UPDATE: 12/4/24
On December 3, 2024, the U.S. District Court for the Eastern District of Texas (Sherman Division) issued a preliminary injunction in favor of the plaintiffs in Texas Top Cop Shop, Inc. et al. v. Garland (U.S. Attorney General). In its ruling, the Court stated that “[t]he Court has determined that the CTA and Reporting Rule are likely unconstitutional for purposes of a preliminary injunction. It has not made an affirmative finding that the CTA and Reporting Rule are contrary to law or that they amount to a violation of the Constitution.”
The Court further declared that the injunction applies nationwide, preventing enforcement of the Corporate Transparency Act (CTA) and staying the January 1, 2025, filing deadline. Specifically, the Court ruled:
“…the CTA, 31 U.S.C. § 5336 is hereby enjoined. Enforcement of the Reporting Rule, 31 C.F.R. 1010.380 is also hereby enjoined, and the compliance deadline is stayed under § 705 of the APA. 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.”
It is important to note that this is a preliminary injunction, and further developments in this case or others may alter this order. Reporting companies should remain attentive to updates and proceedings that could impact their compliance obligations. The opinion can be read HERE.
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We have previously written about the Corporate Transparency Act (CTA) and its impact on HOAs and Condominium Associations (https://www.tilchinhall.com/blog/2023/12/the-corporate-transparency-acts-impact-on-hoas-and-condominium-associations/) and the United States District Court for the Northern District of Alabama ruling the act unconstitutional (https://www.tilchinhall.com/blog/2024/04/federal-district-court-rules-corporate-transparency-act-unconstitutional-what-impact-does-this-have-on-residential-associations/). That case is on appeal in the Eleventh Circuit, which heard arguments in September 2024.
Community Associations Institute (CAI) is a national organization advocating for the benefit of homeowners associations, condominiums, and other community associations. On September 10, 2024, CAI filed a lawsuit in the United States District Court for the Eastern District of Virginia, Community Associations Institute v United States Department of Treasury, seeking to specifically exempt community associations from the CTA. CAI simultaneously filed a Motion for Preliminary Injunction, seeking to prohibit the Treasury from enforcing the CTA while the action is pending.
On October 24, 2024, the federal judge denied CAI’s motion for a preliminary injunction. On November 11, 2024, CAI filed a Notice of Appeal to the United States Court of Appeals for the Fourth Circuit, and on November 12, 2024, it filed the appeal brief. Unfortunately, this appeal is unlikely to receive a ruling before the current January 1, 2025, deadline.
Currently, none of the several lawsuits pending nationwide against the Treasury have blocked enforcement of the CTA in general. This result means that association boards of directors must file a Beneficial Ownership Information Report (BOIR) with United States Department of Treasury Financial Crimes Enforcement Network (FinCEN) by January 1, 2025. Failure to comply could result in up to $10,000 in fines and up to two years in prison.
We Can Help
Association boards of directors or their managers are able to complete and file the BOIR on their own. However, many have expressed concerns with preparing the forms or with making the associated certifications. Therefore, we are offering BOIR preparation and filing for associations we represent and others. Please reach out to us at (248) 349-6203 or email us using the contact form.
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