A federal judge in the U.S. District Court for the Northern District of Alabama ruled March 1 that the Corporate Transparency Act is unconstitutional, following a lawsuit alleging that the law violates five U.S. Constitutional Amendments. 

The Corporate Transparency Act requires certain businesses to report information to the U.S. Department of the Treasury’s Financial Crimes Enforcement Unit about their ownership in an effort to combat tax evasion and money-laundering operations. 

The ruling only affects the plaintiffs in this particular case, so the legislation will remain in effect for all other businesses.

This means that dental practices are still mandated to report beneficial ownership information if they employ fewer than 20 people and generate less than $5 million (gross receipts) in revenue annually. The deadline to file is Jan. 1, 2025. Dentists should also be aware of recent fraudulent attempts to solicit information from those subject to reporting requirements through URLs, QR codes and messages titled “Important Compliance Notice.”

In the case National Small Business United v. Yellen, the district court concluded that the Corporate Transparency Act is unconstitutional as Congress does not have the authority to require companies to disclose personal stakeholder information to the Financial Crimes Enforcement Unit. 

The National Small Business Association, an Ohio nonprofit organization, and Isaac Winkles, a member of the National Small Business Association, filed the lawsuit against the U.S. Department of the Treasury and Treasury Secretary Janet Yellen. They alleged that the disclosure requirements in the act violated the First, Fourth, Fifth, Ninth and Tenth Amendments. 

“Because 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 goals, the plaintiffs are entitled to judgment as a matter of law,” the court order reads. 

While the Treasury and the Financial Crimes Enforcement Unit are expected to appeal this decision to the Eleventh Circuit, it is unclear what consequences this ruling could have for the future of the law.

For more information or to file a beneficial ownership report, visit fincen.gov/boi.

For other questions, visit the ADA’s FAQ document.