Federal Court Ruling Puts Corporate Transparency Act Reporting Requirements On Hold: What Do Community Associations Need To Know?

A recent federal court ruling has put a temporary pause on the Corporate Transparency Act (“CTA”), a federal law that broadly imposes certain reporting requirements by January 1, 2025. The case, captioned Texas Top Cop Shop, Inc., et al v. Merrick Garland, et al., Case No. 4:24-CV-478 (E.D. Tex.), was brought by six separate plaintiffs—one private individual and five entities—seeking to challenge the CTA as unconstitutional and thus unenforceable. In the 79-page decision (available here), a U.S. District Court in the Eastern District of Texas found that the CTA “appears likely unconstitutional” and issued a nationwide injunction to postpone the CTA reporting deadline until the case could be heard. 

Based on this ruling, the CTA’s reporting requirements, including the January 1^st initial filing deadline, are currently suspended and not in effect for all reporting companies, including condominium and community associations and co-ops. However, the ruling does not permanently eliminate the CTA and its reporting requirements. It appears likely that the ruling will be appealed, and the injunction blocking the enforcement of the CTA is temporary “pending further order of the Court”.

Similar lawsuits challenging the CTA as unconstitutional have been filed recently with mixed results. For example:

• A federal court recently ruled in a similar lawsuit brought by the National Small Business Association (“NSBA”) that the CTA is unconstitutional but only suspended enforcement of the CTA’s reporting requirements for the specific members of the plaintiff organization. Click here for LP’s article on the NSBA case; and

• In a recent litigation challenged to the CTA filed by the Community Associations Institute (“CAI”), a not-for-profit organization that represents homeowners, condominiums, and other community associations, a federal court denied CAI’s request for a preliminary injunction to postpone the CTA reporting deadline. Click here for LP’s article on the CAI case.

Clarity regarding the fate of the CTA and its reporting requirements is expected in the coming weeks and months. For now, the CTA’s reporting requirements, including the January 1^st initial reporting deadline, are on hold.

As such, community associations that have not yet completed their initial CTA reporting with FinCEN are not required to do so (and if LP is coordinating the CTA filing, we will put a pause on any further filings until there is clarity on the issue). However, community associations should be prepared to complete such reporting if and when the injunction is lifted and thus the reporting requirement is reimposed. For community associations that have already completed their initial CTA reporting, no action is required and there is currently no requirement to update any such reporting unless and until the CTA’s reporting requirements are reimposed. 

LP is committed to keeping our community association clients informed of, and prepared to proactively and successfully navigate, any changes in the law. For questions regarding the new accessible parking requirements approved by the legislature for Illinois condominium associations, or other issues facing your condominium or community association, please contact Howard Dakoff, Laura Marinelli, Adam Kahn, or Molly Mackey of LP’s Community Association Group.