Corporate Transparency Act Declared Unconstitutional

A few months ago I wrote about a federal law called the Corporate Transparency Act (CTA) that affects small business owners. This law requires them to give detailed personal information to the government starting from January 1, 2024. The information they have to provide includes their name, birth date, home address, and either their passport or driver's license number along with a photo.

But on March 1, 2024, a court in Alabama said the CTA was not allowed because it went beyond what Congress is allowed to do under the Constitution. The court stopped the government from enforcing the law against the people who brought the case. This case is called National Small Business v. Yellen. Then, on March 4, the agency responsible for collecting this information, called FinCEN, said it would follow the court's decision for as long as it's in place.

The court decision applies only to the plaintiffs in that case. Unlike in some other situations, where courts stop laws across the country, this court didn't do that. And since FinCEN said they're going along with the court's decision, they probably won't appeal it.

So, what should you do if you own a small business in Michigan and you have to follow the CTA? If your business was set up before 2024, you have until the end of this year to give your information. If your business was set up after 2023, you have 30 days from when it started to report your information.

Because the penalties under the CTA for non-compliance are severe, the better course of action at this point may be to file your BOI information on a timely basis. But before you do anything, it’s a good idea to talk to a lawyer.