Updates on The Corporate Transparency Act as of 2/19/2025

Home Updates on The Corporate Transparency Act as of 2/19/2025

Kieran J. Purcell, Esq., CCAL

Managing Shareholder

858.527.0111
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Practices: Community Association Counsel 

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CORPORATE TRANSPARENCY ACT REPORTING REQUIREMENTS REINSTATED

On February 17, 2025, the United States District Court for the Eastern District of Texas stayed a nationwide injunction halting enforcement of the Corporate Transparency Act (Act) in Smith v. United States Department of Treasury. The Eastern District of Texas’ decision cited the recent Supreme Court of the United States’ Texas Top Cop Shop, Inc. v. McHenry—formerly, Texas Top Cop Shop v. Garland decision as precedent.

The Smith nationwide injunction was the last remaining order pausing beneficial ownership reporting requirements. The Eastern District of Texas’ decision in Smith means common interest developments which meet FinCEN’s “reporting company” definition must file a beneficial ownership information (BOI) report within the filing deadlines. Click here for more information to help you determine if your common interest development is a “reporting company.”

UPDATED DEADLINE TO FILE – 12:00 PM EASTERN, MARCH 21, 2025

On February 19, 2025, FinCEN issued an alert regarding the Act.  FinCEN stated that the decision by the Eastern District of Texas reinstated reporting requirements under the Act.  However,  the Department of the Treasury recognized  some reporting companies may need additional time to comply with reporting obligations, so FinCEN generally extended the deadline 30 calendar days to 12:00 pm Eastern, March 21, 2025.

If your association was previously given a later deadline by the Department of the Treasury, the later deadline should still be met. These extensions were granted for various reasons, including certain disaster relief extensions. However, for most reporting companies, the deadline to file beneficial owner information reports is March 21, 2025.

IS THERE STILL HOPE THE REQUIREMENTS WILL CHANGE BEFORE THE DEADLINE?

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

As you may recall, 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 the denial and the government responded to the appeal on February 7, 2025. CAI’s response is due at the end of February.

In addition, CAI is continuing to utilize lobbying and advocacy efforts in Washington D.C. to encourage Congress to repeal the Act, exempt common interest developments from the Act’s reporting requirements, or delay the first reporting date.  H.R. 736 and S. 505 are two bills that were recently introduced to seek a one-year delay of the CTA reporting requirements.

If you are interested in assisting with CAI’s efforts, visit CAI’s Action Center for information about how to contact your  Congress person and Senators to ask them to support H.R. 736 and S. 505.

This continues to be a developing issue. Common interest development boards should continue to remain informed and should be prepared to file any required reports prior to FinCEN’s March 21, 2025 deadline.

 

 

*This article is an update to the previous versions: