Montana Lawyer April/May 2024

The government argued in National Small Business United v. Yellen, that the CTA was authorized under three pow ers but none of the powers withstood the scrutiny of the court: (i) Foreign affairs powers The court found that foreign affairs powers could not be applied to the “purely domestic arena of incorporation” and that incorporation is a power left to the states. (ii) The Commerce Clause As for the Commerce Clause the court found the CTA did not fit into any of the three categories of power: regulating interstate commerce channels, regulating instrumentalities of interstate commerce, or regulating activities that substantially affect interstate commerce. (iii) Taxing powers Lastly, although collecting beneficial owner information may be helpful to the IRS when collecting taxes, the usefulness of the collected information was not sub stantial enough to invoke tax powers. The question everyone is waiting to be answered is will the Supreme Court hear a CTA case in the 2024 October Term? What does the recent unconstitutional ruling mean for Montana businesses? You guessed it, nothing. Although this verdict and the recent suit of the Michigan Small

Business Association is heartening for those who do not support the CTA, the Alabama verdict was immediately ap pealed. Even if the NSBA and SBAM were successful in their suits and the CTA was ruled unconstitutional, these verdicts only protect their members. In Montana, the Small Business Development Career (“SBDC”) Network is the largest small business association that aids Montana companies. The MT SBDC is an accredited member of the larger association- America’s SBDC, which offers free services to small busi nesses across Montana with ten offices. America’s SBDC is a non-profit associa tion that prides itself with offering the most comprehensive business assis tance in the United States. As stated on America’s SBDC’s website, the organiza tion works with the U.S. Small Business Administration, the U.S. Congress, and the U.S. Senate. The CTA was vetoed by the president in December of 2020 but passed with broad bipartisan sup port in the U.S. House and U.S. Senate to pass over the veto. There has been no announcement or release of comment regarding their view or plans regarding the CTA and due to the non-profits main funding source, it is not likely any action

will be taken. What should Montana Small Business Owners do if they feel the CTA poses significant Constitutional violations? Although many Small Business trainings and resources are offered by the SBDC, other national organizations such as the NSBA serve Montana businesses. The NSBA suit can still be overturned on appeal but a possible protection action that could be taken in the meantime is to become a NSBA member. The NSBA membership dues depend on your em ployee count. Anti- CTA Small Business Owners across the country are taking out their calculators to see if their foreseeable CPA/ attorney fees that will potentially be incurred with a 2025 CTA report will cost more than a national organization mem bership. Stay tuned for the next happen ings in the CTA as a result of litigation. Many feel this is for the states to dictate, it is possible more states fall in line with New York and create their own guidelines. Jessica Osterloh is a member of the Montana Bar and works for a Corporate Fiduciary in Montana. In addition, she serves as the Estate, Trust, and Probate Chair for the BETTR Law Section.

BETTR SECTION MENTORSHIP PROGRAM

NEW TO TRANSACTIONAL PRACTICE? DON’T KNOW WHERE TO FIND ANSWERS?

Providing limited-scope input within the mentor’s discretion, a mentor from the Business, Estates, Trusts, Tax and Real Property Section may be able to help. To learn more, or to find a mentor, email Brand Boyar, Mentor Program Chair of the BETTR Section, at bboyar@wordenthane.com .

APRIL-MAY 2024

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