WASHINGTON — Democratic lawmakers have filed an amicus brief with the 11th Circuit Court of Appeals supporting the Corporate Transparency Act, following a ruling from a judge in Alabama that the law is unconstitutional, a decision that could undermine
A district court judge in the Northern District of Alabama ruled in early March that the Corporate Transparency Act was unconstitutional because it fell outside the scope of Congress' power to legislate. Specifically, the judge said that there wasn't a clear enough case to justify the legislation on the basis of national security.
"The Government says that the CTA is within Congress' broad powers to regulate commerce, oversee foreign affairs and national security, and impose taxes and related regulations," Judge Liles Burke wrote in the ruling. "The Government's arguments are not supported by precedent. Because the CTA exceeds the Constitution's limits on the legislative branch and lacks a sufficient nexus to any enumerated power to be a necessary or proper means of achieving Congress policy goals, the Plaintiffs are entitled to judgment as a matter of law"
The case was originally brought by the National Small Business Association and one of its members against the Treasury Department. It would undercut the ability of the Financial Crimes Enforcement Network within the Treasury Department to move forward with implementing the Act's provisions, including the Fincen beneficial ownership registry.
The government is currently appealing that ruling. The lawmakers who filed the brief, many of whom were involved in writing the Corporate Transparency Act and its precursor pieces of legislation, ask the court to reverse the Alabama court's earlier decision.
"Anonymous shell corporations harm the United States' national security, foreign affairs, foreign and interstate commerce, and tax interests," the lawmakers said. "Such shell companies often operate in multiple layers to hide their true owners and violations of key sanctions, money-laundering, and tax laws. Allowing illicit money to be hidden through corporate forms also undermines public safety and law enforcement efficacy on a national and international scale."
The lawmakers in the brief include Rep. Maxine Waters of California, the top Democrat on the House Financial Services Committee and Sens. Sheldon Whitehouse and Jack Reed of Rhode Island, Ron Wyden of Oregon and Elizabeth Warren of Massachusetts.
"The CTA is a garden-variety, valid exercise of Congress's core Article I authorities, supported by extensive congressional fact finding and a robust legislative record," the lawmakers said. "The district court's contrary holding rests on a cramped reading of Congress's Article I authority, contravenes decades of precedent, and without record support impermissibly second-guesses Congress's copious factual findings."
Whitehouse originally sponsored the TITLE Act, which predated the Corporate Transparency Act. Wyden was an original sponsor of the Corporate Transparency Act, and Waters helped usher the bill into law during her time as chair of the House Financial Services Committee. Warren and Reed also played "instrumental" roles in the legislation, according to the lawmakers.
