Latest news with #CorporateTransparencyAct
Malaysian Reserve
07-05-2025
- Business
- Malaysian Reserve
New Small Business Data: Uncertainty Weighs Heavily
WASHINGTON, May 7, 2025 /PRNewswire/ — As the nation celebrates National Small Business Week, the National Small Business Association (NSBA) is releasing new data showing that nearly two-thirds of small businesses picked economic insecurity the top challenge facing their business – the highest this indicator has been in 13 years. NSBA's annual Small Business Economic Report details small-business confidence, economic outlook, financing, hiring and a host of other key indicators. 'We've been hearing from our members for months that they are concerned about the economy, this survey confirms it: the vast majority of small-business owners expect a flat economy or even a recession in the coming year,' stated NSBA President and CEO Todd McCracken. 'When compared with six months or even one year ago, the majority believe that today's economy is worse off, and small-business confidence in the financial future of their business is at its lowest point since July 2009.' While the small-business overall outlook isn't great, it isn't all doom-and-gloom. As is typically the case with small-business owners, there is an inherent optimism they have in their ability to manage their own business; most report they are already growing or anticipate growth in the coming year. When it comes to capital, the lifeblood of any small business, there hasn't yet been a marked drop in terms of small-business owners' ability to access loans. That said, 40 percent say they are unable to get the financing the need – which should be a wake-up call given the direct correlation that exists between capital availability and job growth. Among the key policy imperatives, small-business owners expressed growing concern over the impact of tariffs and placed top priority on policymakers ending partisan gridlock and work together. 'I look forward to working with Congress and the administration to ensure pro-small-business policies are sought out—including tax extenders, eliminating the Corporate Transparency Act and strengthening small-business lending,' stated McCracken. Please click here to read the full report. Celebrating more than 85 years in operation, NSBA is a staunchly nonpartisan organization advocating on behalf of America's entrepreneurs. NSBA's 65,000 members represent every state and every industry in the U.S. Please visit or follow us at @NSBAAdvocate. View original content to download multimedia: SOURCE National Small Business Association
Forbes
30-04-2025
- Business
- Forbes
The Current Status Of The Corporate Transparency Act
In December of 2020, the U.S. Senate passed the Corporate Transparency Act (CTA) with a veto-proof majority. This bill was supported by the Trump White House and had earlier passed the House with strong majorities. This bill was bipartisan. President Trump signed the bill during his first term. The CTA was passed because the Treasury Department wanted more tools in place to fight money laundering. The Treasury Department believes that a lot of money laundering is done through shell companies. Shell companies are legal entities—generally an LLC or a corporation—which exist primarily on paper and have minimal or no employees, assets, or actual business operations. Shell companies make it much harder for government agencies to follow the actual money trail. The Treasury Department wanted to require every LLC and corporation in the United States, with limited exceptions, to register with the federal government and report certain information to the Treasury Department. This information included a business address and specific information regarding certain owners, including valid photo identification to be uploaded. Congress and the first Trump administration agreed with the Treasury Department and passed the Corporate Transparency Act into law. It was not controversial; it went through the normal process to become law and was fully supported by a strong majority of both Democrats and Republicans. The Financial Crimes Enforcement Network (FinCEN) is the government agency in charge of enforcing the CTA under the Treasury Department. FinCEN increased its public information campaign about the law in 2021, 2022, and 2023 and launched an efficient website to accept the filings in January of 2024. I am a Certified Public Accountant, and there was a lot of controversy about who should file these forms due to state law. A significant minority of CPA firms, including mine, chose to provide this service to their clients. A majority of law firms chose to provide this service, though not all. Many companies that provide entity renewal services chose to offer this service. A few new companies formed just to provide this service. Some business owners filed these forms themselves. FinCEN expected 32.6 million filings to be made in 2024, and the maximum penalties for non-compliance were staggering: civil penalties of up to $591 per day and criminal penalties of up to $10,000 and two years in prison. In the end, fewer than 7 million forms were filed. There were many court cases, with different district courts coming to different conclusions. These court cases really confused the issue until February of 2025, when the Supreme Court determined that enforcement of the CTA would continue pending further review. There were still more court cases to come. On March 2, 2025, Treasury Secretary Scott Bessent announced that, with respect to the Corporate Transparency Act, not only would the Department not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it would also 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. The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. Treasury is taking this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest. On March 21, 2025, FinCEN issued an interim final rule that removes the requirement for U.S. companies and U.S. persons to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act. In that interim final rule, FinCEN revises the definition of 'reporting company' in its implementing regulations to mean only those entities that are formed under the law of a foreign country and that have registered to do business in any U.S. state or Tribal jurisdiction by the filing of a document with a secretary of state or similar office (formerly known as 'foreign reporting companies'). If you own a business or LLC that was subject to the reporting requirements of the CTA as passed in 2020, your business is no longer subject to those reporting requirements under current instructions from the Treasury Department. The National Federation of Independent Business (NFIB) is asking Congress to rescind the law entirely so that the law cannot be enforced by a new Secretary of the Treasury. Further, they are asking that all previously collected information be destroyed. This sequence of events—from a strongly bipartisan law to abrupt regulatory rollback—is something I have not seen before, nor did I expect. I find it a puzzling and unusual end for The Corporate Transparency Act.
