The Corporate Transparency Act has been declared unconstitutional by the Alabama District Court; however, FinCEN enforcement against entities that are not parties to that action will continue until further notice.

On March 1, 2024, U.S. District Court Judge Liles C. Burke issued a 53-page opinion[1] granting summary judgment for the National Small Business Association and held that the Corporate Transparency Act “exceeds the Constitution’s limits on the legislative branch and lacks a sufficient nexus to any enumerated power to be a necessary or proper means of achieving Congress’ policy goals.”

As a result, Judge Burke found the CTA to be unconstitutional because it exceeds the Constitution’s limits on Congress’ power, without even reaching a decision on whether it violates the First, Fourth, and Fifth Amendments. The Court then permanently enjoined the government from enforcing the CTA against the named plaintiffs and ordered a further hearing on the award of costs of litigation.

 In a notice issued by FinCEN on March 4, 2024[2], the regulator advised that it will “comply with the court’s order for as long as it remains in effect” and will not enforce the CTA against the named plaintiffs in the instant case. What goes unsaid is that FinCEN intends to continue enforcement of the CTA against non-parties while the case works its way through the federal court system. As a result, we advise continued compliance with the CTA absent further developments.