The Department of Justice on Monday appealed a ruling by U.S. District Court of the Northern District of Alabama Judge Liles Burke who recently granted summary judgment to the National Small Business Administration (NSBA) in its challenge of the constitutionality of the Corporate Transparency Act (CTA).

The ruling by Burke to strike down the CTA is a “victory for law-abiding small-business owners everywhere who would have been forced to disclose their sensitive personal information to a government database,” according to the small business advocacy group.

Bruce Ely, a tax attorney and partner with the Bradley Arant Boult Cummings law firm, told 1819 News on Monday, “The filing of this Notice of Appeal was surprisingly close on the heels of the Federal District Court ruling, but conspicuously absent was a request for the Court of Appeals to suspend or “stay” the lower court’s order during the pendency of the appeal. Most of us practitioners expected that request, and it may still be filed— but at a later date.” 

“The speed with which the DOJ filed this appeal certainly tells us they plan to fight, and they probably wanted to get that message out to the business community and practitioners as soon as possible,” Ely said.

1819 News reported in January about a new requirement under the CTA whereby most Alabama small business owners would be required to share ownership information about their companies or risk being subject to civil and criminal financial penalties or imprisonment under the new federal law.

"The CTA has from the very beginning been poor policy that unfairly targets America's small businesses," Todd McCracken, President and CEO of NSBA, said in a recent statement. "This ruling justifies the concerns of millions of American businesses about how the CTA is not only a bureaucratic overreach, but a Constitutional infringement."

The challenge to the CTA began in 2022 when the NSBA and Huntsville business owner Isaac Winkles first brought their case before the District Court. While the case was being considered in court, the U.S. Treasury Department was implementing the CTA despite millions of small-business owners not knowing about the requirements of the CTA. The database is ripe for data security issues and confusion, which could saddle small-business owners with hefty penalties or even jail time, according to NSBA.

The CTA 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 case was not a class action so it only directly affects those who were NSBA members as of March 1 plus the individual plaintiff who was also a member.

cta appeal ala by Caleb Taylor on Scribd

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