Forbes
26-04-2025
- Business
- Forbes
Tax Breaks: The Not So Many Rules And Regulations Edition
Cutting through the red tape. Tax Day may have come and gone, but tax news hasn't slowed down. Even as taxpayers and tax professionals were winding down from tax season, there was chaos at the IRS. President Donald Trump replaced IRS Acting Commissioner Gary Shapley, who was backed by Elon Musk, after Treasury Secretary Scott Bessent complained to Trump that Shapley was picked without his permission. Trump replaced Shapley with Deputy Treasury Secretary Michael Faulkender. Faulkender is the fifth IRS Commissioner or Acting Commissioner since January. (If you're keeping count, the others are, in order, Werfel, O'Donnell, Krause, and Shapley.) Rule changes were afoot, too. In response to an Executive Order to review and rescind regulations that are deemed unconstitutional or undermine national interests, the IRS issued IRS Notice 2025-23. The notice announces the intent to remove the regulations related to certain basis-shifting actions that imposed reporting obligations and potential penalties. The notice also withdraws IRS Notice 2024-54, which had outlined new proposed regulations addressing partnership-related-party basis shifting transactions that will now, presumably, never occur. While this may provide immediate relief for taxpayers, the future of partnership tax enforcement is now far from settled. The IRS also released guidance providing clarification on the deductibility of theft losses for scam victims. The guidance, in the form of a legal memo, makes clear that taxpayers who were tricked in a traditional investment scam may be entitled to tax relief. However, taxpayers who lost money through personal scams, such as romance or false kidnapping schemes, likely do not qualify for the deduction. Key to claiming the deduction? The losses must be associated with a profit motive—by the victim (yes, you read that right). Previously released guidance from FinCEN is also getting a second look. Months after the Treasury announced it would not enforce the Corporate Transparency Act (CTA) against domestic companies, a new lawsuit aims to block a new rule requiring data collection—this time focused on reporting for cash residential real estate purchases, claiming the rule is burdensome and unconstitutional. The 2024 rule—which is effective at the end of this year—requires title companies to collect and report detailed information about non-financed residential real estate sales to legal entities (including small businesses), trusts, and shell companies. The rule would not require the reporting of sales to individuals. For purposes of the rule, non-financed means that it does not involve an extension of credit secured by the transferred property and extended by a financial institution—that would exempt commercial mortgages, for example, but would include cash transactions and transfers financed by private lenders. If some of this sounds familiar, it's because there are similarities between the largely gutted Corporate Transparency Act (CTA) reporting requirement and this rule. For example, for purposes of the real estate reporting rule, information that must be reported includes the identity of the reporting person, the legal entity or trust to which the residential real property is transferred, the beneficial owners of that transferee entity or trust, the person that transfers the residential real property, and the property being transferred, along with certain transactional information. Also giving deja vu? The case (East Texas Title Co. v. Bessent) is assigned to Judge Jeremy Kernodle. On January 7, 2025, Kernodle granted a preliminary injunction and stay in Smith v. U.S. that prohibited FinCEN from enforcing the CTA. In global news, the death of Pope Francis made an impact all over the world. In a few weeks, the conclave will gather in the Vatican's Sistine Chapel to cast a series of votes to choose the next pope. One of the questions that will surely be top of mind for those tasked with the choice is whether the next pope will carry on the legacy of Pope Francis. During his lifetime, Francis consistently emphasized that taxation is a moral imperative and has called for a fairer tax system to benefit everyone, especially the poor. That means, he has insisted, that the wealthy should contribute to the common good. As part of his overall message, he has argued against tax evasion and tax havens, causes that other world leaders and organizations have also made a priority. As we watch for the white smoke, it's worth contemplating what it could mean for global tax policy. A little closer to home, Forbes published its first-ever Best-In-State CPAs. It's our sequel to last year's inaugural Forbes Top 200 CPAs list, identifying 1,000 of the finest CPAs from across all 50 states. You can check it out here. And lastly, my son was recently stunned to learn that I had, years ago, written about the tax consequences of one of his favorite movies, 'Ratatouille.' It was part of a series where I evaluated the tax consequences of movies referred by readers—those