Alabama District Court Declares Corporate Transparency Act Unconstitutional


On March 1, 2024, the United States District Court for the Northern District of Alabama ruled that the Corporate Transparency Act (CTA) exceeds the constitutional limits on Congress’s legislative power and is therefore unconstitutional.

In a lawsuit filed by the National Small Business Association challenging the constitutionality of the CTA, the plaintiffs motioned for summary judgment, arguing that the CTA’s requirements for most entities incorporated under state law to disclose personal stakeholder information to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) exceeded Congress's constitutional authority and violated multiple amendments of the Constitution.

The court granted the motion for summary judgement, ruling that the CTA was not a valid exercise of Congress’s enumerated powers. However, the court did not address whether the CTA violated any constitutional amendments.

While this may be encouraging news for those who are less than enthusiastic about the CTA’s reporting requirements, neglecting to comply with reporting requirements under the CTA is not an advisable course of action at this time. The case is likely to be appealed, and FinCEN has already released a statement on its website implying that it interprets this ruling as only applying to the specific plaintiffs in the case.

More to come, but for now new entities formed in 2024 should continue to make the required filings under the CTA.

This article is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read here. Please review the full disclaimer for more information. Relying on the information provided in this article or communicating with Lowndes through our website does not create an attorney/client relationship.

Related Expertise

Jump to Page

We use cookies on our website to improve functionality and collect statistical information on our website traffic. For details on how we use cookies, please see our Privacy Policy. By using this website, you agree to our Privacy Policy and Terms of Use

Necessary Cookies

Necessary cookies enable core functionality such as security, network management, and accessibility. This type of cookie does not collect any personally identifiable information about you and does not track your browsing habits. You may disable necessary cookies by changing your browser settings, but this may affect how the website functions.

Analytical Cookies

Analytical cookies (also known as performance cookies) help us improve our website by collecting and reporting information on its usage at an aggregate level. You may disable analytical cookies by clicking on the Manage Cookies button.