https://lnkd.in/e6BG24dD
“Indeed, even in the pursuit of sensible and praiseworthy ends, Congress sometimes enacts smart laws that violate the Constitution”
With those words from Judge Lilies C. Burke, we kick off March with a constitutional law ruling that could impact many small businesses.
As part of the 2021 Corporate Transparency Act (“CTA”), certain companies are now required to submit certain beneficial ownership information (BOI) reports beginning this year. Some studies indicate this new requirement would apply to approximately 32.6 million companies in 2024, and estimated 5 million additional companies annually. While the law was enacted as part of an effort to combat money laundering, it certainly added additional compliance costs to many small businesses.
Issac Winkles was one of these business owners. He who owned a small family business with “3 full-time employees and annual turnover of under $20 million” in Alabama. Winkles, along with the National Small Business Association, argued this reporting requirement violated the 4th, 5th, 9th, and 10th Amendments of the US Constitution.
On Friday night, Federal District Court Judge Liles C. Burke ruled that the Corporate Transparency Act “exceeds the Constitution's limits on the legislative branch and lacks a sufficient nexus to any enumerated power to be a necessary or proper means of achieving Congress’ policy goal”. As a result, he granted the plaintiffs motion for summary judgment, preventing the US Treasury from enforcing the law against Winkles.
This is likely just the start of what could be a long legal battle against the Corporate Transparency Act. Your team Wolf & Company, P.C. will surely be following this closely.
#smallbusiness #constitutionallaw #corporatetransparencyact #cta #taxcompliance
