CTA NATIONAL UPDATE: Beneficial Ownership Reporting Requirements Reinstated by Federal Court and FinCEN Deadline Extension
Updated February 19, 2025, 12 PM EST
On February 17, the United States District Court for the Eastern District of Texas granted the government’s motion for stay a nationwide injunction halting enforcement of the Corporate Transparency Act in Smith v. United States Department of Treasury. The Court cited the Supreme Court of the United States’ decision to stay the preliminary nationwide injunction in the Texas Top Cop Shop, Inc., matter as precedent for their decision.
This was the last remaining nationwide order pausing beneficial ownership reporting requirements. Due to this new court order, reporting requirements under the act are reinstated for applicable community associations.
On February 19, FinCEN issued the following guidance that the Department of the Treasury recognizes that reporting companies may need additional time to comply with their BOI reporting obligations, and FinCEN is generally extending the deadline 30 calendar days from February 19, 2025, for most companies.
According to FinCEN, for the vast majority of reporting companies, the new deadline to file an initial, updated, and/or corrected BOI report is now March 21, 2025. FinCEN will provide an update before then of any further modification of this deadline, recognizing that reporting companies may need additional time to comply with their BOI reporting obligations once this update is provided.
CAI continues to track movements in the federal courts over challenges regarding the Corporate Transparency Act and has contacted the United States Department of Treasury, urging an administrative delay be issued due to the chaos and confusion created by these recent court rulings and Congress’ deciding not to take legislative action to extend the filing deadline.
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. The Government filed it response to CAI's appeal on February 7, 2025. CAI has until February 28, 2025 to reply.
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.
CTA Advocacy and Legislative Efforts
Act Now! Ask your Members of Congress to Delay the CTA!
Tell the Senate to support H.R. 736 and S. 505! H.R 736 was sent to the Senate on February 10, 2025, and S. 505 has nearly identical language. If passed, both bills would delay the Corporate Transparency Act’s implementation for pre-existing entities to January 1, 2026.
Act Now! Ask your Members of Congress to Repeal the CTA!
Tell Congress to support H.R. 425 and S. 100! If passed, both bills would completely repeal the CTA and its beneficial owner reporting requirements.
Corporate Transparency Act
The Corporate Transparency Act (CTA) was signed into law Dec. 2020 and is now in effect for many community associations. This law will require community associations with fewer than 20 employees and less than $5 million in annual revenue to disclose beneficial owners’ information to the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
While we support the goal of stopping money laundering and funding schemes for terrorist activity, this is not good public policy for community association boards of directors. CAI believes community associations were unintendedly caught up in this law which is intended for corporations laundering money for terrorist activity. Failure of a volunteer community association boards to comply—intentional or not—could result in up to $10,000 in fines and up to two years in prison.
CAI Files Lawsuit over Corporate Transparency Act
CAI Membership
We learned from the National Small Business Association (NSBA) lawsuit that “association standing” protects all members of the organization in the lawsuit. If CAI’s lawsuit is successful in exempting community associations from the Corporate Transparency Act, it is very possible the exemption will only apply to community associations that are members of CAI.
For the time being, CAI recommends that your association sign up for a Homeowner Leader membership, Group option. Up to 15 board members may be listed under this membership option, which should be broad enough to cover the majority of community association boards.
Help CAI Fight The Corporate Transparency Act!
Relevant Advocacy Blog Posts
For additional questions on the Corporate Transparency Act please email CAI’s Government & Public Affairs team at [email protected]; or contact
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Dawn M. Bauman, CAE
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Phoebe E. Neseth, Esq.