In a ruling that came as a blow to regulatory bodies, the Federal District Court in Alabama has put a stop to the enforcement of the Corporate Transparency Act (CTA). The law, which came into force on January 1, 2024, has been at the forefront of the U.S. government’s battle against money laundering.
The CTA is designed to stop money laundering through increased transparency by creating a beneficial ownership database with reporting requirements that disclose beneficial owners of certain U.S. companies and non-U.S. companies doing business in the U.S.
This past Friday evening, March 1, 2024, a Federal District Court judge in the Northern District of Alabama granted a motion for Summary Judgment, which effectively declared the Corporate Transparency Act (CTA) unconstitutional. The Court stated that the enactment of the CTA “cannot be justified as an exercise of Congress’ enumerated powers.” The decision prevents the government from enforcing the CTA against the Plaintiff in the case. The Court stated that it will separately issue a final judgment.
As a result, it appears that the enforcement of the CTA may be on hold. The Justice Department is highly likely to appeal the Alabama case.
CBIZ will continue to monitor the effect of this ruling and the impact it may have.
© Copyright CBIZ, Inc. All rights reserved. Use of the material contained herein without the express written consent of the firms is prohibited by law. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein. Material contained in this publication is informational and promotional in nature and not intended to be specific financial, tax or consulting advice. Readers are advised to seek professional consultation regarding circumstances affecting their organization.
“CBIZ” is the brand name under which CBIZ CPAs P.C. and CBIZ, Inc. and its subsidiaries, including CBIZ Advisors, LLC, provide professional services. CBIZ CPAs P.C. and CBIZ, Inc. (and its subsidiaries) practice as an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable law, regulations, and professional standards. CBIZ CPAs P.C. is a licensed independent CPA firm that provides attest services to its clients. CBIZ, Inc. and its subsidiary entities provide tax, advisory, and consulting services to their clients. CBIZ, Inc. and its subsidiary entities are not licensed CPA firms and, therefore, cannot provide attest services.