As previously discussed in our December 9, 2024, update on the Corporate Transparency Act (“CTA”), a nationwide injunction was entered by the U.S. District Court of the Eastern District of Texas to much fanfare from small businesses and community associations. That created a dilemma whether to file voluntarily because the injunction could be lifted or be prepared to file should the injunction be lifted at a moment’s notice.
On December 23, 2024, the Fifth Circuit Court of Appeals reinstated the CTA stating that the “government has made a strong showing that it is likely to succeed on the merits in defending” against the unconstitutional arguments raised. Thus, the dilemma we discussed has now become reality as incorporated community associations need to quickly file its Beneficial Ownership Information Report (“BOI”) before the deadline.
FinCEN recognized that the original deadline of January 1, 2025, would be unfair to maintain given the injunction, but FinCEN did not give much more time to comply. The new deadline to file for existing incorporated community associations is January 13, 2025. Then on December 26th, the Fifth Circuit Court of Appeals reinstated the injunction after review by its merits panel. FinCEN has not yet published any response.
The dilemma we discussed has now become reality and continues as the courts play hot potato with the CTA. In light of the foregoing, all community associations that are not otherwise clearly exempt from filing a BOI should proceed with preparing to comply at a moment’s notice or file the report to ensure compliance by January 13, 2025 to avoid the game of hot potato.
