Sharan L. Levine
Four states, including Michigan, are part of a lawsuit filed against the U.S. Treasury Department challenging the constitutionality of the Corporate Transparency Act of 2020.
The Corporate Transparency Act was enacted as part of the National Defense Authorization Act of 2020 in order to address money laundering problems around the world, coming up with anti-money laundering approaches and responding to international requirements. The CTA requires companies to disclose beneficial ownership information (BOI) to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
On March 27, Small Business Association of Michigan (SBAM) and others in Michigan filed a lawsuit in the U.S. District Court for the Western District of Michigan against the Treasury Department challenging the constitutionality of the CTA, making this the third CTA lawsuit against the department. Similar litigation involves different litigants in Alabama, Ohio, and Maine.
In Michigan, the challenges to the CTA are based on the following assertions:
• Congress did not have the legislative power to authorize the CTA.
• The provisions of the CTA, which require persons to file personal information, constitute an unreasonable search and seizure violating a citizen’s Fourth Amendment rights. The plaintiffs argue that the information the government is collecting is provided for
the purpose of criminal investigation and/or monitoring without establishing probable cause for the search and seizure of the individual’s personal information. They also argue that the search is a violation of an individual's right to privacy.
• Finally, the Michigan case argues that the Act is vague in violation of the Fifth Amendment by depriving persons of life, liberty, and property without due process of law because the language is too vague as to what the information will be used for.
The Michigan plaintiffs asked the court to enjoin the government from enforcing the CTA and requiring plaintiffs to file the required forms. On April 26, the judge in the Western District Court case denied the plaintiffs’ motion seeking the preliminary injunction.
At Levine & Levine, we represent many small business clients who are in single member LLCs or closely held companies with just two or three members/shareholders. Frequently, for estate planning purposes, members/shareholders will assign their interest to their Revocable Trust. The trustees are also required to file the beneficial ownership information report.
We are closely monitoring the CTA cases circulating in the country to protect our clients’ interests. We are prepared to advise and assist business owners as needed to file the personal information prior to the deadline and as required by law.
If a company was incorporated prior to 2024, the current deadline for filing is Dec. 31, 2024. For new companies established with the Secretary of State in 2024, the deadline for filing is 90 days after formation of the new company.
We are here to help business owners understand the complexity of the CTA. For additional information about the CTA, visit the 2024 Levine & Levine Newsletter.
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Sharan Levine is a partner with Levine & Levine Attorneys at Law.
The Corporate Transparency Act was enacted as part of the National Defense Authorization Act of 2020 in order to address money laundering problems around the world, coming up with anti-money laundering approaches and responding to international requirements. The CTA requires companies to disclose beneficial ownership information (BOI) to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
On March 27, Small Business Association of Michigan (SBAM) and others in Michigan filed a lawsuit in the U.S. District Court for the Western District of Michigan against the Treasury Department challenging the constitutionality of the CTA, making this the third CTA lawsuit against the department. Similar litigation involves different litigants in Alabama, Ohio, and Maine.
In Michigan, the challenges to the CTA are based on the following assertions:
• Congress did not have the legislative power to authorize the CTA.
• The provisions of the CTA, which require persons to file personal information, constitute an unreasonable search and seizure violating a citizen’s Fourth Amendment rights. The plaintiffs argue that the information the government is collecting is provided for
the purpose of criminal investigation and/or monitoring without establishing probable cause for the search and seizure of the individual’s personal information. They also argue that the search is a violation of an individual's right to privacy.
• Finally, the Michigan case argues that the Act is vague in violation of the Fifth Amendment by depriving persons of life, liberty, and property without due process of law because the language is too vague as to what the information will be used for.
The Michigan plaintiffs asked the court to enjoin the government from enforcing the CTA and requiring plaintiffs to file the required forms. On April 26, the judge in the Western District Court case denied the plaintiffs’ motion seeking the preliminary injunction.
At Levine & Levine, we represent many small business clients who are in single member LLCs or closely held companies with just two or three members/shareholders. Frequently, for estate planning purposes, members/shareholders will assign their interest to their Revocable Trust. The trustees are also required to file the beneficial ownership information report.
We are closely monitoring the CTA cases circulating in the country to protect our clients’ interests. We are prepared to advise and assist business owners as needed to file the personal information prior to the deadline and as required by law.
If a company was incorporated prior to 2024, the current deadline for filing is Dec. 31, 2024. For new companies established with the Secretary of State in 2024, the deadline for filing is 90 days after formation of the new company.
We are here to help business owners understand the complexity of the CTA. For additional information about the CTA, visit the 2024 Levine & Levine Newsletter.
—————
Sharan Levine is a partner with Levine & Levine Attorneys at Law.
