On March 1, the Corporate Transparency Act (CTA) was ruled unconstitutional by Judge Liles C. Burke of the US District Court for the District of Alabama.
The law, which would have required almost every business in the US to provide the Financial Crimes Enforcement Network (FinCEN) with information about its beneficial owners in order to combat the use of shell corporations in money laundering and fraud went into effect on Jan 1 and could have resulted in hefty fines for noncompliance.
The case was brought by National Small Business United, an affiliate of the National Small Business Association.
Judge Burke’s ruling found that the CTA “transcends the limits imposed by the Constitution on the legislative branch and lacks a strong connection to any enumerated power to serve as a necessary or appropriate means to achieve Congress’ policy objectives.”
An appeal of the case, officially National Small Businesses United v. Yellen, is expected and legal observers note that it could even wind up before the Supreme Court.
