A federal judge in Alabama has ruled that the bi-partisan, anti-money laundering law passed in 2021, aka The Corporate Transparency Act (CTA), is unconstitutional. This legal injunction puts the future of the bill in jeopardy.
As of now, we are no longer required to register our businesses with FinCen.
The intent of the bill, which became effective January 1st of this year, was to identify the shell companies involved in money laundering in the hopes of stopping the flow of illicit funds to drug cartels, terrorist organizations, and other nefarious endeavors. The law created a beneficial ownership database where small businesses would be required to disclose the beneficial owners of entities. The requirement would have affected 32M entrepreneurs.
The National Small Business Association filed the lawsuit against the Treasury Department arguing that the bill was unconstitutional because it infringed on the protected rights of state sovereignty, due process, and privacy. And U.S. District Judge Lisle C. Burke agreed.
In his decision, he cited that the Act gave the federal government “unfettered legislative power”. Judge Burke also stated, “The CTA 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 Treasury Department has not said whether or not they’ll appeal the decision.
I love the idea of doing something about this. Anything we can do to stop the flow of illegal funding to terrorist organizations threatening our national security or drug cartels that are poisoning our children is obviously a great idea. But the real question becomes how to properly do it.
If a criminal wants to hide, they’re going to.
If the Act hadn’t been stopped, what would happen? Given the amount of press it has received, in other words not very much, how many of us would register? Maybe 70% or 80% if the government was lucky.
What would the government then do to track down the other 6M or 7M small businesses? Do you think they’d hire a new army of investigators to track down the rest of those individuals?
Where would that money come from? How many billions would that cost?
And most of the people they’d track down would probably be less educated individuals, probably married to their sisters, who were unable to read in the first place. What good would any of that do?
The people funding the drug cartels and terrorist organizations aren’t dummies. If they want to hide, it would take a lot more than this to find them.
For now, we no longer need to register our businesses. If anything happens with this in the future, I’ll let you know.
Let me leave you with this…
The deadline for filing S Corp and Partnership returns is March 15th. We’ve already begun the process of extending these returns that haven’t yet been completed.
Please understand that an extension does nothing but extend the due date of the “paper” return. It doesn’t extend the due date of any payment that’s due with the return.
If you file an extension without a payment and end up owing, a penalty will be assessed. Since this only involves S Corps and Partnerships that are pass-through-entity returns, the penalty would only be levied at the State Level.
If you’ve already made a deposit on the Pass Through Entity Tax Credit, then an additional deposit is unnecessary. Anyone who’d like to make a deposit with their extension should contact our offices today. We’d love to help.
If you choose to not make a deposit, there will be absolutely nothing I can do to abate these penalties. The choice is yours.
We’re all going to get through this. Let’s get through it together.
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Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
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