CTA NATIONAL UPDATE: FILING DEADLINE REINSTATED WITH DEADLINE EXTENSIONS
On Dec. 23rd, the Fifth Circuit Court of Appeals reinstated the January 1, 2025, beneficial ownership information filing deadline under the Corporate Transparency Act (CTA) for all community associations. Given this late-breaking federal court development, FinCEN has extended reporting deadlines, including that reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.) This continues to be a developing matter, but at the time of this communication applicable community associations should proceed to filing their BOI filings by their respective extended deadline.
Given this late-breaking federal court development, FinCEN has extended reporting deadlines as follows:
Reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)
Reporting companies created or registered in the United States on or after September 4, 2024 that had a filing deadline between December 3, 2024 and December 23, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN.
Reporting companies created or registered in the United States on or after December 3, 2024 and on or before December 23, 2024 have an additional 21 days from their original filing deadline to file their initial beneficial ownership information reports with FinCEN.
Reporting companies that qualify for disaster relief may have extended deadlines that fall beyond January 13, 2025. These companies should abide by whichever deadline falls later.
Reporting companies that are created or registered in the United States on or after January 1, 2025 have 30 days to file their initial beneficial ownership information reports with FinCEN after receiving actual or public notice that their creation or registration is effective.
Learn more regarding FinCEN’s reporting deadline extensions here.
This continues to be a developing matter, but at the time of this communication applicable community associations should proceed to file their BOI reports in compliance with their applicable FinCEN deadline extension.
The Fifth Circuit Court of Appeals court order can be read here. This order is still not a final ruling on the CTA’s constitutionality. The Fifth Circuit also ordered that the appeal in this lawsuit be expedited to the next available oral argument panel.
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. 18th, 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.
An Update on the Corporate Transparency Act
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.
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
Act Now!
Tell congress to support H.R. 9045 and exempt community associations from reporting requirements!
FinCEN Announces CTA Filing Extension for Communities Impacted by Recent Hurricanes
Has your community been impacted by Hurricanes Milton, Helene, Debby, Beryl, or Francine? Certain associations may be eligible for a 6-month extension for filing BOI information with FinCEN.
If your association is located in an area that qualifies for FEMA relief AND tax filing relief, then the association could receive an additional 6 months to file its BOI information with FinCEN, depending on the deadline for either your association’s initial filing or updated filing.
Please see the following announcements from FinCEN:
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
-
Dawn M. Bauman, CAE
-
Phoebe E. Neseth, Esq.