Supreme Court Allows Enforcement of Corporate Transparency Act; FinCEN’s Website Says Filing Requirements Still on Pause
On December 3, 2024, a federal court in Texas issued a nationwide preliminary injunction in Texas Top Cop Shop, Inc v Garland, No. 4:24-CV-478, 2024 WL 4953814, at *37 (ED Tex, December 3, 2024), temporarily halting the enforcement of the Corporate Transparency Act. Unfortunately for community associations, the Fifth Circuit delivered a lump of coal just two days before the holiday. On December 23, 2024, the Fifth Circuit stayed the ruling of the district court’s injunction pending appeal. However, on December 27, 2024, the Fifth Circuit reinstated the injunction which halted enforcement once again. On December 31, 2024, the US Department of Justice asked the Supreme Court to review this matter.
On January 23, 2025, the Supreme Court stayed the injunction blocking the enforcement of the Corporate Transparency Act. In response to the Supreme Court’s decision, FinCEN’s website released the following Alert:
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.
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On January 23, 2025, the Supreme Court granted the government’s motion to stay a nationwide injunction issued by a federal judge in Texas (Texas Top Cop Shop, Inc. v. McHenry—formerly, Texas Top Cop Shop v. Garland). As a separate nationwide order issued by a different federal judge in Texas (Smith v. U.S. Department of the Treasury) still remains in place, reporting companies are not currently required to file beneficial ownership information with FinCEN despite the Supreme Court’s action in Texas Top Cop Shop. Reporting companies also are not subject to liability if they fail to file this information while the Smith order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.
Accordingly, this means that community associations are currently not obligated to comply file Beneficial Ownership Information (“BOI”) reports with the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”).
However, due to the ever-changing nature of the CTA and the continued litigation, we highly recommend that community associations file BOI reports with FinCEN to comply with the Corporate Transparency Act. Please be advised that should FinCEN lift the hold that is currently pausing the filing requirements, community associations who have not filed may face potential penalties of $591/day up to $10,000.
The Fifth Circuit is still scheduled to hear oral arguments regarding the constitutionality of the Corporate Transparency Act on March 25, 2025. We recommend that community associations contact Hirzel Law, PLC to take the necessary steps to file a BOI report with FinCEN.
Jeremy Fernando is an Associate Attorney at Hirzel Law, PLC. Mr. Fernando is licensed to practice law in the State of Illinois. He concentrates his practice on community association law, condominium law, homeowners association law, and real estate law. Mr. Fernando’s legal career includes serving in corporate practice where he represented insurance companies and institutional investors in U.S. and cross-border private placements of securities, including transactions in the Netherlands, England, Ireland, Australia, and Germany. Mr. Fernando earned his Juris Doctor from Marquette University Law School, where he graduated with honors and ranked in the top 15% of his class. He also served as an Associate Editor of the Marquette Law Review. Mr. Fernando is committed to providing effective legal representation to his clients and is passionate about helping communities navigate complex legal challenges. He may be reached at 312-552-7669 or jfernando@hirzellaw.com.
