On January 23rd, the U.S. Supreme Court lifted the injunction that placed the Corporate Transparency Act (“CTA”) on hold. An injunction remained nationwide in a separate federal case delaying CTA compliance, but now that injunction has been lifted as of February 17, 2025.
To refresh your memory, a nationwide injunction was entered by the U.S. District Court of the Eastern District of Texas. 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. 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 was January 13, 2025. Then, on December 26th, the Fifth Circuit Court of Appeals reinstated the injunction. FinCEN appealed the imposition of the injunction to the U.S. Supreme Court.
As the dissent argues, the litigation is being expedited by the lower courts and a delayed implement of over four years shows supports maintaining the injunction while the litigation on the merits proceeds. A majority of the court disagrees and compliance with the CTA is currently the law of the land. Concurrently, an injunction was entered in Smith v. U.S. Dept. of Treasury, which remained. In light of the ruling of the Supreme Court, the federal court in Smith has lifted the injunction.
FinCEN has announced a new deadline date of March 21, 2025.
While the litigation has been moving through the process, the U.S. House passed legislation to delay the deadline for compliance through 2026. The legislation is now pending in the U.S. Senate with no timetable on its consideration or scheduled vote.
Sadly, this entire “do we file or not” dilemma has played out as we worried it would. In light of the foregoing, all community associations that are not otherwise clearly exempt from filing a BOI should proceed with filing as soon as possible.