included 'Trading Places,' 'Blow' and 'Casablanca.' For each film, I focused on the tax considerations and consequences of the plot as well as how the decisions made by the characters would play out in real life, tackling issues like presumption of death, international tax treaties, illegally gained income, commodities markets, and estates. It was great fun, so I'm easing back into it for the summer of 2025. If you have a movie for me to review—especially those with an interesting tax or financial crimes twist—send me an email (kerb@ for consideration. A quick caveat: I won't do anything too racy as my review needs to be safe for work (also, my mom could be reading). I'm not a fan of extremely violent films because I'm super squeamish—and a scaredy cat. But otherwise, I'd love your suggestions, so nominate away. I hope you find the feature fun and informative. Welcome to (almost) summer! Kelly Phillips Erb (Senior Writer, Tax) Articles marked with (☆) are premium content and require you to log in with your Forbes membership credentials. Not a subscriber yet? Click here to sign up. The administration has announced they will take steps to collect outstanding student loans. This week, a taxpayer asked: I don't have the money to pay my student loans, so I have not been paying them. What does the news about student loan collections mean for my taxes? The U.S. Department of Education recently announced that it will resume collection actions for student loans in default status beginning on May 5. The Department had previously not collected on defaulted loans since 2020 due to the pandemic. For purposes of the announcement, loans in default status are those loans without a payment in 270 days, or about nine months. The Department has suggested that more than five million borrowers have not made a monthly payment in over 360 days, and 4 million borrowers are in late-stage delinquency (91-180 days). As a result, there could be almost 10 million borrowers in default in a few months. As part of the collections process, the Office of Federal Student Aid (FSA) will restart the Treasury Offset Program (TOP) on May 5. Here's where your taxes come in. If you don't pay your debt, it can be turned over to TOP, which helps collect the debt by holding back money from a federal payment, like a tax refund. That process may be referred to as offsetting the payment, administrative offset, or offset. Up to 100% of your federal tax refunds can also be seized to pay federal non-tax debts, child support, state income tax, and unemployment insurance debts. (Your Social Security and Railroad Retirement benefits can also be seized for federal tax and non-tax debts—but those seizures are limited to 15% of the benefit. Other payments that can be seized all or in part, depending on the kind, include vendor and federal employee travel-related payments, federal salaries (including military pay), Office of Personnel Management retirement, and state payments.) Your debt will remain in the TOP database until the original agency tells TOP to stop collecting it. That typically happens once the debt has been paid in full, is subject to a bankruptcy stay, or if there are other reasons to pause or stop collection. If you can't pay your student loans, don't reach out to the IRS—the agency can't help you. You should work with your lender to get on a payment plan, sign up for loan rehabilitation, or explore other options. Good luck! — Do you have a tax question or matter that you think we should cover in the next newsletter? We'd love to help if we can. Check out our guidelines and submit a question here. The economy continues to be a concern for most Americans. A recent Gallup poll indicated that, along with the economy and healthcare, public concern about Social Security is up significantly, with Social Security registering a 15-year high. According to the poll results, the top-ranking worries include the economy (60% worry a great deal), healthcare costs (59%), inflation (56%), federal spending and the budget deficit (53%), and the Social Security system (52%). One of the reasons for the concern isn't just deep cuts to staffing at the Social Security Administration, but a genuine worry that benefits may be on the chopping block. By law, Social Security benefits are supposed to be paid even if there's a deficit and even if Congress doesn't pass a budget. That's why you'll hear benefits called 'entitlements.' The word triggers a lot of emotional responses, but it simply means those dollars aren't generally part of the budget discussion because they are mandatory expenditures. The tricky part? Mandatory spending—like those entitlement programs—is much more expensive than discretionary spending. Mandatory spending far outpaces discretionary spending. Social Security and Medicare are examples of entitlement programs with a dedicated funding source—those payroll taxes that we (workers, employers, and self-employed persons) pay into the system make up a "trust fund." Like a bank deposit, your actual contributions don't sit in a vault waiting for you to claim them. Instead, your money is