On January 1, 2024, the Corporate Transparency Act (“CTA”) went into effect. The CTA requires housing cooperatives to report their beneficial ownership information by January 1, 2025 to the Financial Crimes Enforcement Network (“FinCEN”). Congress enacted the CTA in 2021 to protect national security and identify those individuals who would use shell companies and other organizations to hide or benefit from ill-gotten gains.
To comply with the CTA, housing cooperatives are required to report private information for each board member to FinCEN. The reported information includes each board member’s full name, date of birth, residential address, and an identifying number from a U.S. driver’s license or passport, along with an image of the U.S. driver’s license or passport. Private information of this nature was not previously required. NAHC strongly opposes the CTA.
However, on March 1, 2024, the CTA was declared unconstitutional by the U.S. District Court for the Northern District of Alabama. The Court held that 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 Court also held that the CTA is “unconstitutional because it cannot be justified as an exercise of Congress’s enumerated powers.”
This ruling is only limited to the jurisdictional district in Alabama as the Judge did not provide for a nationwide injunction prohibiting the enforcement of the CTA. An appeal of the decision is likely. However, as there was not a nationwide injunction, housing cooperatives must still comply with the CTA and its reporting requirements.
NAHC supports the CTA being struck down as unconstitutional in Alabama, but more must be done to introduce legislation exempting housing cooperatives from the CTA. NAHC is working with its lobbyist to have such legislation introduced. To that end, NAHC urges its members to contact their congressional representatives to advocate for an exclusion of housing cooperatives from the CTA.
Take action and urge your congressional representatives to advocate for protecting housing cooperatives.
Dear Representative’s Name,
I’m reaching out to urge Congress to:
► Support legislation exempting housing cooperatives from the Corporate Transparency Act (“CTA”).
Sincerely,
Your Name
Find your Members of Congress and send your messages today!
