{"id":716,"date":"2024-04-18T21:02:18","date_gmt":"2024-04-18T21:02:18","guid":{"rendered":"https:\/\/www.westevens.com\/blog\/?p=716"},"modified":"2024-04-18T21:55:40","modified_gmt":"2024-04-18T21:55:40","slug":"is-boi-reporting-unconstitutional","status":"publish","type":"post","link":"https:\/\/www.westevens.com\/blog\/is-boi-reporting-unconstitutional\/","title":{"rendered":"New Reporting Law: Is It Unconstitutional?"},"content":{"rendered":"

What is BOI Reporting?<\/strong><\/p>\n

Effective January 1, 2024, the Corporate Transparency Act (CTA) mandates many businesses must submit beneficial ownership information (BOI) to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).<\/p>\n

This led to the National Small Business Association filing a lawsuit against the Treasury.<\/p>\n

Key Takeaways<\/strong><\/p>\n

    \n
  1. The Court ruled in favor of members of the National Small Business Association (as of March 1, 2024); those entities are not currently required to report BOI to FinCEN.<\/li>\n
  2. The Court did not issue a nationwide injunction halting the CTA\u2019s enforcement, meaning the CTA remains in effect (for now) as to entities other than the named plaintiffs and NSBA members as of March 1, 2024.<\/li>\n
  3. Other businesses and plaintiffs may use this ruling to file similar challenges seeking a nationwide injunction of FinCEN\u2019s enforcement of the BOI requirements under the CTA.<\/li>\n<\/ol>\n

    Plaintiffs\u2019 Challenge to the CTA<\/strong><\/p>\n

    In November 2022, National Small Business United, d\/b\/a\/ the National Small Business Association (\u201cNSBA\u201d), and Isaac Winkles, a major shareholder of an NSBA member (together, the \u201cPlaintiffs\u201d) filed a lawsuit against Treasury, seeking declaratory judgment that the Corporate Transparency Act (CTA) is unconstitutional, and exceeding Congress\u2019 authority under Article I of the Constitution and violating the First, Fourth, Fifth, Ninth, and Tenth Amendments. \u00a0Plaintiffs also sought an injunction preventing the U.S. Government from enforcing the CTA against the Plaintiffs.\u00a0 On March 1, 2024, the Court granted Plaintiffs\u2019 motion for summary judgment.<\/p>\n

    The Court\u2019s Decision<\/strong><\/p>\n

    The Court took an expansive view of states\u2019 rights and a more limited view of Congress\u2019 ability to regulate certain activity out of concern for U.S. national security, and rejected the government\u2019s arguments that the CTA was constitutional under Congress\u2019 abilities to regulate Commerce, regulate foreign affairs, and to impose taxes.\u00a0 In its ruling, the Court concluded that the \u201cCTA exceeds the Constitution\u2019s limits on the legislative branch and lacks a sufficient nexus to any enumerated power to be a necessary or proper means of achieving Congress\u2019 policy goals.\u201d<\/p>\n

    In reaching its decision, the Court found that corporations are established by state law, and that the Congressional findings in the CTA expressing concerns over foreign money laundering and necessity of collection of BOI for U.S. national security interests were not sufficient to justify regulation of the domestic activity of incorporation under Congress\u2019 foreign affairs powers.<\/p>\n

    Conclusion<\/strong><\/p>\n

    We have now seen the National Small Business Association win a lawsuit against the Treasury regarding the CTA (which includes BOI reporting). This sheds light that others will move to do the same and we could<\/em> see this mandatory reporting revoked.<\/p>\n

    As of now, if you were incorporated before Dec 31, 2023, you have until Dec 31, <\/sup>2024 to report. It may be worth it to wait and see how this pans out before filing yourself. If you have incorporated Jan 1, 2024 or after, you have 90 days to report your BOI information.<\/p>\n

    If you have questions over this topic, contact us today!<\/p>\n

    Sincerely,<\/p>\n

    W. E. Stevens, P.C.<\/p>\n

    Serving our clients with focused intentionality, professionalism, and timeliness<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

    What is BOI Reporting? Effective January 1, 2024, the Corporate Transparency Act (CTA) mandates many businesses must submit beneficial ownership information (BOI) to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). This led to the National<\/p>\n","protected":false},"author":2,"featured_media":717,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[10,12],"tags":[29,36,33,7,22,3,24,31,17],"_links":{"self":[{"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/posts\/716"}],"collection":[{"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/comments?post=716"}],"version-history":[{"count":5,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/posts\/716\/revisions"}],"predecessor-version":[{"id":722,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/posts\/716\/revisions\/722"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/media\/717"}],"wp:attachment":[{"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/media?parent=716"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/categories?post=716"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/tags?post=716"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}