CORPORATE TRANSPARENCY ACT REPORTING REQUIREMENTS REMAIN PAUSED

On January 23, 2025, the U.S. Supreme Court stayed a nationwide injunction halting enforcement of the Corporate Transparency Act (Act) in Texas Top Cop Shop, Inc. v. McHenry—formerly, Texas Top Cop Shop v. Garland. This decision appears at first glance to require that common interest developments comply with the Act.  However, Texas Top Cop Shop is not the only case currently making its way through the judicial system.  A  different federal judge in Texas imposed a similar nationwide injunction in Smith v. U.S. Department of the Treasury.  The Smith nationwide injunction still remains in place.

On January 24, 2025, FinCEN issued an alert confirming that despite the U.S. Supreme Court’s action in Texas Top Cop Shop, while the Smith order remains in place, reporting companies are not currently required to file beneficial ownership information (BOI) reports with FinCEN and are not subject to liability for failure to do so. That said, FinCEN reiterated that reporting companies may continue to voluntarily submit beneficial ownership information reports.

At present, the Smith nationwide injunction means the reporting requirements for applicable common interest developments are currently “on hold” and thus applicable common interest developments are not currently subject to liability for failure to meet filing deadlines.

Common interest development boards should continue to remain informed and prepared to act quickly to meet filing deadlines as needed.  Our office will continue to provide updates as they arise.

Status of CAI’s CTA Lawsuit, Lobbying and Advocacy Efforts

As you may be aware, the Community Associations Institute (CAI) filed a lawsuit challenging the application of the Act on common interest developments.  CAI requested a preliminary injunction but that request was denied by a federal judge.  CAI appealed and the government’s response to CAI’s appeal is due on January 31, 2025.

In addition, CAI is utilizing lobbying and advocacy efforts in Washington D.C. to encourage legislators to either repeal the Act or exempt common interest developments from the Act’s reporting requirements. H.R. 425 and S. 100 are two bills that were introduced to repeal the Act.

If you are interested in assisting with CAI’s efforts, visit CAI’s Action Center for information about how to contact your Members of Congress and Senators to ask them to support H.R. 425 and S. 100.

For additional information and updates regarding the Act and CAI’s efforts to repeal the Act or exempt applicable common interest developments visit www.caionline.org/CTA.