Alabama Court Rules CTA Unconstitutional

On Friday, March 1, 2024, a U.S. District Court judge in Alabama ruled the Corporate Transparency Act unconstitutional. The Corporate Transparency Act (“CTA”) is a federal law that went into effect January 1 of this year, requiring any entity that does not meet an exemption to file information on its beneficial owners with the Financial Crimes Enforcement Network (FinCEN). See a summary of the CTA from our previous blog on the topic here. The purpose of the law is to make it more difficult for corrupt individuals to launder money, hide assets or otherwise abuse the U.S. financial system for illicit purposes. Some see it as overburdensome to small businesses.

The judge in National Small Business United v. Yellen found that the CTA “is unconstitutional because it exceeds the Constitution's limits on Congress’ power.”1 At this time, however, the ruling only affects the parties that were plaintiffs in the case. This means that currently, all other reporting companies are still required to report their beneficial owners and company applicants pursuant to the CTA. It remains to be seen how other federal courts will rule on this issue if this question comes before them, and whether this ruling will be appealed and higher courts will weigh in.

BrownWinick will continue to track these developments and this ever-evolving law.  

Any questions? Contact Ellen Hames at 515-242-2423 or Brennan Block at 515-242-2441. 


Nat’l Small Bus. United v. Yellen, No. 5:22-cv-01448-LCB (N.D. Ala. 2022).