Cato Expert Discusses Treasury CTA Announcement

Skorup issued the following statement in reaction:

“Last night, the U.S. Department of the Treasury granted regulatory relief to millions of American small business owners when it announced on X that it will not enforce the penalty provisions of the Corporate Transparency Act (CTA). The CTA requires that most small businesses and nonprofits formed under state law produce sensitive information about their owners, managers, and—in many cases—senior employees and the family members of its managers and owners. Critically, the CTA also empowers the Department’s Financial Crimes Enforcement Network, popularly known as ‘FinCEN,’ to function as a new, global tipster. That’s because Congress requires this self-reporting to FinCEN so that international and domestic law enforcement agencies can investigate and prosecute financial crimes.

Covered businesses and nonprofits were required to submit the sensitive personal and business information to the federal government by January 2025. However, several parties sued and last year federal judges prevented the law from going into effect. The Cato Institute filed an amicus brief in one of those cases and highlighted one of the law’s constitutional problems: the CTA compels testimony in violation of the Fifth Amendment. Just last month, the U.S. Department of Justice was defending its information mandates in court. The Treasury Department announcement last night did not explain its legal rationale for the policy change, but it appears that the agency will rely on its statutory discretion to exempt most small businesses and nonprofits from the law’s requirements. No agency should mandate the self-report of sensitive information from millions of Americans for later suspicion-less analysis and criminal investigations.”

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Best regards,

EMILY ADAMEC
Manager of Media Relations
eadamec@​cato.​org
O: (202) 216‑1410