BREAKING NEWS!
As you are aware from our prior updates, a Texas Federal Court recently issued an injunction that has temporarily paused enforcement of the Corporate Transparency Act (CTA), citing constitutional concerns. As predicted, we also want you to be aware, on December 5, 2024, the U.S. Government appealed the Order. Given the foregoing, most of our clients continued with the process.
New Update: FinCEN’s Guidance on Compliance
In response to the injunction, FinCEN has just announced that it will comply with the injunction as against all companies that were required to file. FinCen has indicated compliance with the CTA is currently voluntary for entities not specifically named in the court’s order. Importantly, FinCEN has clarified that there will be no penalties imposed on entities that choose not to file during this period of voluntary compliance. However, FinCEN has also emphasized its commitment to implementing the CTA as mandated by Congress and indicated that compliance could once again become mandatory at any time if the injunction is lifted or overturned. They also indicated that filing can still happen during this period while there is a stay.
This clarification underscores that, while compliance is voluntary during this injunction period, the potential for rapid changes in the legal landscape remains significant. Once the injunction is resolved, the January 1, 2025, filing deadline could still be reinstated, and penalties for noncompliance could apply at that time.
What do we now recommend?
Now that we know that FinCen will comply with the Order and there is no penalty for not complying, while the stay remains in place, for those of you who are using our firm’s service and have elected to proceed, we will continue to collect and process all necessary information to ensure that, if the stay is lifted, all that will be required is the push of a button to promptly file. This means we will NOT send the data to FinCen, but instead will have it held and ready to be sent if and when the stay is lifted. The good news there is that your info will not get to FinCen unless a Court ultimately requires it.
Why Continue the Upload Process?
- Readiness and Timeliness: By continuing to upload your information now, you’ll avoid last-minute scrambles if and when the stay is lifted.
- Compliance and Protection: If the law is ultimately deemed valid, your filings will be ready to go. If the law is invalidated, your information will not have been submitted to the FinCEN database, ensuring your privacy is preserved.
- Efficiency: The preparatory work for the filings will already have been completed, saving time and effort down the road.
Note, Schneider Buchel LLP offers a streamlined filing service to help Community Associations. The service includes securely collecting necessary information on beneficial ownership and submitting filings to FinCEN, ensuring compliance without administrative burden on board members or managing agents. Community Associations interested in using the service should contact the firm at CTA@schneiderbuchel.com for more information.
Please reach out to us with any questions.
Contact Us
"*" indicates required fields