Federal Court Reinstates Corporate Transparency Act Beneficial Ownership Reporting Requirements and Deadline Extended by FinCEN
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.
****
On February 17, 2025, the United States District Court for the Eastern District of Texas granted the government’s motion for stay a nationwide injunction halting enforcement of the Corporate Transparency Act in Smith v. United States Department of Treasury. Due to this court order, reporting requirements under the Corporate Transparency Act are reinstated for community associations.
On February 19, 2025, FinCEN issued guidance that the Department of the Treasury recognizes that reporting companies may need additional time to comply with their BOI reporting obligations, and FinCEN is generally extending the deadline 30 calendar days from February 19, 2025, for most companies:
Beneficial ownership reporting requirements are back in effect, with a new deadline of March 21, 2025 for most companies. FinCEN will assess its options for further modifying deadlines.
Accordingly, this means that community associations are once again obligated to file Beneficial Ownership Information (“BOI”) reports with FinCEN by March 21, 2025. Failure to do so could subject the association to potential penalties of $591/day up to $10,000.
Updated Filings
Community associations who have already completed an initial filing must submit an updated BOI filing with FinCEN if there have been changes to the association’s beneficial owners since the initial filing. A community association must prepare an updated filing if any of the following have occurred:
-
- Any change to the information reported for the community association, such as a new business address.
- A change in board members. If a community association has had an election since the initial filing and the association has added or removed certain board members, then the association must prepare an updated filing.
- An owner purchases 25% or more of the units or lots. If a community association has an owner who purchased 25% or more of the units or lots since the initial filing, then the association must prepare an updated filing.
- Any change to a board member’s name, address, or driver’s license. If a board member has obtained a new driver’s license or has changed addresses since the initial filing, then the association must prepare an updated filing.
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.
