On May 20, we filed an amicus curiae (“friend of the court”) brief with the U.S. Court of Appeals for the Eleventh Circuit, arguing against the IRS’s use of the Corporate Transparency Act (CTA) to engage in extensive data collection.
The CTA mandates forward-looking data collection unrelated to the administration of taxes, thereby overstepping constitutional bounds and infringing on financial privacy rights. The CTA is not a tax law but rather a regulatory measure that collects vast amounts of data from businesses, purportedly to aid future tax collection. We argue that the data collection is too far removed from actual assessment, levy, and collection of taxes. The Supreme Court has consistently differentiated between regulations that gather information and those directly related to tax collection, with only the latter being protected from judicial review.
We also warn about the privacy implications of the CTA. Financial records are deeply personal, and the CTA poses significant privacy concerns by disseminating such information across multiple government departments without the stringent protections usually afforded to tax data collected by the IRS. Our brief highlights that while nonprofit organizations are exempt from disclosing their donor lists, the requirement for donors to register their activities under the CTA undermines the right to private association. We highlight that this level of data collection has historical precedence in infringing on privacy rights, impacting groups ranging from civil rights organizations to individuals like police officers.
We argue that the District Court correctly ruled that the CTA cannot be justified under the federal taxing powers. Allowing the CTA to stand would set a dangerous precedent, effectively granting the federal government broad regulatory powers under the guise of tax collection, which could lead to overreach and abuse.
The case is National Small Business United et al. v. U.S. Department of Treasury et al., 11th Cir. No. 24-10736.