In a major win for AGC and the construction industry, the Trump administration announced that it will suspend all enforcement of the Corporate Transparency Act (CTA) against U.S. citizens and domestic reporting companies. The Treasury Department’s March 2 notice states that it “will not enforce any penalties or fines related to the beneficial ownership information (BOI) reporting rule under current regulatory deadlines.” The Treasury Department will be further “issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only.” To this end, the announcement states the Treasury Department “will not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either.” The CTA reporting deadline placed a significant burden on contractors, especially smaller firms.
The Fight in Court Continues
While enforcement is paused, the CTA law is technically still in effect (this is just enforcement discretion). As you are aware, enforcement and compliance with the CTA has been a pendulum that has taken effect and been blocked by courts on multiple occasions. In addition, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has extended the reporting deadlines in the past and is expected to do so again soon. As a result, AGC is still concerned because the CTA is still law, and there are pending court cases (see more details below). There is also concern that a future administration could still administer the law in a way that is harmful to small contractors. That’s why AGC continues to fight in court and on Capitol Hill, arguing that the law is unconstitutional and should be overturned entirely.
Construction Advocacy Fund
AGC’s legal advocacy is only possible because of support from theConstruction Advocacy Fund. Thanks to your contributions, we’ve helped secure this enforcement pause—but the fight isn’t over. Continued legal challenges are critical to ensuring contractors are protected from this regulatory overreach.
More Details on Pending Court Cases
AGC is actively fighting the CTA in multiple courts to protect contractors from unnecessary compliance costs. Most recently, on February 28, AGC and AGC of New York State submitted an amicus brief to the U.S. Court of Appeals for the Fifth Circuit, in Texas Top Cop Shop, Inc. v. Bondi, arguing that the rule places an undue burden on the construction industry. The Fifth Circuit is scheduled to hear oral arguments on April 1 in the Texas Top Cop Shop case, which is one of the several lawsuits challenging the constitutionality of the CTA. Earlier this year, the case reached the U.S. Supreme Court. The High Court lifted the preliminary injunction that had blocked CTA enforcement, allowing the law to remain in effect while the Fifth Circuit considers the appeal. AGC, along with AGC of New York State, has been at the forefront of this fight, submitting prior amicus briefs in both the Fifth Circuit and the Supreme Court, arguing the CTA is unconstitutional because it regulates beyond Congress’ legislative powers, and educating the courts on the significant costs and compliance burdens contractors would face if the CTA is implemented nationwide. These legal briefs were prepared pro bono by Couch White, LLP.
Notably, a recent court order in Smith v. U.S. Department of the Treasury brought the CTA back into effect. However, around the same time, as explained above, FinCEN indicated in a press release that it will not take enforcement action and plans to revise the existing reporting rule to reduce the regulatory burden. (Technically, the CTA and current March 21 deadline are still in effect and will remain so until a “new” final rule is effective.)
In a third lawsuit, AGC joined other business groups, coordinated by the National Federation of Independent Business (NFIB) Legal Center, in filing anamicus brief in the Eleventh Circuit to support small business plaintiffs in the National Small Business Association case. That is the only case in which a district court has decided the ultimate merits of the CTA’s constitutionality (as opposed to ruling in a preliminary-injunction posture), though that decision does not have nationwide effect and provides relief only to the plaintiffs (i.e., members of the NSBA).
For more information, please contact Leah Pilconis.