used to pay benefits for other taxpayers, and future collections will be used to pay your benefits—at least, that's the hope. The problem? Social Security's total costs now exceed its total income—that's been the case since 2021. The trustees for that money—remember there's a trust fund—expect to pay costs using a combination of sources, including trust fund asset reserves from the General Fund of the Treasury through 2035. That's when, without any further action, the trust fund reserves will run out. What happens then? Remember that workers are still paying in as we go. That money, however, will only be sufficient to pay about three-quarters of scheduled benefits through 2098. There's a similar problem with Medicare since expenses per beneficiary will exceed receipts. However, as the population gets older and healthcare costs go up, total Medicare costs will increase. The result? The Trustees anticipate that Medicare will face a substantial financial shortfall. To keep the trust funds for Social Security and Medicare solvent, there will have to be changes. There are a number of ways to do that, including raising payroll taxes, lowering the cost-of-living adjustments, raising the ages for eligibility, and taxing benefits. As you can imagine, none of these options is particularly popular. These aren't small problems. Entitlements are the most significant part of the federal budget. Social Security, Medicare, and Medicaid make up nearly half of the budget, costing a whopping $2.7 trillion. Making cuts will have a cost–including a political one. Fast fashion is cheap to make—and to ship. When President Trump announced his tariffs—especially those on imports from China—discussions almost always focused on automobiles, electronics, and some food items. But one industry that might be impacted was missing from those discussions: fast fashion. Fast fashion refers to the rapid production and distribution of inexpensive, trendy clothing. Despite the potential downsides, including significant environmental impact, magazines and television shows continually promote fast fashion. You may have purchased a fast fashion item—or considered it—after seeing how you can 'buy it for less' or 'steal the look' from a celebrity. Most fast fashion items are made cheaply in other countries and shipped to the U.S. If sent in smaller packages, they also get a break on tariffs since, traditionally, packages valued at under $800 have escaped tariffs, a loophole sometimes described as the de minimis exemption. In an April 2 executive order, Trump announced that commercial packages worth $800 or less would be subject to a minimum level of tariffs, starting at either a flat fee of $25 per postal item or 30% of the postal item's value—in June, the flat fee figure would increase to $50 but the 30% figure would stay the same. Then, on April 8, Trump announced that he would triple the tariff rates. The same packages would be subject to a flat fee of $75 per postal item or 90% of the postal item's value—in June, the flat fee would increase to $150, but the 90% figure would remain the same. On April 9, Trump increased the rates yet again. Now, the 90% figure will increase to 120%, and the flat fee will increase to $100 per postal item—in June, the flat fee will increase to $200. The problem for U.S. lawmakers is that the country receives a substantial amount of those goods. A report by the U.S. House Select Committee on the Chinese Communist Party found that approximately 30% of de minimis shipments come from Shein and Temu—fast fashion providers. To put that into context, according to U.S. Customs and Border Protection, in 2024, the United States received over 1.36 billion de minimis shipments. If 30% of those packages originated from Shein and Temu, they sent around 408 million packages to the U.S. that year. The revenue generated from those packages would be significant, but enforcing the tariffs could prove challenging. One of the reasons the exemption existed initially was to facilitate the flow of commerce and not get bogged down with the small stuff. But it turns out that the small stuff is actually pretty big. 📅 May 1, 2025. Due date for individuals and businesses in the entire states of Alabama, Georgia, North Carolina, and South Carolina and parts of Florida, Tennessee, and Virginia affected by severe storms and flooding from Hurricane Helene (☆) and Hurricane Milton. 📅 June 16, 2025. Due date for individuals living and working abroad to file their 2024 federal income tax return and pay any tax due. 📅 September 30, 2025. Due date for individuals and businesses impacted by recent terrorist attacks in Israel. 📅 October 15, 2025. Due date for individuals and businesses affected by wildfires and straight-line winds in southern California that began on January 7, 2025. 📅 November 3, 2025. Due date for individuals and businesses affected by storms in Arkansas and Tennessee that began on April 2, 2025. 📅 May 8-10, 2025. American Bar Association Section of Tax May Meeting. Marriott Marquis Washington, DC. Registration required. 