Corporate Transparency Act

IMPORTANT NATIONAL CTA STATUS UPDATE

Currently, beneficial ownership information (BOI) filing under the Corporate Transparency Act continues to be voluntary for community associations due to the U.S. District Court for the Eastern District of Texas’s ongoing preliminary injunction. If the Court’s temporary preliminary injunction is lifted between now and the end of the year (2024) BOI filing requirements will be reinstated for community associations.

On Dec. 3, the U.S. District Court for the Eastern District of Texas published a decision in the matter of Texas Top Cop Shop, Inc., et al. v. Garland, et al. issuing a preliminary nationwide injunction against the Corporate Transparency Act (Act). The court granted Plaintiff’s request for a preliminary injunction, blocking the U.S. Department of Treasury from enforcing the act’s beneficial ownership information (BOI) reporting requirements.

The court granted Plaintiff’s request for a preliminary injunction, blocking the U.S. Department of Treasury from enforcing the act’s beneficial ownership information reporting requirements.

In his opinion, Judge Amos L. Mazzant III grants the Plaintiff’s request to preliminary enjoin the Government from enforcing the Corporate Transparency Act and its Implementing Regulations, ruling that “Neither may be enforced, and reporting companies need not comply with the CTA’s January 1, 2025, BOI reporting deadline pending further order of the Court.”

This preliminary injunction applies nationwide, halting enforcement and compliance of the Act’s beneficial ownership reporting requirements across the entire United States. CAI’s legal team believes the injunction applies to all community associations incorporated within the U.S. Read more here: https://advocacy.caionline.org/corporate-transparency-act-blocked-nationwide-by-texas-federal-judge/

On Dec. 5, the Government appealed this ruling to the U.S. Court of Appeals for the Fifth Circuit. FinCEN issued guidance that “in light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”

On Dec. 18^th, CAI filed an amicus brief in support of the plaintiffs in Texas Top Cop Shop, Inc. v. Garland, et al., in their case challenging the CTA’s implementation and the importance of maintaining the current nationwide temporary preliminary injunction.

This injunction is not a final ruling on the CTA's constitutionality. This is a time of uncertainty, and community associations should stay informed, vigilant, and be prepared to comply if the injunction is lifted or further legal developments occur.

CAI’S FEDERAL LAWSUIT STATUS

On October 24, 2024, CAI’s preliminary injunction request was DENIED by the federal judge in this case. While this decision was not the outcome CAI had hoped for, it does not mark the end of CAI’s efforts. CAI appealed the court’s denial of the preliminary injunction request on November 4, 2024, and on November 12, 2024, filed its opening brief of the appeal in the Fourth Circuit urging a pause on reporting requirements for community associations while this lawsuit is adjudicated. Legal briefing will continue in January 2025.

CAI’s other lobbying and advocacy efforts continue on Capitol Hill seeking both a one-year delay of implementation of the CTA’s reporting requirements and an exemption for community associations. The lawsuit itself is continuing to go through the legal process even as the preliminary injunction decision is being appealed.