Court Challenge to Corporate Transparency Act Rebuffed – For Now

National Law Review ^ | October 18, 2024 | William E. Quick, Philip G. Feigen, Mark A. Olthoff

[T Ruth]

On September 20, 2024, U.S. District Judge Michael H. Simon for the District of Oregon issued an Opinion and Order in favor of defendants in the case. Firestone, et al.. v Janet Yellen, et al., Case No. 3:24-cv-1034 (D. Ore.) The Order upheld the constitutionality of the CTA and recognized Congress’ power to regulate. It is currently unclear as to the implications of this ruling for the business community at large. …

[D]iscussing the likelihood of success on the merits, the court rejected the argument that Congress lacked authority to enact the CTA. The court recognized Congress’ broad authority to adopt legislation under the Commerce Clause to effectuate prohibitions on financial crimes involving commercial entities. As well, Congress had authority under the Necessary and Proper Clause to protect national security. ...

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The Oregon court’s conclusions are contrary to those of the Northern District of Alabama reached earlier this year in National Small Business United, et al. v. Yellen, et al., Case No. 5:22-cv-01448, 2024 WL 8899372 (N. D. Ala. Mar. 1, 2024). There, the court held that the CTA did not pass muster under the Necessary and Proper Clause (referring to foreign affairs and national security), the Commerce Clause, nor Congress’s taxing power under the Necessary and Proper Clause. The court extensively discussed Supreme Court precedent to reach the result that the CTA cannot be justified as a constitutional exercise of Congress’s powers. Having found the CTA unconstitutional, the district court permanently enjoined any requirements for registration as well any potential penalties for noncompliance for the Plaintiffs only. The case is currently on appeal to the Eleventh Circuit Court of Appeals, Case No. 24-10736.

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With this, and other Corporate Transparency Act new developments, occurring almost daily, now is the time to discuss the Corporate Transparency Act ...

[T Ruth]

This is a mess.

[Twotone]

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