Corporate Transparency Act Update: CAI

On April 15, the National Small Business Association filed a petition for writ of certiorari with the U.S. Supreme Court regarding its ongoing lawsuit over the constitutionality of the Corporate Transparency Act in National Small Business Association v. United States Department of Treasury. NSBA’s petition represents a formal request to review a previous ruling from the 11th Circuit Court of Appeals that upheld the constitutionality of CTA. On May 18, CAI filed an amicus brief in support of the NSBA’s petition to SCOTUS.

An amicus curiae brief, from the Latin term meaning “friend of the court,” is submitted by a party that has a strong interest in the outcome or possesses specialized knowledge relevant to the case. The filer may be an advocacy organization, trade association, academic, government entity, or individual with expertise or a stake in the legal issue like CAI. The primary purpose of an amicus brief is to assist a court in reaching a well-informed decision by providing information or perspectives that the parties involved may not present. You can learn more about CAI’s amicus curiae program here.

CAI previously filed an amicus brief in May 2024 with the 11th Circuit in support of NSBA arguing the CTA is unconstitutional on behalf of its small business members.

CAI continues to emphasize the detrimental impacts the CTA will have on the 373,000 community associations and volunteer boards across the United States. CAI’s arguments focus on the fact that this act was not intended to apply to locally based, volunteer-driven nonprofit corporations with the sole purpose of providing municipal-like services to residents.

CAI’s SCOTUS amicus brief focuses on the fact that community associations are created through interstate action and are conducted primarily through intrastate commerce. As a result, associations are beyond the reach of the commerce clause as implemented through the CTA. The brief also goes on to argue that the core functions of a community association are entirely noncommercial, therefore making association activities beyond the reach of the commerce clause and the CTA.

This amicus curiae brief drafting was led by dedicated CCAL fellows Edmund Allcock, Robert Diamond, Todd Sinkins, Thomas Ware, Julie Howard, and Brendan Bunn. CAI is grateful for their continued leadership in this advocacy fight on behalf of CAI’s members across the United States.

Last year, Financial Crimes Enforcement Network issued an interim final rule removing the requirement for U.S. companies and persons to report beneficial ownership information to FinCEN under the CTA.

Under the interim final rule, FinCEN revises the definition of reporting company to mean only entities formed under the law of a foreign country that have registered to do business in any U.S. state or tribal jurisdiction by filing documents with a secretary of state or similar office (formerly known as foreign reporting companies). FinCEN also exempts entities previously known as domestic reporting companies from BOI reporting requirements.

Through this interim final rule, all entities created in the United States — including those previously known as domestic reporting companies and their beneficial owners will be exempt from the requirement to report BOI to FinCEN. This interim ruling serves as a temporary, binding set of rules until a more comprehensive final rule is issued and published. Even though enforcement is currently paused by FinCEN, the act remains federal law. We continue to await a final rule from FinCEN.

CAI also has signed onto a joint coalition letter of organizations that represent and protect businesses from excessive government mandates. The letter urges the U.S. Treasury and DOJ to support the U.S. Supreme Court’s review of the CTA and the significant constitutional and privacy questions it raises. This letter reaffirms CAI’s concerns that the CTA imposes an unprecedented reporting regime on millions of businesses and other legal entities and raises important constitutional, privacy, and federalism questions warranting review by the court.

Conversations surrounding the act also continue on Capitol Hill. H.R. 425 was introduced by Ohio Rep. Warren Davidson last year. This important bill proposes to repeal the CTA in its entirety. While the CTA remains law, the risk of enforcement still exists. H.R. 425 would put a definitive end to the act and its potential threats to community associations.

CAI is thrilled to report this bill was amended and approved by the House Financial Services Committee on April 21. The positive amendment added to the bill will fully repeal the CTA but will and also require FinCEN to delete data from BOI filings for Americans and entities that are not reporting companies within 90 days of the bill’s adoption.

This bill will now be sent to the House floor for consideration. We need CAI advocates to continue to contact your representatives to urge them to support H.R. 425 and protect community association board members’ private data and information in your state. Take action today here.

Learn more about CAI’s Corporate Transparency Act efforts and federal lawsuit here: https://www.caionline.org/advocacy/advocacy-priorities-overview/corporate-transparency-act/

Please contact CAI’s Government & Public Affairs team at government@caionline.org if you have any specific questions.