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Alerts and Updates

Appeal Filed by Justice Department in Case Declaring Corporate Transparency Act Unconstitutional – To File or Not to File?

March 14, 2024

Appeal Filed by Justice Department in Case Declaring Corporate Transparency Act Unconstitutional – To File or Not to File?

March 14, 2024

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[Updated April 4, 2024] - Since our previous Alert about the March 1, 2024, Alabama District Court decision declaring the Corporate Transparency Act (CTA) unconstitutional, the U.S. Justice Department, on behalf of the Department of the Treasury, filed a notice of appeal on March 11, 2024. After the filing, FinCEN stated that:

While this litigation is ongoing, FinCEN will continue to implement the Corporate Transparency Act as required by Congress, while complying with the court’s order. Other than the particular individuals and entities subject to the court’s injunction… reporting companies are still required to comply with the law and file beneficial ownership reports as provided in FinCEN’s regulations.

Our position (which was confirmed by FinCEN’s own statement regarding the appeal) is that for entities newly created or first registered in 2024 (that are not part of the limited group of plaintiffs in the Northern District of Alabama case), the required CTA filing should be timely made within the requisite 90-day period (the 90-day period is reduced to 30 days for entities formed or first registered in 2025 and beyond). For entities formed or first registered before January 1, 2024 (whose CTA reporting deadline is not later than January 1, 2025), our position is that (1) the required CTA information should be collected by the reporting company, but (2) the reporting company may wish to delay the FinCEN filing itself for now, in hopes that greater clarity about the issue is provided by FinCEN or the courts before year-end.

About Duane Morris

Duane Morris is actively monitoring developments regarding the CTA and issuing Alerts on the topic. Duane Morris will provide advice to clients related to CTA compliance only when explicitly engaged to do so in writing.

For More Information

If you have any questions about this Alert, please contact Thomas R. Schmuhl, Jocelyn Margolin Borowsky, Joel N. Ephross, Bruce H. Jurist, Hope P. Krebs, Lee J. Potter Jr., any of the attorneys in our Corporate Transparency Act Group, the attorney in the firm with whom you are regularly in contact, or Michael A. Gillen or any of the professionals in the Tax Accounting Group.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.