📅 May 13-14, 2025. National Association of Enrolled Agents 2025 Capitol Hill Fly-In, Washington, DC. Registration required (NAEA members only). 📅 June 16-19, 2025. Latino Tax Fest. MGM Grand Hotel & Casino, Las Vegas, Nevada. Registration required. 📅 July 18-19, 2025. Tax Retreat 'Anti Conference.' Denver, Colorado. Registration TBA. 📅 July 21-23, 2025. National Association of Tax Professionals Taxposium 2025, Caesars Palace, Las Vegas, Nevada. Registration required. VATICAN CITY, VATICAN - OCTOBER 22: Karl-Heinz Rummenigge, CEO of FC Bayern Muenchen hands over a gift to Pope Francis during an private audience with the team of FC Bayern Muenchen in the Palace of the Vatican on October 22, 2014 in Vatican City, Vatican. (Photo by Alexander Hassenstein/Bongarts/Getty Images) By all accounts, Pope Francis was a huge soccer fan. During a meeting with the Argentina and Italy national teams, Francis told the players to remember that, 'for better or worse' they are role models. Which of the following soccer players who met the Pope is the only one to not be accused of tax evasion? (A) Gianluigi Buffon (B) Diego Maradona (C) Lionel Messi (D) Ronaldhino Find the answer at the bottom of this newsletter. The IRS has published Internal Revenue Bulletin 2025-18. EY has appointed Martin Fiore as Americas vice chair for tax in New York, effective July 1, 2025. Fiore succeeds Kevin Flynn, who has led the business since 2022 and is retiring at the end of the fiscal year. Fiore had previously served as EY Americas Deputy Vice Chair – Tax. Fiore is based in New York and will oversee tax strategy and all client services, leading a group of more than 18,000 people across the Americas and Israel. Greenberg Traurig, LLP has announced the addition of Michelle Rosenblatt to the Private Wealth Services Practice as a shareholder. Rosenblatt joins the firm's Austin office from Jackson Walker LLP, and focuses her practice on U.S. and international tax, estate, business, and wealth preservation planning for high-net-worth individuals, families, and family offices. Baker Tilly and Moss Adams announced merger plans to create the sixth-largest advisory CPA firm in the US. The deal is expected to close in June. Jeff Ferro, CEO of Baker Tilly, will serve as CEO of the combined firm through his retirement, with Eric Miles, currently Moss Adams CEO, to assume the role of CEO on January 1, 2026 (Ferro will remain a director on Baker Tilly's board). Ferro helped steer Baker Tilly's private equity deal in 2024. Indiana is raising its cigarette tax. Lawmakers approved a $2 per-pack increase as part of the state's new budget. The tax hike, which takes effect July 1, will bring the total state cigarette tax to $3 per pack. Twelve states have sued the Trump administration for 'illegally imposing' tax hikes on Americans through tariffs. The lawsuit seeks a court order to stop the tariffs, claiming that Trump does not have the authority to raise them under the International Emergency Economic Powers Act (IEEPA). The lawsuit is filed by the attorneys general of New York, Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, Nevada, New Mexico, Oregon, and Vermont. — If you have tax and accounting career or industry news, submit it for consideration here or email me directly. Here's what readers clicked through most often in the newsletter last week: You can find the entire newsletter here. The answer is (A) Gianluigi Buffon. VATICAN CITY, VATICAN - AUGUST 13: Pope Francis exchanges gifts with Gianluigi Buffon of Italy (L) during an audience at The Vatican on August 13, 2013 in Vatican City, Vatican. (Photo by) Buffon is a former Italian soccer player, considered one of the best goalkeepers in the world. While Buffon was not accused of tax fraud, he was involved in a betting scandal in 2006. He denied betting on Italian football matches and was cleared of all charges by the Italian Football Federation. Diego Maradona was an Argentine professional soccer player and manager, widely regarded as one of the greatest soccer players in history. Maradona was charged and found guilty of not paying taxes on his image rights while playing for Napoli in the 1980s and 1990s. He was cleared of the charges by Italy's highest court in 2023, nearly two years after his death. Lionel Messi is an Argentine professional soccer player, regarded by many as the best in the world. In 2013, Spanish tax authorities alleged that Messi's father used a series of shell companies in tax havens to shield Messi's royalties and licensing income from tax. Messi consistently maintained that he did nothing wrong, but in 2016, a Spanish court found Messi and his father guilty of tax fraud. Messi unsuccessfully appealed the ruling in 2017. Ronaldo de Assis Moreira, known simply as Ronaldinho, is a former Brazilian soccer player. In 2019, Ronaldinho had properties seized and his Brazilian and Spanish passports confiscated, among reports of unpaid taxes and fines. Following the seizure, the case was placed under judicial secrecy rules. How did we do? We'd love your feedback. If you have a suggestion for making the newsletter better, submit it here or email me directly.
