source of power for enacting the CTA in Congress’ powers to oversee foreign affairs or efficiently administer taxation. As a result, the court granted the Plaintiff’s relief and deemed it unconstitutional to enforce the CTA’s requirements against those Plaintiffs. The court did not rule on the constitutionality of the CTA in regard to whether it violates other rights granted in the First, Fourth, or Fifth Amendments. In issuing its opinion, the District of Northern Alabama suggested that the CTA could be revised to be brought within the powers of Congress by limiting its application to entities whose activities “affect interstate or foreign commerce.” Thus, assuming that the CTA does not violate any other constitutional right outlined in the First, Fourth, or Fifth Amendments, the court indicated that legislation could be revised and re-enacted while maintaining coverage of most, if not all, of the reporting companies currently covered by the CTA. As a result of the District of Northern Alabama’s ruling, FinCEN is enjoined from enforcing the CTA on the members of NSBA at this time. Because the granted relief did not contemplate a broader impact on reporting companies, the CTA remains enforceable against all other entities required to report under the CTA. In fact, FinCEN issued a statement saying that it will continue enforcing the CTA as to all other reporting entities not subject to the Alabama court’s injunction.11 The decision is currently on appeal to the Eleventh Circuit. B. Other Current Lawsuits Lawsuits in Ohio, Maine, Michigan, Texas, and Massachusetts followed, alleging similar constitutional violations of the First, Fourth, Fifth, Ninth, and Tenth Amendments. Similar to the Alabama case, the Ohio, Maine, and Michigan lawsuits would apply only to the Plaintiffs of those cases. Thus, regardless of the outcomes of those individual cases, other reporting companies’ CTA obligations would be unaffected. The Texas and Massachusetts Plaintiffs, however, facially challenge the CTA, arguing that the legislation is not only unconstitutional as applied to the Plaintiffs, but as to all reporting companies.12 Thus, they seek to enjoin FinCEN from enforcing the CTA entirely. If the CTA is found to be unconstitutional in those cases, FinCEN would be enjoined from enforcing the CTA on any reporting company in the United States, effectively repealing the legislation. With each complaint that is filed, it becomes increasingly likely that the Supreme Court will have to provide a definitive answer as to Tax Practice For Sale • Within 30 miles of Lincoln, NE • 300 Individual Returns • 15 Entity Returns • $180,000 in Revenue Please call 402-613-2254 for more information. CONTINUED ON PAGE 20 19 nescpa.org
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