On March 1, 2024, U.S. District Judge Liles C. Burke for the Northern District of Alabama, Northeastern Division, issued a Final Judgment ruling in favor of the Plaintiffs’ (National Small Business United, et al. “NSBU”) motion for summary judgment, and against the U.S. Treasury (Defendants). 

This judgment held that the Corporate Transparency Act (CTA) is unconstitutional because it exceeds the Constitution’s limits on Congress’ power.

Further, FinCEN is permanently enjoined from enforcing the CTA against the Plaintiffs in that case (but only the Plaintiffs in that case). 

It is currently unclear as to the implications of this ruling for the business community at large. This ruling may be persuasive in similar cases brought against Treasury outside of the Northern District of Alabama, but is not precedential, meaning that other judicial forums may rule differently on the issues presented in this case. 

We anticipate Treasury will file an immediate appeal of this ruling to the Eleventh Circuit Court of Appeals.

In reaching its conclusions, the court reviewed all of the arguments made by Treasury and the Plaintiffs. First, the court dispensed with Treasury’s standing argument finding that the Plaintiffs had a redressable injury and the NSBU had associational standing in order to bring the suit in federal court. Next, the court discussed the various constitutional arguments the Plaintiffs made, determining the CTA did not pass muster under the Necessary and Proper Clause (referring to foreign affairs and national security), the Commerce Clause, nor Congress’s taxing power under the Necessary and Proper Clause. The court extensively discussed Supreme Court precedent to reach the result that the CTA cannot be justified as a constitutional exercise of Congress’s powers. The Court indicated that its conclusion made it unnecessary to decide whether the CTA violates the First, Fourth, or Fifth Amendments of the Constitution, as also asserted by the Plaintiffs.

Because this case only included questions of law, and was decided on summary judgment based solely on dispositive motions by the parties, the appeals court will have de novo review of this case. That is, the appeals court will decide all issues in the case, as if the case was being heard for the first time. 

Business owners and management should continue to meet any impending filing deadlines under the CTA.