Forbes
25-04-2025
- Business
- Forbes
Lawsuit Challenges A New Rule Requiring Reporting Details Of Cash Real Estate Purchases
A new reporting requirement would require reporting for cash real estate purchases. getty A lawsuit filed in the Eastern District of Texas this month could upend another Treasury reporting rule. Months after the Treasury announced it would not enforce the Corporate Transparency Act (CTA) against domestic companies, Flowers Title Companies LLC d/b/a East Texas Title Companies v. Bessent aims to block a new rule requiring data collection—this time focused on reporting for cash residential real estate purchases. In 1993, Celia Flowers, a Texas attorney, bought the first of many title companies she now owns (the company's website boasts 11 offices). Today, Flowers and her daughter, Erica Hallmark, own and manage East Texas Title Companies, based in Tyler, Texas, a mid-sized city located about an hour and a half southeast of Dallas. Title companies typically assist with transferring property ownership during a real estate transaction. That can involve researching and clearing title searches and assisting with real estate closings. East Texas Title Companies claims it handles thousands of such real estate closings each year. Some of those closings have involved cash purchases, subjecting them to a new Treasury reporting requirement. East Texas Title Companies is pushing back on the reporting requirement with a lawsuit, claiming the rule is burdensome and unconstitutional. In 2024, the Financial Crimes Enforcement Network (FinCEN) finalized a rule to require title companies to collect and report detailed information about non-financed residential real estate sales to legal entities (including small businesses), trusts, and shell companies. The rule would not require the reporting of sales to individuals. For purposes of the rule, non-financed means that it does not involve an extension of credit secured by the transferred property and extended by a financial institution subject to existing reporting obligations—no commercial mortgage or paid for by cash, for example. Transfers financed by private lenders that do not have certain existing reporting obligations would also need to be reported. There is no threshold purchase price for the transfer—the transfer would be reportable irrespective of purchase price. That also means that transfers of ownership for which no consideration is exchanged, like gifts, would need to be reported. (Exempt transfers would include those involving an easement, the death of the property's owner, the result of a divorce, or those made to a bankruptcy estate.) If some of this sounds familiar, it's because there are similarities between the largely gutted Corporate Transparency Act (CTA) reporting requirement and this rule. For example, for purposes of the real estate reporting rule, information that must be reported includes the identity of the reporting person, the legal entity or trust to which the residential real property is transferred, the beneficial owners of that transferee entity or trust, the person that transfers the residential real property, and the property being transferred, along with certain transactional information. (Sound familiar?) However, FinCEN has drawn some distinctions between the real estate reporting rule and the CTA, stating that this "is a tailored reporting requirement that would capture a particular class of activity that Treasury deems high-risk and that warrants reporting on a transaction-specific basis." As with the CTA, breaking the rules—even accidentally—could lead to hefty fines and even criminal charges. On April 14, 2025, East Texas Title Companies filed a lawsuit challenging the reporting rule on several grounds. In the complaint, the company claimed that it "objects to being conscripted into performing government surveillance on its clients"—specifically, the requirement to hand over its records to FinCEN without a warrant. The information being requested, argues the company, is beyond what is necessary to facilitate real estate closings in compliance with state and local law. And finally, East Texas Title Companies contends that the rule is unconstitutional as a violation of the separation of powers. Luke Wake, an attorney for Pacific Legal Foundation, representing East Texas Title Companies pro bono (for free), told Forbes the requirements under the reporting rule were "incredibly sweeping," noting that the authority claimed by FinCEN under the Banking Secrecy Act authorizes reporting for "any suspicious transaction relevant to a possible violation of law or regulation." In this case, the "suspicious" element is a cash transaction. According to the authorities, cash purchases of residential real estate are considered high risk for money laundering. FinCEN Director Andrea Gacki said in a statement last year that it was "an important step toward not only curbing abuse of the U.S. residential real estate sector, but safeguarding our economic and national security." (FinCEN did not immediately respond to a request for comment for this article.) East Texas Title Companies disputed that characterization in its court filings, arguing that there is nothing inherently suspicious about a buyer using their own money. The company claims that buyers who can afford to purchase property without a loan may do so for many legitimate reasons, including saving on lending costs and interest payments by paying out of their own pocket. Such broad language is also concerning, the company argues, because "there is no