As we previously reported, effective January 1, 2024, corporations are required to file reports identifying all “beneficial owners,” defined as “individuals who directly or indirectly own or control” a corporation. Corporations in business before January 1, 2024, have until January 1, 2025, to file their initial Beneficial Ownership Information (BOI) report. Penalties for non-reporting range from $500 to $10,000 per day.
That requirement is now in question. On March 1, 2024, a U.S. District Court judge issued an opinion stating the Corporate Transparency Act (CTA) “exceeds the constitution’s limits on the legislative branch and lacks a sufficient nexus to any enumerated power to be a necessary or proper means of achieving Congress’ policy goals.” In this ruling, the court directed the government to halt enforcement of the CTA against the plaintiffs (the National Small Business Association).
Currently, most corporations – including community associations – are required to submit BOI reports. This ruling prohibits enforcement of the CTA against the plaintiffs, however, what that means for other entities is unclear. Litigation and efforts to exclude community associations from these reporting requirements will likely continue. Considering this uncertainty, it may be wise for community associations to wait until later in the year to submit their initial BOI.
We will continue to provide updates as more information becomes available. Contact your favorite HGCT attorney with questions.