If you're keeping up with small business advocacy groups like the National Small Business Association, you've already heard that a federal district court in Alabama ruled the Corporate Transparency Act (CTA) unconstitutional.
So what does that mean for small businesses?
On March 1st—U.S. District Judge Liles C. Burke decided that the Corporate Transparency Act is unconstitutional on the grounds that Congress exceeded its powers in enacting the law—and so the rulemaking stemming from it is unlawful.
The federal court order likely marks the beginning of legal discourse between Congress and small business advocacy organizations—including the National Small Business Association. We can expect to watch this legal action unfold throughout the year.
I'm a small business owner - do I need to file a BOI report?
In response to the federal ruling on March 1st, FinCEN issued a statement on Monday publicly adhering to the court order—immediately pausing enforcement of the Corporate Transparency Act and its subsequent laws until further notice.
Some small business owners are still choosing to file the report. The choice is yours, and there is no penalty if you still choose to file.
There isn't a there isn't a one-size-fits-all option when it comes to navigating the Corporate Transparency Act—specifically BOI reporting. There are mixed strategies out there.
What are CPA Organizations saying?
The AICPA publicly supported the suspension of the BOI reporting rule. The organization is still encouraging small business owners to continue submitting BOI reports on their own using the BOI e-filing system.
What are Employment Lawyers saying?
Employment lawyers are recommending that small business owners wait as long as they can before filing.
Why delay? Because the BOI reporting rule may never be reinforced. Or it's possible that the legislation could return completely reimagined, requiring different information and/or less identifying documents from small business owners.
To jog your memory, the currently-paused legislation called upon business owners like yourselves-identified as Beneficial Owners under the Corporate Transparency Act-to upload key identifying documents to FinCEN. Such as:
- Full Name
- Date of birth
- Current residential address
- Social Security Number
- Identification document (generally a passport or driver’s license)
Feeling nervous to upload those sensitive documents online? You're not the only one.
CTA: Not The Way
The National Small Business Association-the driving plaintiff in the current legal discourse-has been actively campaigning to stop the Corporate Transparency Act (CTA) for months. You can read more about their efforts, and follow along with their campaign—CTA: Not The Way—on their website.
Beware of BOI Scam Tactics/BOI Promoters
Small business owners preparing to submit BOI details should beware of a developing third-party vendor market, where small business owners could potentially fall victim to scams, or attempts to phish or mine data.
Trusted attorneys at Lipresti Law focus on business law, and shared an additional warning for small business owners: "Most small business owners can likely take care of the submission of BOIs themselves. In most cases the form is done in minutes online. We're already seeing a third-party vendor market develop, including scammers offering to complete this service at inflated price. There is also a fear among professionals that fraudsters will look to strike by offering the service at a very cheap price, just to gain access to your vital identifying documents—and then turn around and sell your information on the dark web. If you need help, get in touch with your business attorney or payroll provider for general education. The information requested per BOI is essentially the 'holy grail' for identity theft—don't let it fall into the wrong hands."
We'll continue to provide updates and action-items for small business owners as the legal action continues.
In the mean time, you can still learn about the currently-paused legislation in our previous blog: Small Business Owner's Guide to the Corporate Transparency Act (CTA) and Beneficial Ownership Information (BOI) Reporting.
