February 6, 2025: As you are likely aware, the Corporate Transparency Act (CTA) requires certain businesses to disclose their beneficial owners—the individuals who control or own the business—to the Financial Crimes Enforcement Network (FinCEN). This includes most owners Associations, including residential and commercial associations.
Over the past year the CTA has been subject to many legal battles, and as a result there has been an incredible amount of confusion over whether or not reporting is required. In an effort to provide the most information possible, below is a brief timeline of what has happened over the past two months.
- 12/3/24: A federal court in Texas halted the enforcement of CTA’s reporting requirements nationwide, ruling that the CTA and its reporting provisions were likely unconstitutional.
- 12/10/24: Following the Texas ruling, FinCEN announced that companies were not subject to liability if they failed to meet the January 1, 2025, reporting deadline.
- 12/23/24: The government appealed the Texas ruling, and the 5th Circuit Court granted an emergency motion lifting the nationwide injunction.
- 12/24/24: FinCEN extended the reporting deadline to January 13, 2025
- 12/26/24: The 5th Circuit vacated its stay issued on 12/23/24, and the preliminary injunction was once again in effect.
- 12/27/24: FinCEN announced that, due to the ongoing federal court order, reporting companies are currently not required to file beneficial ownership information and no deadline was being enforced.
- 01/23/25: The Supreme Court lifted the nationwide injunction on the CTA, allowing enforcement to proceed.
- 01/24/25: Despite the Supreme Court’s action, a separate injunction (issued on 1/7/25) remains in effect. Reporting companies are not subject to liability if they fail to file.
- 2/6/2025: On February 5, 2025, the Department of Justice, on behalf of the Department of the Treasury, filed a notice of appeal against the district court’s injunction and requested a stay of the order while the appeal is pending in Smith v. U.S. Department of the Treasury, No. 6:24-CV-336 (E.D. Texas 1/7/25).
Currently, there is no filing deadline or active enforcement of the CTA, but Associations that haven’t filed should be ready to act quickly if a new deadline is announced, as it could allow limited time for compliance.
Many if not most of our clients are choosing to file now to avoid the uncertainty. If you prefer to wait for a definitive deadline, that’s completely understandable; however, please be aware that once a deadline is announced, the rush to file may result in delays. The civil penalties have recently been increased to $606 per day for willful non-compliance.