CooperatorNews: Hal, thanks for sitting down with us for this interview. To start, could you please explain to our readers what the Corporate Transparency Act is?

Coopersmith: “Thanks for having me. The Corporate Transparency Act, known colloquially as the CTA, is part of the National Defense Authorization Act, which became law on Jan. 1, 2021. The CTA was enacted with the goal of providing law enforcement with beneficial ownership information to aid in the detection, prevention, and punishment of business misconduct. To accomplish this aim, the Financial Crimes Enforcement Network, or FinCEN, a bureau of the U.S. Department of the Treasury, was established to obtain and analyze a record of this information from all applicable beneficial owners,” called a BOI report. 

CN: What happened in the courts at the end of 2024 with respect to the Corporate Transparency Act?

Coopersmith: “On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction suspending the enforcement of the CTA. In Texas Top Cop Shop, Inc., et al. v. Garland, et al., U.S. District Judge Amos Mazzant temporarily halted the CTA’s reporting requirements, finding the Act likely unconstitutional. The injunction applied to all states, and affects all existing reporting companies, despite previous court challenges in other districts that had upheld the law. On December 23, 2024, the Fifth Circuit Court of Appeals issued a stay of the injunction, which made the deadline enforceable.  FinCen then extended the deadline to January 13, 2025. On December 26, 2024, the Fifth Circuit Court of Appeals reversed itself and vacated the stay of a preliminary injunction that had blocked enforcement of the Act.”  

CN: What is the status of the lawsuit?

Coopersmith: “The lawsuit is being appealed to the Fifth Circuit, with oral arguments scheduled for March 25, 2025.”

CN: Can we assume this requirement applies to boards of co-op and condominium properties as ‘beneficial owners’? And if so, what do boards need to do to be compliant?

Coopersmith: Presently there is no requirement for a co-op or condo board to file a BOI report.  If the law is reinstated though, cooperative corporations and condominium associations will be required to file a BOI report, as there is no express exemption for cooperative corporations and condominium associations unless they fall within a broader exemption. Those broader exemptions include being a tax-exempt entity under Section 501 of the Internal Revenue Code, having been created without virtue of filing a document with the Secretary of State of similar office, or qualifying as a large operating company that employs more than 20 full-time employees in the US, has income greater than $5 million, and has an office in the United States.”

CN: What has changed as a result of these recent developments, and what advice are you providing to boards you represent?

Coopersmith: “There has been a lot of uncertainty as a result of the lawsuit. FinCen is still accepting voluntary submissions. It’s good practice to have all the information readily available—or alternatively, submit a voluntary filing.”   

CN: Thanks.

Coopersmith: “My pleasure.”