Program Update:
Alabama Federal Court Decision Throws Corporate Transparency Act into Disarray
A federal district court in Alabama issued a significant decision in National Small Business United v. Yellen , No. 5:22-cv-01448 (N.D. Ala. March 1, 2024), on March 1, declaring the Corporate Transparency Act (CTA) unconstitutional as it exceeds the Constitution’s limits on the power of Congress.
While the Alabama decision clouds the future of the CTA, businesses should take note of the narrow scope of the remedy applied by the court. For now, reporting requirements under the CTA remain in effect as written for all covered entities other than the plaintiffs in this case, and reporting companies are still subject to civil and criminal penalties should they willfully fail to report on a timely basis.
The defendants in the case filed an appeal to the 11th Circuit Court on March 11, 2024.
The preceding excerpt is from a post on Stradley Ronon’s Business Vantage Point blog by lawyers Lisa Jacobs, Lori Smith, John Baker and Evan Poulgrain.
New Reporting Requirements for Businesses Formed or Doing Business in Pennsylvania
Counsel to business owners: your client may now be required to submit beneficial ownership reports to the Financial Crimes Enforcement Network (FinCEN), and it will be required to file annual reports with the Pennsylvania Department of State commencing in 2025.
Part One: Corporate Transparency Act
The Corporate Transparency Act (“CTA”) became effective on January 1, 2024, and impacts millions of small business owners across the U.S. It was created to give certain governmental authorities, law enforcement agencies and financial institutions access to beneficial ownership information to assist with the prevention of financial crimes, including tax fraud, money laundering, and financing for terrorism.
A byproduct of the legislation, however, is that the CTA places a burden on business owners to comply with the reporting requirements or be penalized for noncompliance.
Business entities formed in the United States (or foreign businesses registered in the United States) between January 1 and December 31, 2024, have 90 days from the secretary of state’s notice that the formation has become effective to file the required report; entities created or registered before January 1 must file by December 31, 2024. Entities created (or registered) after December 31, 2024, will have 30 days from actual or public notice that the company’s creation or registration is effective to file their initial reports with FinCEN. The consequences of not filing on time range from fines to imprisonment.
Complying with the Corporate Transparency Act: Your Client’s Legal Obligations.
Hear from transactional attorneys as they provide an overview of the CTA and share what every lawyer needs to know to comply with the reporting requirements of the CTA.
- Who does the CTA affect?
- What is a “beneficial owner?”
- What is a “reporting company?”
- What is a “company applicant?”
- Who needs to file, and who is exempt?
- What information needs to be filed?
- The use of FinCen identifiers
- Implementation and compliance challenges
- Engagement letters for entity formations
- Ethical obligations with respect to the new reporting requirements
Part Two: Annual Report Requirement
Beginning in 2025, most Pennsylvania business entities will be required to file annual reports with the Department of State. The new requirement includes entities formed in other states and registered to conduct business in Pennsylvania. The panel will cover the following topics:
- What entities must file?
- Contents of the filing
- The deadlines for filing
- The consequences of not filing and “administrative dissolution”
Co-sponsored with the PBA Business Law Section .
Recorded in February 2024.