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Helpful articles to aid Management Companies, Board Members, and Housing Cooperative Professionals in handling complex legal issues.

TEXAS COURT LIFTS SECOND NATIONWIDE INJUNCTION FOR CTA

On January 7, 2025, the Texas Court in Smith v. United States Department of the Treasury, No. 6:24-cv-336-JDK (E.D. Texas, Tyler Div. 2025), signed a nationwide injunction and issued an opinion stating that the CTA was likely unconstitutional in its application. The Department of Justice filed an appeal with the Court requesting emergency relief from the nationwide injunction. On February 18, 2025, the Court agreed to stay its January 7, 2025, order until the appeal is completed. Given this decision, FinCEN’s regulations implementing the BOI reporting requirements of the CTA are no longer stayed. Thus, subject to any applicable court orders, BOI reporting is now mandatory, but FinCEN is providing additional time for companies to report. The deadline for compliance is extended to March 21, 2025, which comes days before the Fifth Circuit hears oral argument on the constitutionality of the CTA in the Texas Top Cop Shop, Inc., case.

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TEXAS COURT LIFTS SECOND NATIONWIDE INJUNCTION FOR CTA

On January 7, 2025, the Texas Court in Smith v. United States Department of the Treasury, No. 6:24-cv-336-JDK (E.D. Texas, Tyler Div. 2025), signed a nationwide injunction and issued an opinion stating that the CTA was likely unconstitutional in its application. The Department of Justice filed an appeal with the Court requesting emergency relief from the nationwide injunction. On February 18, 2025, the Court agreed to stay its January 7, 2025, order until the appeal is completed. Given this decision, FinCEN’s regulations implementing the BOI reporting requirements of the CTA are no longer stayed. Thus, subject to any applicable court orders, BOI reporting is now mandatory, but FinCEN is providing additional time for companies to report. The deadline for compliance is extended to March 21, 2025, which comes days before the Fifth Circuit hears oral argument on the constitutionality of the CTA in the Texas Top Cop Shop, Inc., case.

There is pending legislation before Congress and the Senate. H.R. 736 - Protect Small Businesses from Excessive Paperwork Act of 2025 was introduced by Representative Zachary Nunn (R-IA-3) and S. 505 - A bill to amend title 31, United States Code, to modify the deadline for filing beneficial ownership information reports for reporting companies formed or registered before January 1, 2024 was introduced by Senator Tim Scott (R-SC). H.R. 736 was passed by a vote of 408-0 on February 10, 2025, and was sent to the Senate Banking, Housing, and Urban Affairs Committee for consideration, where S. 505 was also introduced.

MAHC, along with ten Michigan housing cooperatives, will continue their judicial fight on behalf of housing cooperatives and that there is still a chance that the CTA could either be extended for review, or outright repealed. Reporting companies, whether they are their legal counsel to assist with the filing of Beneficial Ownership Information or not, are encouraged to submit reporting information as soon as possible to avoid unnecessary delays, fines and/or criminal sanctions.

-April E. Knoch, Esq.
Pentiuk, Couvreur & Kobiljak, P.C.

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    April E. Knoch, Esq
    April E. Knoch, Esq
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