BOI / Fincen Lawsuit Update

[BobKamman]

Trying to avoid doing real work, I looked up the status of this case.  Turns out the 11th Circuit held oral arguments last week:

"Oral argument held this date. Oral Argument presented by Steven H. Hazel for Appellants Secretary, U.S. Department of the Treasury, U.S. Department of the Treasury and Acting Director of the Financial Crimes Enforcement Network and Thomas Lee for Appellees National Small Business United and Isaac Winkles. [Entered: 09/27/2024 12:40 PM]"

The three-judge panel no doubt was reminded that a decision by the end of the year would be helpful.  

Meanwhile the Community Associations Institute (advocacy group for what are commonly known as homeowners associations, or HOAs) filed a lawsuit earlier this month to ask for an exemption for its members.  They also filed an amicus brief in the NSBU case:

The Corporate Transparency Act (CTA) was signed into law Dec. 2020 and is now in effect for many community associations. This law will require community associations with fewer than 20 employees and less than $5 million in annual revenue to disclose beneficial owners’ information to the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).  

While we support the goal of stopping money laundering and funding schemes for terrorist activity, this is not good public policy for community association boards of directors. CAI believes community associations were unintendedly caught up in this law which is intended for corporations laundering money for terrorist activity.  Failure of a volunteer community association boards to comply—intentional or not—could result in up to $10,000 in fines and up to two years in prison.  

https://www.caionline.org/advocacy/advocacy-priorities-overview/corporate-transparency-act/ 

I know some HOA board members who would do everyone a favor by spending a couple years in prison, but probably not for this cause. 

The CAI lawsuit was filed in the Eastern District of Virginia, across the river from DC, where the judges are somewhat more respectable than the yahoos in Alabama.  

[abctax55]

Bob.... being from Alabama, I 'resemble' that remark 😉

[BobKamman]

@abctax55 Live long and prosper!  But I just saw an interesting stat about your state:

Roughly 1 in 100 Americans die every year. West Virginia has the highest death rate by state: 1,462.7 per 100,000 residents. Alabama has the highest death rate by a single cause: Nearly 300 residents per 100,000 die of heart disease every year — but that number is affected by the relatively advanced average age of the state’s population. Once you adjust for that, the heart-unhealthiest state is Mississippi at 245.6 deaths per 100,000, and the heart-healthiest is  @IronMan 's Minnesota at 118.

Which, of course led me to Google for this information:  The ten states with the lowest life expectancies, in order, are Mississippi (74.6), West Virginia (74.9), Alabama (74.9), Kentucky (75.1), Arkansas (75.4), Oklahoma (75.5), Louisiana (75.5), Tennessee (76.1), South Carolina (76.2), and Ohio (76.6).

[Taxes-by-Rocky]

Yes, it is insulting when the people from Alabama have to fix your mistakes.

[Over Ruled] | C-SPAN.org

[abctax55]

@BobKamman 

No longer "my" state; I just happened to have been born/raised there.  The stork made a big mistake.

I left there 50 years ago & have never looked back.

[IRonMaN]

"and the heart-healthiest is  @IRonMaN 's Minnesota at 118."

Must be the lutefisk.

[BobKamman]

Not to change the subject (to get it back on topic), but I must agree with much of what the "community associations" lawsuit claims.  HOAs are run by volunteers, who may not want to reveal their personal data to other board members and a management company. And there is frequent turnover.  Fincen could have made exceptions that cover these organizations -- especially since some of them are old enough to have 501(c) status, but others are not. (As I read it, the new Code section is 528.)  

But why wait until just a few months before the deadline? It's not like they haven't seen this coming since January 2021.  "It is better to curse the darkness, than to light one candle," I suppose.  

[PATAX]

@Taxes-by-Rocky Good job Rocky👍

[PATAX]

@BobKamman If you know more than the so called "yahoo" judges from Alabama, then why don't you become a judge?

