CAI Challenges Corporate Transparency Act’s Constitutionality in Court Filing
Community Associations Institute filed an amicus brief earlier this week in the United States Court of Appeals for the 11th Circuit challenging the constitutionality of the Corporate Transparency Act.
In March, a district court in Alabama ruled that the act was unconstitutional and exceeded Congress’ authority. Now, as the 11th Circuit hears an appeal in National Small Business United d/b/the National Small Business Association, et al., v. Janet Yellen, in her official capacity as Secretary of the Treasury, et al., CAI’s amicus brief supports the district court’s finding.
Enacted by Congress in 2021, the Corporate Transparency Act requires businesses, including community associations, to register with the Treasury Department’s Financial Crimes Enforcement Network. CAI supports the act’s intent to bolster transparency and counter money laundering and terrorist financing efforts but believes it should not apply to community associations.
As local, volunteer-driven, nonprofit organizations that exist with the primary purpose of maintaining communities and providing services to residents, the act’s broad application will burden community associations with excessive reporting requirements and hinder their ability to serve residents effectively. More than 365,000 community associations and 2.5 million volunteer leaders will be impacted by the law and will have a duty to file information with the federal government beginning Jan. 1.
The amicus brief filed by CAI underscores the adverse effects the Corporate Transparency Act would have on community associations and asserts that its expansive reach exceeds congressional authority. Volunteers play a critical role in fostering vibrant neighborhoods, and CAI warns that compliance with the act’s reporting mandates could have a chilling effect on the elected leaders who serve their communities.
The following attorneys and fellows of CAI’s College of Community Association Lawyers contributed their expertise to the amicus brief: Edmund Allcock, a CCAL fellow with Allcock Marcus in Braintree, Mass.; Norman Orban, an attorney with Allcock Marcus; Julie Howard, a CCAL fellow with NowackHoward in Atlanta; Brendan Bunn, a CCAL fellow with Chadwick, Washington, Moriarty, Elmore & Bunn in Fairfax, Va.; Thomas Ware, a CCAL fellow with Kulik Gottesman Siegel & Ware in Sherman Oaks, Calif.; Todd Sinkins, a CCAL fellow with Rees Broome in Tysons Corner, Va.; and Steven Casey, an attorney with Jones Walker in Birmingham, Ala.
In addition to the court case, two pieces of legislation in Congress related to the Corporate Transparency Act would help community associations if passed before the end of the session.
S. 3625 is a Senate companion bill to H.R. 5119 that passed the House of Representatives 400-1 and delays the reporting requirements for the act by one year. Senate Republicans are willing to pass the bill, but Democrats haven’t budged. CAI continues to meet with Democrats on the Senate Banking Committee on the issue.
Frustrated by the Senate’s lack of movement, the House introduced another bill, H.R. 8147, that would repeal the Corporate Transparency Act.
Access additional CAI resources on the Corporate Transparency Act.
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Dawn Bauman, Chief Strategy Officer. As CAI’s lead advocate for federal and state legislative and regulatory affairs, Dawn works with volunteer leaders throughout the country serving on CAI legislative action and government affairs committees to advocate for strong and sensible public policy for America’s community associations.