As you may recall, the Department of Justice (“DOJ”) has filed a Notice of Appeal of the preliminary injunction issued by the US District Court for the Eastern District of Texas against the Beneficial Ownership Report (“BOI”) required to be filed by January 1, 2025 pursuant to the Corporate Transparency Act (“CTA”). On December 13, 2024, the DOJ requested that the appellate court rule on its appeal by December 27, 2024.
Meanwhile, Congress has recently released its governing spending bill which includes a one-year delay in the CTA filing requirement. This bill (of just over 1,500 pages), is a short-term funding bill proposed to keep the government funded until March 14, 2025, is expected to be voted on this week. Both the US Senate and US House would need to pass this bill in order for the one-year delay to move forward.
No one knows at this time whether the DOJ’s request for a ruling by December 27, 2024 will be accepted. Additionally, there is no information yet on whether the Congressional bill will be passed and, if passed, whether the one-year delay in the CTA filing requirement will remain in the bill. What we do know is that the Financial Crimes Enforcement Network (“FinCen”) has temporarily stayed the January 1, 2025 reporting requirement for as long as the preliminary injunction issued by the Texas Court remains in place, but that FinCen intends to move forward with the BOI reporting requirement if that preliminary injunction is lifted.
Here’s what this means to you:
- The Association’s Board of Directors may file its BOI report voluntarily, in anticipation of FinCen reinstating the requirement if the preliminary injunction is lifted or overturned. This is the most prudent course of action since we anticipate the CTA reporting requirement to go back into effect and this will avoid last minute scrambling by the Board.
- The Association’s Board of Directors may gather and prepare the information needed in order to file its BOI report, but hold off on filing until more information and decisions are made by the courts and Congress votes on the proposed funding bill. In this way, the Board is ready to file if needed if and when the reporting requirement is reinstated.
- The Association’s Board of Directors can choose not to act at all at this time. While we anticipate that the BOI reporting requirement will be reinstated which would require a Board to act quickly in order to meet the CTA deadline (which could very well be January 1, 2025 again if the appellate court overturns the preliminary injunction and/or Congress does not pass the funding bill), it is also possible that the reporting requirement would continue to be stayed long term.
We will keep you updated as matters progress. If you have any questions, please contact one of our attorneys at 303.432.9999 or [email protected]. Happy Holidays!
Given all the “maybe” and “yet to be determined’s” –Our small HOA Community Board needs to ask: Are there penalties associated with late filing IF the stay is NOT extended, or Congress rejects the CTA piece of the Gov’t Spending Bill pending? It begs the obvious question– “How does any Board act prudently without putting their budget in strife, their Board members at risk, or neglecting their fiduciary duty? To say nothing of encouraging volunteers to join the Board–yet upon hearing the need to give up their very personal information, decide–“No thanks!” {Let me put this in context: I am not a ‘conspiracy theorist’, but the US Government, including Civl Service, Military, etc., has breached my personal identity no less than 4 times in the last 12 years–each time causing great stress to sort out the nightmare– including need to reinstate clearances, change everything from passwords to bank accounts and credit cards and healthcare identification!} This seems a complete contradiction, as we now are about to inaugurate a new president who formerly and currently will not even forfeit his tax records! All input/advisement is welcome. Sign me, “Twice burned, thrice learned”
There are penalties for failing to file the Beneficial Ownership Report by the CTA filing deadline if/when it is in place. At this time, there is no indication from FinCen that any such penalties would be waived. The Penalties include daily fines of up to $500 (adjusted for inflation) and potential imprisonment and additional fines of up to $10,000 for willful violation of the CTA.
At this time, we recommend doing one of the following: (1) filing the Beneficial Ownership Report such that the association will be compliant if/when the filing deadline is imposed again; or (2) obtaining the information from the Board so that you are prepared to file asap when the deadline is imposed.