The Federal Corporate Transparency Act and News Updates

Cervantes Chatt & Prince
Mar 20, 2024
6 min read

Updated: Feb 24

Most Recent CTA News February 19, 2025

Corporate Transparency Act is now reinstated with a new Filing Deadline of March 21, 2025.

Following a recent court decision on February 17, 2025, the Financial Crimes Enforcement Network (FinCEN) has reinstated beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA). To allow businesses additional time to comply, FinCEN has extended the deadline for most reporting companies by 30 days, making the new filing deadline March 21, 2025.

For further updates or assistance with BOI reporting, contact our firm today!

Find more BOI information here: https://fincen.gov/boi

Past CTA Updates

December 27, 2024: Reinstated Injunction

Fifth District of the Court of Appeals Reverses Itself - Reinstates Injunction

On December 26, 2024, in a shock to the legal community, the Fifth District of the Court of Appeals has vacated its ruling that stayed the injunction against enforcement of the Corporate Transparency Act. The Order is quite simple, stating:

In order to preserve the constitutional status quo while the merits panel considers the parties' weighty substantive arguments, that part of the motions-panel order granting the Government's motion to stay the district court's preliminary injunction enjoining enforcement of the CTA and the Reporting Rule is VACATED.

This means that the injunction once again prohibits the government from enforcing the CTA against businesses throughout the nation. Businesses of all types that would have otherwise had to file BOIR forms will not currently have to comply with the CTA.

The Plaintiffs in the underlying lawsuit who sought and won the preliminary injunction, filed a motion for expedited ruling for rehearing en banc. This is a request for a new hearing before all of the judges of the Fifth District Court of Appeals instead of just the three judge panel the case was assigned to. The current briefing schedule on the Motion is as follows:

The Government has until February 7, 2025 to file a brief in support of their appeal and the lifting of the injunction.
The Plaintiffs will have until February 21, 2025 to file a response brief in support of the District Court's Order.
The Government will have the right to file a reply brief on or before February 28, 2025.

The motion is scheduled for a hearing on March 25, 2025.

As the back and forth nature of the injunction shows, this issue remains very fluid. We do not recommend that our clients file their BOIR reports at the moment. However, they should be prepared to do so should the injunction be lifted once again. Board members, decision-makers and individuals holding twenty-five percent interest in a business will need to provide a current name, address, birth date and an identifying document (a drivers license or passport). Businesses should begin collecting this information so that they can comply should the worst happen and the injunction is lifted.

December 24, 2024: Filing deadline extended to January 13, 2024

Those businesses that have not filed their BOIR forms have a slight reprieve as we are going into the holiday season. The Department of Treasury has extended the reporting deadline for entities that were in existence before January 1, 2024 now have until January 13, 2025 to file their forms.

We will work with our clients in the new year to get their businesses in compliance.

Enjoy your holiday!

December 23, 2024: Stay in place preventing enforcement of the injunction - Resume Filing

We have unfortunate news out of the Fifth Circuit Court of Appeals, which is the appellate court presiding over the Texas District Court that issued an injunction against the enforcement of the Corporate Transparency Act. The Fifth Circuit has put a stay in place that prevents the enforcement of the injunction. Effectively, this means that, for now, it is as if the injunction was never issued by the Texas District Court. The ruling is due, in part, to an unfortunate crossroads between burdens and, at this juncture, the Fifth Circuit believes that the government effectively showed harm if it will not be able to enforce the CTA. The Court has put the case on an expedited calendar to address additional issues that could arise.

What does this mean for Associations? Associations that are incorporated as not-for-profit corporations or limited liability companies will need to comply with the CTA’s reporting requirements, which requires the filing of a Beneficial Ownership Information Report (“BOIR”) with FINCEN by January 1, 2025. Each filing requires the Associations to give the names, addresses and birthdates of each board member. Additionally, they will need to provide a copy of their drivers license or passport for upload into FINCEN’s system.

We know that many Board Members are skeptical of these obligations. Unfortunately, they have, once again, become mandatory to serve on a Board. There is still some hope that the government will push out the reporting deadline in light of the changes to the injunction as it works its way through the courts. We will not know until later this week or early next week as to whether that is a reality.

As a reminder, the CTA does not only affect associations but also corporations, limited liability companies, and other entities created by filing of a document with the secretary of state or any similar office in the United States. There are 23 types of entities exempt from the reporting requirements under the CTA. Contact us to find out if any of these exemptions apply to your business.

December 4th, 2024: Preliminary Injunction Filed - Hold off on Filing

We finally have good news regarding the Corporate Transparency Act. Originally, we advised clients to hold off on complying with the CTA in hopes that an exemption would be given by Congress or that a court would invalidate the CTA, at least as it applied to community associations. CAI filed a lawsuit seeking to declare the CTA invalid, but its request for a preliminary injunction – which could have exempted associations – was denied by a court.

All hope looked lost. Due to the penalties involved for non-compliance, we just recently started advising clients to get ready to comply. Fortunately, a federal judge in Texas has entered a nationwide preliminary injunction against enforcement of the CTA. This means that community associations and businesses, alike, will not have to comply with the CTA at this time.

If the injunction is lifted by the District Court, the Fifth Circuit Court of Appeals or the Supreme Court, associations and other businesses will need to comply. However, if none of those courts invalid the injunction and if the Texas District Court ultimately finds the CTA to be unconstitutional, they will never need to comply.

With this good news, our clients are able to concentrate on running their business entities without having to worry about providing private information to the government. If you have questions, please do not hesitate to reach out to our firm. Click the button below to view the Texas Top Chop Shop v. Garland opinion.

Corporate Transparency Act Information

The Corporate Transparency Act (CTA) went into effect January 1, 2024. This law requires that certain business, including small business, to file information with the federal government - U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN).

The law’s purpose is to increase business transparency to prevent illegal activities like fraud, money laundering and tax evasion.

Who Does This apply to?

The CTA applies to all businesses that are registered with the state unless there is an exemption. Currently there are 23 types of entities that exempt from filing. One of those exemptions are for “tax exempt entities”. There is discussion by CPA’s as to whether an Association is “Tax exempt” if they file an 1120-H.

What has to be provided?

The association has to make an initial filing including the following information

Name
Address
Phone Number
Tax ID Number
Other contact information for the association.

It is also necessary for providing additional information about the President, and most likely every Board member of the association. Information required:

Name
Address
Date of Birth
Identifying documents (drivers license or passport)

The association must file a change of information within 30 days of any changes to the original information occurs. This means that within 30 days of any change in the board, the association will need to file a revised filing with FinCen.

When does this have to be done?

The Corporate Transparency Act takes effect on January 1, 2024, however, the deadline to submit any necessary documents is January 1, 2025. Any changes in the association will also require a revision with 30 days.

What if we do not file?

Assuming that the law does not change, the Association can be fined up to $500.00 per day if information is not properly filed. There is also a risk of criminal penalties and senior officers of entities that fail to file could be held accountable for not filing.

What should the Associations do right now?

Associations are advised to consult with their attorney to start preparations immediately. By doing so, community associations can avoid large fines.

What are the attorneys doing?

It looks like the attorneys may be the ones filing this on behalf of clients, similar to annual reports.

Right now the biggest concern is how to protect the personal information of clients. Our portal allows our clients to upload a copy of their drivers license or passport in an encrypted format.

Legal assistance from CCP

Contact our law firm if you have questions regarding the Corporate Transparency Act and the impact it may have on your association.

Cervantes Chatt and Prince can assist in understanding the CTA requirements and how to file.

You can reach CCP by calling 630.326.4930 or at ccpchicago.com. Request a free consultation!

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