Corporate Transparency Act February 2025 Update: What HOA and Condo Boards Need to do Before March 21st

Recent Update: Filing Deadline Extended – March 21, 2025

HOA and Condo Boards, take note! The filing deadline for the Corporate Transparency Act (CTA) has been extended to March 21st, 2025. This extension, announced by FinCEN on February 19th, gives community associations extra time to comply with the Beneficial Ownership Information (BOI) reporting requirements. But don’t delay! While the deadline has shifted, it’s crucial to use this time to understand the requirements and prepare your filings. This post will guide you through the key steps you need to take before March 21st.

Trump Administration Appeals CTA Injunction

On February 20, 2025, the Trump administration filed a notice of appeal and motion for stay against the Eastern District of Texas injunction in Smith v. United States Department of the Treasury. This action signals a continued effort to enforce the CTA.

Possible Filing Deadline Extension and Modified Application

In its filing, the Treasury Department stated that if the stay is granted, it would extend the filing deadline for 30 days. More importantly, the Treasury Department would use those 30 days to determine if lower-risk categories of entities should be excluded from the reach of the filing requirements. This could potentially impact community associations.

Key Compliance Actions for Community Associations

Now that the CTA is in effect, here’s what you would need to do:

1. Know the Deadline for Your Filing (If Reinstated):
   • General Deadline: Associations created or registered before January 1, 2024, must file by March 21, 2025.
   • Hurricane Relief Areas: Associations in disaster-affected counties still have until July 1, 2025, to file.
2. Understand What Information to Report: The BOI report includes:
   • The legal name, taxpayer identification number, and jurisdiction of formation for the association.
   • Names, dates of birth, residential addresses, and identifying numbers of beneficial owners. It’s important to note that all board members are generally considered beneficial owners under the CTA, regardless of their ownership percentage. This is because they exercise substantial control over the association.
   • A document verifying the identifying number of each beneficial owner (e.g., a copy of a driver’s license).
3. Filing Options: Community associations would be able to file their BOI reports in several ways:
   • DIY Filing: File directly through the FinCEN website, suitable for associations with clear ownership.
   • Hire an Attorney: An attorney can ensure compliance and navigate complex requirements.
   • Use CorpNet: Partnered with CorpNet to provide an affordable, streamlined service for filing BOI reports. The cost for filing through CorpNet is $199. Sign up for CorpNet to help you with this here.

Important Deadlines and Penalties

• Associations created before January 1, 2024, must submit their BOI report by March 21, 2025.
• New entities created after January 1, 2024, must submit their report within 90 days of registration.
• Updates for any changes in ownership or directors must be made to FinCEN within 30 days.

Noncompliance could lead to penalties of $500 per day for ongoing violations if the CTA is enforced.

Recent Developments: Court Decisions and Advocacy Efforts

The situation surrounding the CTA is dynamic. Here’s a breakdown of recent events:

• Supreme Court Decision: On January 23, 2025, the U.S. Supreme Court granted the government’s motion to stay a nationwide injunction in the case of Texas Top Cop Shop, Inc. v. McHenry. This would have allowed the government to enforce the CTA in that specific case.
• Ongoing Injunction: However, a different federal order (Smith v. U.S. Department of the Treasury) still prevents the requirement for reporting companies to file beneficial ownership information. This is the primary reason for the current pause.
• Current Status: As of February 20, 2025 reporting requirements under the CTA are are in effect for corporations and nonprofits, including applicable community associations. Reporting companies can voluntarily submit their beneficial ownership reports, but are not required to do so. However, the Trump administration is appealing the injunction, and the filing deadline could be reinstated with 30 days’ notice. Furthermore, the Treasury Department may modify the application of the CTA to exclude lower-risk entities.
• Important Update: Following a federal court decision on February 18, 2025, FinCEN has reinstated BOI reporting obligations, extending the filing deadline to March 21, 2025.
• If you’ve already filed: No action needed unless your details have changed.
• If you haven’t filed: Use this extension to comply. FinCEN may further modify deadlines and reduce burdens for lower-risk entities.
• Avoid Penalties: Non-compliance can result in penalties of up to $10,000. Ensure you understand the requirements and file a BOI report promptly.
• February 17 Update: The United States District Court for the Eastern District of Texas reversed a previous order, reinstating the Corporate Transparency Act’s reporting requirements for applicable community associations in Smith v. United States Department of Treasury.
• FinCEN Guidance (February 19): FinCEN announced on February 19th that most companies will have an extra 30 days to file their BOI reports. The new deadline is March 21, 2025.
• Legislative Efforts: H.R. 736 and S. 505 are bills in Congress that would delay the Corporate Transparency Act for existing businesses until 2026. The House has passed H.R. 736; the Senate is now considering it.
• ACT NOW: Contact your senators to support H.R. 736 and S. 505 via this link. Share this request with others in your community.

Status of CAI’s CTA Lawsuit

CAI’s lawsuit against the U.S. Department of Treasury and other officials remains active. While an initial injunction request was denied, CAI continues to appeal, seeking relief from the requirements. Oral arguments are scheduled for March 2025 in the Fifth Circuit Court of Appeals, where the court will decide on the constitutionality of the CTA as it applies to community associations.

On September 10, 2024, CAI initiated legal action against the U.S. Department of Treasury, Secretary Janet Yellen, and the director of FINCEN, disputing the application of the Corporate Transparency Act to community associations.

CAI’s request for a preliminary injunction was denied on October 24, 2024. Following this, CAI appealed on November 4, 2024, and filed its initial arguments on November 12, seeking a pause in reporting requirements for community associations. The government responded on February 7, and CAI has until February 28 to submit its reply.

Status of CTA Lobbying and Advocacy Efforts

With the 199th Congress in session, CAI is lobbying to repeal or exempt community associations from CTA reporting requirements. Bills H.R. 425 and S. 100 have been introduced to fully repeal the CTA. It’s vital to reach out to your congressional representatives to support these bills via this link.

What to Do Next

1. Stay Informed: The most important thing is to stay informed about the legal challenges to the CTA.
2. Monitor Updates: Follow CAI’s efforts to stay current on any changes or exemption opportunities.
3. Prepare to File: Understand the requirements so you’re ready to comply by the deadline.

To Comply with the CTA:

1. Check if Your Association is Affected by the CTA Deadline.
2. Choose Your Filing Method.
3. Submit the Required Information.

For further assistance during the filing process if it becomes necessary, contact Corpnet who can file this and answer your questions.

Staying Informed

Community associations must comply with the CTA, while remaining aware of ongoing developments. Follow CAI’s efforts to stay current on any changes or exemption opportunities. If you want help filing here is a resource to help you for $199 by clicking HERE.

Financial institutions may also inquire as to whether the entity has filed a CTA and could require filing as part of the financial institution’s anti-money laundering program.

If you have any questions, feel free to contact CAI’s Government & Public Affairs team at government@caionline.org.