limit to what sort of consumer transactions FinCEN might require reporting on" if the agency were to find it useful for regulatory purposes. Wake, who litigates cases on the nondelegation doctrine and regulatory overreach, said, "You can hardly move a stone without implicating some sort of regulation." The rule didn't simply materialize out of nowhere—it was a slow build. In 2016, FinCEN began issuing "geographic targeting orders" ("GTOs") that required East Texas Title "to file reports and maintain records concerning non-financed purchases of residential real estate… by certain legal entities in select metropolitan areas of the United States." The GTO was subsequently expanded, with FinCEN claiming that it was successful in identifying the supposed risks of non-financed real estate transactions. As a result, the rule was expanded nationwide. (If you're struggling to recall where you heard the term "GTO" recently, it made news after the Trump administration issued a GTO in March 2025 requiring all money services businesses (MSBs) located in 30 ZIP codes across California and Texas to file Currency Transaction Reports (CTRs) with FinCEN at a $200 threshold for cash transactions. The threshold for all other areas remains $10,000.) Complying with these rules is, the plaintiff claims, time-consuming and costly. It's not just recordkeeping—the costs would include legal counsel and staff time to create new procedures to track and ensure proper reporting for every transaction. And relying on keywords like suspicious could result in reporting rules being expanded to include other transactions. Wake muses that, by relying on such broad language and delegated authority, FinCEN could require reporting from any business owner or taxpayer deemed to be engaged in transactions that could be suspicious. "It could be a hot dog vendor in Manhattan," he says. FinCEN asserts statutory authority for the rule under a provision of the Bank Secrecy Act. The Secretary of the Treasury has subdelegated his rulemaking authority under the Bank Secrecy Act to the Director of FinCEN. FinCEN relied on that delegated authority to promulgate the final rule. That, Wake argues, is constitutional overreach. "Congress cannot shirk its lawmaking responsibilities by granting federal agencies a blank check to write laws," said Wake. "FinCEN is now mandating unreasonable collection and reporting of personal information to the federal government; the agency claims a sweeping power to require reporting on conceivably any consumer transaction simply because systematic reporting might prove useful to the government." Only Congress can write the laws that govern us, he says, pointing to the nondelegation doctrine. The nondelegation doctrine is a principle originating in Article I of the Constitution, which granted legislative authority to Congress. The idea is that Congress may not surrender its legislative authority to other entities. The doctrine hasn't been invoked a great deal—the last time it was successfully used to strike down laws was 1935. In that case, A.L.A. Schechter Poultry Corp. v. United States, the Supreme Court held that "Congress is not permitted to abdicate or to transfer to others the essential legislative functions with which it is thus vested." The deciding factor in that case was a lack of specificity—in that case, the Supreme Court found that the applicable law "sets up no standards… We think that the code-making authority this conferred is an unconstitutional delegation of legislative power." Last year, the Supreme Court agreed to hear consolidated separation of powers cases involving the delegation of powers. The cases, now captioned as Federal Communications Commission et al., Petitioners v. Consumers' Research, et al., were granted the right to be heard on November 22, 2024, and focused on whether Congress unlawfully delegated the power to tax to the Federal Communications Commission (FCC), which then delegated its power to a private company. Oral arguments were heard in March 2025. Wake, on behalf of PLF, submitted an amicus brief in support of the respondents in that case. (When it comes to legal issues before the Supreme Court, those with an interest or expertise in the subject but who aren't a party to the litigation may also file briefs to explain their point of view. These briefs are called amicus briefs and are filed by a party known as an amicus curiae, which translates to "friend of the court.') And finally, the Fourth Amendment protects people against "unreasonable searches and seizures" of "persons, houses, papers, and effects." This includes business records, claims East Texas Title Companies in its filings. The rule compels "warrantless, physical, trespassory searches by requiring the production, to FinCEN, of papers containing information that the agency compels reporting persons and entities to gather." There is, the plaintiff argues, "[n]o legal doctrine that renders this compelled transfer of private information directly to the government through papers a non-search." The case is East Texas Title Co. v. Bessent, filed in U.S. District Court for the Eastern District of Texas and assigned to Judge Jeremy Kernodle. If that name rings a bell, it's because, on January 7, 2025, Kernodle granted a preliminary injunction and stay in Smith v. U.S. that prohibited FinCEN from enforcing the CTA. The plaintiff is seeking an order setting aside the rule on the basis that it is unlawful. Barring any such order or injunction, the real estate reporting rule is set to go into effect in December 2025.
