Community Associations Institute (CAI), the leading international authority on community association governance, education, and management, has filed an amicus brief addressing the constitutionality of the Corporate Transparency Act in the United States Court of Appeals for the 11th Circuit.
The case, National Small Business United d/b/a the National Small Business Association, et al., v. Janet Yellen, Secretary of the Treasury, et al., centers on a challenge to the act’s constitutional validity.
In March, a U.S. District Court in Alabama ruled portions of the act unconstitutional, and CAI fully encourages the 11th Circuit to uphold this decision.
Enacted by Congress in 2021, the Corporate Transparency Act requires certain business entities to register with the Treasury Department’s Financial Crimes Enforcement Network. The act is intended to bolster transparency and counter money laundering and terrorist financing efforts. CAI supports the act’s intent but believes its broad application presents undue burdens on local, volunteer-driven, nonprofit organizations such as community associations, which play pivotal roles in maintaining neighborhoods and serving residents.
"CAI recognizes the importance of transparency in corporate ownership structures under the Corporate Transparency Act. However, CAI believes that community associations unintentionally fall under its scope,” says Dawn M. Bauman, CAE, CAI’s chief strategy officer and executive director of the Foundation for Community Association Research.
“The act's broad application will burden community associations with excessive reporting requirements, hindering their ability to serve residents effectively,” she adds. “We advocate for a balanced approach, urging policymakers to consider an exemption for community associations to ensure essential governance functions remain unimpeded.”
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.
Contributing their expertise to the amicus brief are attorneys and fellows of CAI’s College of Community Association Lawyers: 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.
CAI supports the lower court’s decision declaring the Corporate Transparency Act unconstitutional and urges the 11th Circuit Court of Appeals to affirm that decision.