Federal judge strikes down Corporate Transparency Act
The National Lumber and Building Material Dealers Association (NLBMDA) reports that the Corporate Transparency Act (CTA) has been ruled unconstitutional by Federal District Court Judge Liles Burke.
The judge issued a rebuke of the law that temporarily blocks beneficial ownership reporting requirements for small businesses that took effect on Jan. 1, 2024.
The ruling stems from a legal challenge filed in 2022 by the National Small Business Association alleging that the CTA violates a laundry list of constitutional protections.
The NLBMDA submitted a statement in support of the litigation shortly after it was filed, and strongly endorses the court’s decision that CTA is unconstitutional because it cannot be justified as an exercise of Congress’ enumerated powers.
While the beneficial ownership reporting requirements on small businesses are blocked for now, the U.S. Department of Justice is expected to appeal the ruling using an expedited process that will send the case to the U.S. Court of Appeals for the Eleventh Circuit.
The court agreed that CTA is an unprecedented attempt by the federal government to gather the personal information of millions small business owners, disproportionately targeting asssociation members and subjecting them to increased paperwork, privacy risks, and potentially devastating fines and prison terms.
Without the court’s intervention, small business owners can be confronted with civil penalties of up to $10,000, 2 years’ imprisonment, or both, for failing to report their personal information.
The NLBMDA recently hosted a webinar on CTA and federal regulations from the U.S. Department of Treasury that require small LBM dealers to report personal information about their owners and key employees to the Financial Crimes Enforcement Network (FinCEN).
NLBMDA members can access a recording of the webinar here and a copy of the presentation here. More information can also be found at FinCEN’s BOI website, including additional guidance materials and a Frequently Asked Questions (FAQ) page that can be found here.
NLBMDA said it is closely monitoring developments on CTA and is supporting efforts to block these regulations on LBM dealers.
Members with questions can contact NLBMDA’s Director of Government Affairs Jacob Carter at [email protected].