Yahoo
24-04-2025
- Business
- Yahoo
Opinion - America has a fentanyl and human trafficking crisis. We must secure our financial borders to fix it
President Trump is rightly prioritizing two of the most urgent threats to our nation's security: fentanyl poisoning and human trafficking. But border security is a multidimensional issue. To dismantle the criminal networks flooding our communities with deadly drugs and exploiting our vulnerable citizens, we must also secure our financialborders. Drug cartels and trafficking organizations don't just rely on smuggling routes; they depend on financial systems that allow them to launder massive amounts of illicit profits with little oversight. The Trump administration recently took a bold step by designating certain drug trafficking organizations as foreign terrorist organizations. This significant move signals a clear recognition: stopping traffickers means following the money. For one, it raises the stakes for financial institutions to take their anti-money laundering responsibilities seriously — TD Bank got hit last year with a historic $3 billion in U.S. fines, in part for contributing to the fentanyl and synthetic drug crisis. Additionally, the new designation will give U.S. law enforcement a stronger political mandate to 'follow the money' to stop the cartels. Canada is now following suit. Yet even as we raise the stakes abroad, the United States has held the door open to the world's dirty money. For years, our nation has been one of the easiest places on the globe to set up anonymous shell companies, making it a prime destination for drug traffickers looking to hide their profits. Ample evidence shows that fentanyl networks and trafficking cartels have relied on anonymous U.S. companies to perpetrate their lethal schemes. Even Secretary of State Marco Rubio noted in a recent interview that in some cases, traffickers and their money launderers set up 'shell companies, to hide their profits and be able to distribute the funds they have.' Congress took action to address money laundering entities in 2021 by passing the bipartisan Corporate Transparency Act (CTA), which requires certain companies to disclose their true owners to the Financial Crimes Enforcement Network (FinCEN). This law, passed under the first Trump administration, marked the most significant update to U.S. anti-money laundering law in two decades. Most notably, if implemented correctly, federal, state and local law enforcement would have access to vital information on the beneficial owners of these formerly anonymous companies. Prior to this, law enforcement investigations into the financing of these trafficking and drug networks were derailed by layers of corporate secrecy. But today, enforcement of this critical anti-trafficking tool is at risk, facing opposition from some business groups and lawmakers who want to weaken its implementation. Worse still, the U.S. Department of the Treasury recently announced it will notenforce key parts of the CTA. This is an alarming reversal that directly undercuts law enforcement's ability to fight trafficking and fentanyl distribution. At a time when traffickers are growing more sophisticated, we cannot afford to let them exploit loopholes in our financial system. Effective efforts to stop fentanyl and traffickers require fully implementing the CTA and fully funding FinCEN's efforts to track the illicit financial flows fueling the fentanyl crisis. What's more, this law assists the administration in continuing its work building robust relationships with our neighbors to support law enforcement cooperation and information sharing to dismantle these transnational crime operations. Our government recognizes the need to work with Canada and Mexico to crack down on the financial enablers of drug and human trafficking. Failing to enforce the beneficial ownership information requirements of the CTA, as announced by the Department of Treasury last week, is a significant step back in our fight to improve public safety. Other nations are stepping up. Canada already requires disclosures similar to the Corporate Transparency Act, Mexico has anti-money laundering measures that generate crucial financial data ripe for analysis. With proper enforcement, the United States can lead a regional effort to choke off the flow of criminal proceeds and dismantle these dangerous transnational networks. But if we abandon our own enforcement tools, we make America the soft target. We invite cartels and traffickers to hide their profits here, undermining the very border security and law enforcement efforts we claim to champion. Stopping trafficking means going after the money. It means equipping our law enforcement agencies with every available tool — including the CTA. Tariffs alone won't stop trafficking. Increasing border security alone won't stop fentanyl. But making it harder for criminals to both profit and move their money? That's where it hurts. Follow the money. Secure America's financial borders and bring these criminals to justice. Frank Russo is vice president of Modern Fortis Public Safety Strategies and the director of the CPAC's Center for Combating Human Trafficking. Nelson Bunn is the executive director of the National District Attorneys Association. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
