A recent appeals court ruling on Monday means that most Alabama small business owners will once again be required to share ownership information about their companies or risk being subject to civil and criminal financial penalties or imprisonment.
The requirement is known as the Corporate Transparency Act (CTA) and was part of the National Defense Authorization (NDAA) for fiscal year 2021, passed on Jan 1, 2021, and went into effect on January 1.
The law doesn't apply to any entity that employs more than 20 full-time employees, has filed a federal income tax return reporting gross receipts exceeding $5 million, and has an operating presence in the United States.
Most of the burden to disclose ownership information to the federal government will fall on smaller businesses with fewer than 20 full-time employees and $5 million in sales. A list of other narrow exemptions can be found here.
Earlier in December, the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction in the case, which prevented the U.S. Department of Treasury from enforcing the CTA.
However, the Fifth Circuit Court of Appeals decision on Monday nullifying that injunction allows the Treasury Department's Financial Crimes Enforcement Network (FinCEN) to enforce the CTA and its beneficial ownership information (BOI) reporting requirements while the lawsuit proceeds.
Will Califf, a spokesman for Alabama Attorney General Steve Marshall, told 1819 News “The Biden’s Corporate Transparency Act represents an unprecedented encroachment by the federal government on businesses and on the States’ traditional authority to regulate corporations.”
“We have supported and will continue to support the challenges to this Act, and we hope the injunction on its operation will be restored swiftly,” Califf said.
FinCEN announced on Monday after the ruling that the deadline to file the information was extended from January 1 to January 13, 2025.
"Because of this decision, small business owners must scramble to meet the reporting requirements of this egregious statute. Enforcing a Jan. 1 deadline for compliance will mean massive chaos for our nation's small businesses," Beth Milito, Executive Director of NFIB's Small Business Legal Center, said on Monday. "The district court, in granting the preliminary injunction, rightly recognized that the BOI reporting requirements would have devastating consequences for small business owners. Make no mistake, NFIB is already working to quickly appeal this terrible decision and provide our Main Streets with a reprieve from this harmful mandate."
U.S. Sen. Tommy Tuberville (R-Auburn) introduced the "Repealing Big Brother Overreach Act" to overturn the CTA in April due to the "massive administrative burden" the law would place on millions of American small business owners.
To connect with the author of this story or to comment, email caleb.taylor@1819News.com.
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