[BobKamman]

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@PATAX wrote:

@BobKamman If you know more than the so called "yahoo" judges from Alabama, then why don't you become a judge?

---

And have to eat in the same cafeteria with some of these yahoos? 

What's interesting, though, is this same judge was reversed by the 11th Circuit in the last big case he had.  And who would have known that he would rule in favor of parents of transgender children?  "In May 2022, Burke issued a preliminary injunction blocking enforcement of an Alabama law which criminalized transgender minors from using hormone therapy and puberty blockers. He concluded that the law had a substantial likelihood of being unconstitutional because it interfered with parents' fundamental rights to direct the medical care of their children and constituted unlawful sex discrimination."

Of course that got shot down by an 11th Circuit panel, which disagreed that there is such a fundamental Constitutional right.  But then, those three yahoos were appointed by the same guy as Burk.  

[Taxes-by-Rocky]

While I was good with the initial arguments against BOI - Congress’s foreign affairs and national security powers; the Commerce Clause; or Congress’s taxing power - I kind of like the fourth amendment argument better "unwarranted search and seizure" [well, let's go with 'search' anyway] despite the 11th Circuit's view, or perhaps that of Thomson Reuters.

 Corporate Transparency Act Reaches the 11th Circuit (thomsonreuters.com)

Put simply, does the government have the right to know everything you own?

"Yes, we've granted you a privilege to operate."

"No, one for which I've already paid a license fee and a tax, not to mention the numerous SRO fees; an SRO which is widely recognized by the public."

I don't register my bicycle just because I ride on town roads, my gas grill just because it emits carbon, my fishing rod just because I fish in a state pond.  [Well, ok, I'm only half right on that one.  It's the pond and the fish the government lays claim to, not the pole.]  But I have no intention of inventorying my tangible and intangible property every year just to stick it on a form and send it in.  Do you really need to know I still own that Barcalounger I bought in 1974?

In short, property rights belong to the states - so the saying goes.  Let's let them decide.  Because we all know what will happen if it's left to the states.

[BobKamman]

The Corporate Transparency Act, of course, does not focus on ownership but on control.  You can have zero percent ownership and still be required to report.  25% ownership is considered enough evidence of control, to trigger reporting but is the percentage of ownership ever requested?  (I haven't got that far.)  And owners of businesses that meet the "20 employees and $5 million revenue" standard are not required to report. 

Thanks for the link to the article about oral arguments, although it doesn't even identify where they were held.  And it names only two of the judges -- both of them Harvard Law, Trump appointees.  One of them was also on the panel that reversed Judge Burke on the transgender case.  

[Taxes-by-Rocky]

Bob,

From the perspective of the person filing the form for the entity, I would agree that most company employees don't really care about filing a form and having to list a company's beneficial owners/control persons.  In fact, it's pretty clear that a tax return is the most logical way to accomplish that objective (to a point).

On the other hand, from the perspective of the owner of those shares, no one wants all of their assets listed in what will effectively become a public database.  Nothing good could ever become of that as has been made perfectly clear in recent times.

As a practical matter, no pizza shop is ever going to undergo a CFIUS, DoD, FCC or FTC review (which reviews exist for all right reasons), nor will it ever need to.  The details of such ownership matter so very little when compared to the burden or problems they are likely to create.

[BobKamman]

@Taxes-by-Rocky  It is not a public database.  Unlike in many European countries that practice transparency, instead of just using it as a slogan, it is available only to law enforcement.  Which used to have a better reputation, even though it had more faults.

And no one is being asked to list all of their assets.  They're just being asked about the ones that are easiest to hide.   

[sjrcpa]

" it is available only to law enforcement"

Yes per the law, but many have expressed concerns over the ability to keep it so.

[BobKamman]

@sjrcpa And I have expressed concerns about Intuit keeping your client data from being hacked.  But you still keep sending it to them, don't you?  Not to mention, if the Pentagon can be hacked, how much easier is IRS? But if I want to find out what you own, it's much easier just to go after your data.