In our last post discussing the new regulations issued under the Corporate Transparency Act (“CTA”), we suggested that “time will tell whether industry groups will launch lawsuits challenging the Final Rule.” That time has apparently come: on November 15, 2022, the National Small Business Association (“NSBA”) filed a complaint (“Complaint”) challenging the reporting requirements set forth in the CTA and the accompanying regulations issued by the Financial Crimes Enforcement Network (“FinCEN”).
The Complaint names Treasury Secretary Janet Yellen, the U.S. Treasury Department, and FinCEN Acting Director Himamauli Das as defendants.
This post describes the allegations made in the Complaint and offers some commentary on its merits. Spoiler: while the Complaint’s allegations that the CTA will impose significant burdens on reporting entities are well-taken, its constitutional claims largely face an uphill battle. Rather than attacking the potential, narrow legal grounds suggested in our last blog post – did the CTA really authorize FinCEN to require covered businesses to report as a beneficial owner more than just one person with “substantial authority” – the NSBA instead has launched a constitutional broad side.
Continue Reading Small Business Interest Group Challenges CTA’s Constitutionality