How can you register a rental property in Baltimore City? Effective January 1, 2019, all non-owner-occupied dwelling units, regardless of whether it is a single-family or multi-family dwelling, must be licensed and registered in Baltimore City.
How do you remove a squatter in Maryland? When an empty residential unit or vacant buildings become occupied by a person other than an authorized tenant, they are often referred to as a squatter. Squatter law in Maryland does not allow you to remove the unauthorized person without utilizing the legal process.
What is the Corporate Transparency Act?
In 2021, Congress passed the Corporate Transparency Act (CTA) as part of the sprawling National Defense Authorization Act.[1] The law, which took effect January 1, 2024, “packs a significant regulatory punch, requiring most entities incorporated under State law to disclose personal stakeholder information to the Treasury Department’s criminal enforcement arm.”[2] Entities covered by the law include, with some exceptions, corporations, limited liability companies, and similar entities created in the United States by filing documentation with the secretary of state or similar office, or formed under foreign law and registered to do business in the United States.[3] Failure to report can result in both civil and criminal penalties.[4]
Case Ruling the Corporate Transparency Act Unconstitutional
On March 1, 2024, a federal judge in Alabama ruled that the CTA is unconstitutional. The lawsuit, brought by the National Small Business Association (“NSBA”) and one if its members, argued that the CTA exceeded Congress’s enumerated powers and violated the First, Fourth, and Fifth Amendments.[5] The Government defended the law’s constitutionality on various grounds, but the court sided with the challengers.
The court first rejected the Government’s argument that the disclosures required by the CTA were needed to protect vital national security interests and thus fell within Congress’ power over foreign affairs and national security. The court acknowledged the great deference entitled to Congress in these areas, but reasoned that corporations are “creatures of state law,” and Congress’ foreign affairs powers “do not extend to purely internal affairs, especially in an arena traditionally left to the States.”[6]
The court next addressed Congress’s power to enact the CTA under the Commerce Clause. The law could not be upheld as a valid regulation of the channels and instrumentalities of interstate commerce, as the Government argued, because the CTA by its plain text “doesn’t regulate the channels and instrumentalities of commerce or prevent their use for a specific purpose.” The CTA simply mandates that covered entities report information to the Treasury Department without any reference to “commerce” or channels or instrumentalities of commerce.[7] The law also could not be upheld under Congress’ power to regulate intrastate activity having “substantial effects” on interstate commerce because “the CTA does not regulate commerce on its face, contain a jurisdictional hook, or serve as an essential part of a comprehensive regulatory scheme.”[8]
The court finally rejected Congress’s taxing power as a valid basis for the law. The Government argued that because the required information is necessary to ensure appropriate reporting of taxable income, and Treasury officers and employees have access to the information for tax purposes, the CTA was a necessary and proper exercise of Congress’s taxing powers. But, as the court explained, the Government’s theory would allow Congress to “craft a constitutional law [by] simply impos[ing] a disclosure requirement and giv[ing] tax officials access to the information.”
Because the law could not be justified as “an exercise of Congress’s enumerated powers,” the court found it unnecessary to decide whether the CTA violates the First, Fourth, and Fifth Amendments.[9]
Future of the Corporate Transparency Act
The decision has been appealed and exempts only the plaintiffs in the case from the CTA’s reporting requirement. Those requirements thus remain in effect for other covered entities across the United States.
The business litigation group at Silverman Thompson offers free consultations at 800.385.2243. If you have any questions regarding the Corporate Transparency Act and your business, reach out to Bill Sinclair, at 410.385.9116.
New Maryland Landlord-Tenant Law Effective October 1, 2023
Employers must be aware of, and revise their employment-related documents to reflect, the recent changes to Maryland and federal law. One of a Company’s most powerful way to deter future litigation is by ensuring that its agreements, handbooks, and policies are legally compliant.
Pet Protections During Evictions
What do I need to do to file a Failure to Pay Rent Case in Baltimore City? Baltimore City landlords must comply with registration, inspection, and licensing requirements before initiating Nonpayment of Rent actions in rent court.
Being appointed an agent under a financial power of attorney, or as a Court-appointed guardian, comes with a significant delegation of authority. However, it is important to know that such delegation of power is not without limits. For example, an agent can only exercise powers specifically granted under the power of attorney document. And, in the case of a guardianship, the guardian is obligated to periodically account for the Court of their efforts on behalf of the ward. And, of course, a fiduciary under either scenario cannot abuse their power or use their power unlawfully.
After the enactment of the Tax Cuts and Jobs Act in 2017, the limitation on an individual’s ability to itemize tax deductions resulted in higher income tax for many Maryland business owners. On May 8, 2020, Maryland enacted legislation allowing pass through entities (primarily LLCs, partnerships and S corporations) to elect to pay tax on a member’s distributive share at the entity level. As a result, the taxable gross income of individuals receiving distributive shares of the entities net income is less. In addition, the election creates a federal income tax deduction for the business that is not subject to the $10,000 itemized deduction limit established by the Tax Cuts and Jobs Act.
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The Statutory Right to Purchase Shareholder Stock in the Dissolution of a Close Corporation
WEIRD SCIENCE: MARYLAND’S NEW TEST FOR THE ADMISSIBILITY OF EXPERT TESTIMONY.
On July 14, 2020, the Maryland Court of Appeals issued its opinion in Plank v. Cherneski, (Misc. No. 3, Sept. Term 2019) (July 14, 2020), which finally harmonized Maryland case law as to the existence of a standalone “breach of fiduciary duty” claim. The Court held that such a claim exists under Maryland law and that its elements are: “(1) the existence of a fiduciary relationship; (2) breach of the duty owed by the fiduciary to the beneficiary; and (3) harm to the beneficiary.” The Court stressed that the nature of the fiduciary relationship and available remedies are fact specific and considered on a case-by case basis. “If a plaintiff describes a fiduciary relationship, identifies a breach, and requests a remedy recognized by statute, contract, or common law applicable to the specific type of fiduciary relationship and the specific breach alleged, a court should permit the count to proceed.” The remedy available depends on the specific fiduciary relationship at issue.
Maryland Business Litigation Lawyer Blog