COURT RULES CORPORATE TRANSPARENCY ACT UNCONSTITUTIONAL

A federal District Court in Alabama recently held that the Corporate Transparency Act (“CTA”) is unconstitutional, and the ruling could sideline the requirements for filing the Beneficial Ownership Report required under the regulations.

The Alabama Federal District Court found that the CTA exceeded the authority of the federal agency in its regulation of fraud in interstate and foreign commerce. The decision highlights that it is unlikely the government ever intended the requirements to apply to residential community associations not engaged in any commerce.

While the Court noted the legitimacy of the government’s intention, it nonetheless found the CTA unconstitutional, and not a valid exercise of the powers enumerated to Congress.

In addition to the latest court ruling, there is pending legislation that could delay the reporting deadline to 2026, and the Community Associations Institute (“CAI”) is seeking an exemption for condominiums at the federal level. Further, under the requirements, once an association files their beneficial ownership report they must file again whenever there is a change on the Managing Board. There may be quite a few annual and special election meetings on association calendars between now and the filing deadline of January 1, 2025. Changes on the board are thus very likely which is why we advise not to file yet.

We continue to monitor this issue and will alert you to further developments. MEEB again urges all of our clients to support CAI’s efforts in seeking to exempt communities from the CTA reporting requirements by contacting your congressional representative,

If you have any questions regarding the CTA and filing requirements please contact our attorneys at law@meeb.com.