Tax Notes Talk
The Corporate Transparency Act: Recent Challenges and Confusion
Jan 17, 2025
Lili Martin-Mashburn, a partner at Morris, Manning & Martin, shares her expertise on the Corporate Transparency Act and its current legal challenges. She discusses ongoing litigation questioning the act's constitutionality, including significant cases from Alabama and the Small Business Association of Michigan. The implications for privacy rights and compliance uncertainty for businesses are highlighted. Lili emphasizes the need for companies to stay informed and prepared as the legal landscape evolves.
18:16
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Quick takeaways
- The Corporate Transparency Act aims to enhance business transparency and combat financial crimes, affecting an estimated 32.6 million businesses in 2024.
- Recent court challenges to the CTA highlight constitutional concerns related to the Commerce Clause and the balance between privacy and regulatory authority.
Deep dives
Overview of the Corporate Transparency Act
The Corporate Transparency Act (CTA) is a significant legislative measure aimed at enhancing transparency in business ownership and combating illicit activities such as money laundering and tax evasion. Enforced by the Financial Crimes Enforcement Network (FinCEN), the CTA mandates that certain entities, referred to as reporting companies, disclose information about their business and beneficial owners. This legislation will apply to millions of businesses, with estimates suggesting it will affect 32.6 million businesses in 2024 alone. However, the CTA faces controversy due to its extensive reporting requirements and the associated penalties for non-compliance, which can include substantial fines and even imprisonment.
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