Corporate Transparency Act Blocked: What It Means for Community Associations
In a significant development, the U.S. District Court for the Eastern District of Texas issued a preliminary nationwide injunction on December 3, 2024, halting the enforcement of the Corporate Transparency Act (CTA) and its beneficial ownership information (BOI) reporting requirements. This ruling blocks the requirement for businesses, including community associations, to file their BOI reports with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) by the original January 1, 2025, deadline.
What Does This Mean for Community Associations?
For associations that have already filed their BOI reports, the decision means your filing stands as compliant under the law, at least for now. However, for those who have not yet filed, you now face a decision on whether to proceed with filing before the January 1st deadline or wait for further developments.
Attorney Bill Ward, a legal expert in Connecticut, emphasized, “Although the court issued a preliminary injunction from complying with the filing requirements with FinCen, it will be appealed. I recommend filing by the deadline of December 31, 2024, to avoid imposition of fines. If the court’s ruling is upheld, then future filings will be unnecessary.”
Your Options for Community Associations
With this legal uncertainty, community associations have two options:
- File the BOI Report: This is the cautious approach. Associations should continue as though the CTA deadline is still in place, filing their BOI reports before the year’s end. This protects the association in case the appeal is unsuccessful and the requirement is reinstated.
- Wait and Don’t File: The injunction provides a window of relief, as the filing requirement is temporarily suspended. However, if the court’s decision is overturned, associations could find themselves scrambling to meet the January 1st deadline.
Considerations for Future Filing
Bradley Burnett, a tax attorney with over 38 years of experience, shared his thoughts on the matter: “Since the plaintiff victory is only a temporary injunction, I’d say we all best better give our clients the choice to keep moving forward to comply. While these thoughts are not legal advice, I recommend that practitioners inform their clients that they have a choice whether to comply right now or not.”
He further added, “Clients will need to weigh complying (despite the injunction) vs. not complying (because the injunction was granted). I don’t want to put it off and then face a mad scramble later if the deadline were to come back into play.”
The Future of the Corporate Transparency Act
The injunction is a temporary win, but it’s not the final word. The government is appealing the decision, and several other cases are in progress, meaning the CTA’s future is uncertain. The legal landscape will continue to evolve, and your community association should stay up to date with the latest information.
Next Steps and Resources
For community associations who still wish to file their BOI reports, it’s important to seek assistance from trusted legal or financial professionals who can guide you through the process. You can find more information about the steps involved in completing your filing in our latest blog post on Corporate Transparency Act compliance.
Stay informed by visiting CAI’s dedicated Corporate Transparency Act page for updates and further developments.
