UPDATE: On Dec. 5, the Government appealed this ruling to the U.S. Court of Appeals for the Fifth Circuit. FinCEN issued guidance that “in light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
This injunction is not a final ruling on the CTA’s constitutionality. This is a time of uncertainty, and community associations should stay informed, vigilant, and be prepared to comply if the injunction is lifted or further legal developments occur.
On Dec. 3, the U.S. District Court for the Eastern District of Texas published a decision in the matter of Texas Top Cop Shop, Inc., et al. v. Garland, et al. issuing a preliminary nationwide injunction against the Corporate Transparency Act (Act).
The court granted Plaintiff’s request for a preliminary injunction, blocking the U.S. Department of Treasury from enforcing the act’s beneficial ownership information (BOI) reporting requirements.
In his opinion, Judge Amos L. Mazzant III grants the Plaintiff’s request to preliminary enjoin the Government from enforcing the Corporate Transparency Act and its Implementing Regulations, ruling that “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.”
This preliminary injunction applies nationwide, halting enforcement and compliance of the Act’s beneficial ownership reporting requirements across the entire United States. CAI’s legal team believes the injunction applies to all community associations incorporated within the U.S.
CAI will continue its unwavering commitment to protecting the community association housing model and our members’ interests. We firmly believe the act’s requirements place an excessive burden on community associations, which operate differently from traditional corporations and small businesses. We will continue to pursue a full repeal of the act or exemption to protect the community association housing model as well as the privacy and personal information of its volunteer leaders. This is good news today, but it isn’t the end of the story. Please continue to watch for messaging about any further developments by visiting www.caionline.org/CTA.
Plaintiffs in the Texas Top Cop Shop case made similar arguments to those made in CAI’s federal lawsuit against the U.S. Department of Treasury, Secretary Janet Yellen, and the director of the Financial Crimes Enforcement Network. The plaintiffs argued the act was an overreach of Congress’s authority over the states, improperly compelling speech and contradicting the right of association guaranteed by the First Amendment and violating the Fourth Amendment by forcing the disclosure of private information. Judge Mazzant’s opinion cites arguments and rulings from CAI’s pending federal case in the U.S. District Court for the Eastern District of Virginia to substantiate his ruling.
For community association board members who have taken advice from industry professionals and already complied with the act’s reporting requirements, you have taken the responsible route. We recognize the situation is complex especially because we are so close to the reporting deadline. We continue to believe that exempting community associations from the act is in the best interests of CAI member communities.
The full opinion can be found here. For more information on CAI’s pending lawsuit, advocacy efforts, and the act’s impact on community associations, visit www.caionline.org/CTA.
Thank you for this update! We truly appreciate the time and efforts you have committed to this important matter. Kudos to all of you!
At first I was happy, but after looking at the court records, I don’t see where it says ‘no one nationwide has to comply with filing BOI by Jan. 1, 2025.’
I only see that the plaintiff, which is Texas Top Cop Shop was granted the injunction and they do not have to comply with the filing deadline.
Where does it say that no one in the United States has to comply with the CTA filing deadline of Jan. 1, 2025?
This is like when National Small Business Association won in court, NSBA was the plaintiff and they did not have to comply-so anyone who belonged the NSBA when they won, did not have to comply. But anyone else that joined NSBA later did have to comply-as well as all the other states except one state-where they won and only their state does not have to comply.
Karen,The Plaintiffs only claimed relief for their members as you have cited. The Government argued that if the Plaintiff’s were granted an injunction it would apply to every corporation Nationally.
The Court agreed with the Government and included all corporations nationally. See the Courts Opinion at the bottom of the case Court document.
So does that mean if our Condo HOA does not get registered by the deadline of December 31, 2024…then we wont be in violation and not fined? I suspect there will be a government appeal that will overrule this…and we would be better served to go ahead and register for now to meet the deadline…then if we win the day later on then all should be good…right?
Does this also apply to non-incorporated associations?
Yes.
Filing with Fincen.gov is free and fairly quick. How is that an excessive burden?
I’m going to assume it’s the ongoing upkeep of data that’s considered burdensome, not just the initial filing.
not so they charged me $139
Yes, it is a burden and excessive. For one thing, why should HOA volunteer homeowners, board members, have to file private personal information (including DOB!) for this bureaucratic process. It’s overreach on steroids!
not so they charged me $139
The Fincen website states that there is no fee for filing so I’m not sure what you paid for. There are scammers out there that are charging people to do the filing for them.
My management company charged the association $390 to facilitate 5 board members
The “burden”, aside from adding a new record-keeping and continuous reporting process for new members, is that the law imposes heavy fines and jail time for non compliance. This impacts HOAs financially and their volunteer board members personally if personal data is not submitted to FINCen on time.
What sort of law says “Report your volunteer participation in your HOA or go to prison??
As the president of a relatively small HOA with intentionally limited income that is annually spent only as budgeted, I find it beyond ridiculous to be told I must register for a Federal program intended to prevent fraud and terrorism, or otherwise protect national interests. To a person, my board of directors will resign if forced to comply. These are good citizens, voluntarily doing their best for their community. It is a completely unreasonable imposition by the Fed gov’t in the business of small communities. I encourage every effort to resist it until it is reasonably changed to meet what may be legitimate gov’t interests.
Well said Gary, I wholeheartedly agree.
Not only is it yet another example of egregious government over-reach, this country doesn’t need another inefficient bureaucratic department that has no net positive impact on its citizens, that – by the way – have to pay for it through taxation.