Enforcement of Corporate Transparency Act Temporarily Stopped Nationwide By Federal Court Order

A Texas federal district court has issued a nationwide injunction against the enforcement of the Corporate Transparency Act (“CTA”) by the government. Therefore, until the injunction is lifted, business entities subject to the CTA (including cooperatives and condominiums) do not need to file their beneficial ownership information forms with the Treasury Department. The injunction remains in place until the court issues a final decision on the merits of the case (which could take months or years), or it is reversed by a higher court on appeal.

What You Should Do [Or Not Do] Next

We recommend that entities who were going to file their Beneficial Ownership Information under the CTA should delay the filing until the case proceeds further. This includes cooperatives, condominiums and HOA’s. (However, there is no prohibition against filing if you prefer to do so.)

If the government appeals, the appeal would be heard by the ultra-conservative Fifth Circuit, which is likely to uphold the injunction. The government would then need to appeal to the Supreme Court. We have no idea how the Supreme Court would decide. We also have no idea whether the Justice Department would even continue to seek to enforce the CTA after January 20, 2025, when the new administration is sworn in. In sum, entities subject to the CTA can anticipate a significant delay before they may need to comply with the beneficial ownership filing requirements of the CTA.

What Happened in Court

The plaintiffs in the case included individuals who owned a dairy farm which conducted less than $50,000 of interstate business; a firearms dealer who only did business in Texas; a Tennessee business owner that wanted to protect the name of its beneficial owners; a political advocacy group; and the National Federation of Independent Business, which claims 300,000 members. They asserted that the CTA compels speech that is otherwise protected; constituted an unreasonable seizure of information; and violates the 9th and 10th amendments, which reserve certain powers to the states.

In order to obtain a “preliminary injunction”, a plaintiff must show a substantial likelihood of success; irreparable harm; a balancing of the equities in their favor; and no adequate remedy at law. The court determined that the CTA represented an overreaching use of Congress’s rights to regulate interstate commerce, foreign affairs and taxing authority. It also ruled that in order to show “irreparable harm”, the plaintiffs only needed to show that they would incur some harm, but not how much harm they would incur or how expensive compliance might be. Thus the threats of fines and imprisonment, and the need to make a filing, qualified as “harms.” Based on the foregoing, the equities also favored the plaintiffs.

The government claimed that an injunction affecting only the plaintiffs would be the equivalent of a nationwide injunction, since the NFIB had 300,000 members. Ironically, the court stated that it “agreed with the Government”, so it issued a nationwide injunction rather than limiting it to the plaintiffs in the case.

What’s Next

Three different courts have issued decisions on the CTA. A Missouri federal court invalidated it, but limited the effect to the plaintiffs in that case. A Virginia federal court upheld it, explicitly declining to follow the Missouri court. The Texas court agreed with the Missouri court, and extended the injunction nationwide.

Differences between federal courts are resolved by higher courts (“circuits”) that govern their districts. The Virginia, Missouri and Texas courts are all in different circuits, so assuming that one or more of their decisions are appealed and upheld by their respective circuits, the case ultimately will come to the Supreme Court to resolve. We cannot predict whether the Supreme Court will consider an appeal on an emergency basis. Many businesses have already complied with the CTA requirements and doubtless would like their information to be destroyed if the Act is invalidated.

We will keep everyone advised as the case proceeds.

Court Declares Soho/Noho Arts Fund Contributions Unconstitutional

On December 5, 2024, the Appellate Division declared unconstitutional the portion of the recently amended Zoning Regulations that required payments to the SoHo-NoHo Arts Fund of $100 per square foot of loft area (with annual increases) to the City as a condition of allowing the conversion of lofts to legal residential occupancy. This decision reversed the 2023 decision of the Supreme Court, New York County upholding the regulations. The City of New York is now enjoined from enforcing this provision. See decision here.

The decision is welcome news to many residents of lofts in SoHo and NoHo, as the payment was a pre-condition to the issuance of any building permit allowing conversion of a dwelling loft from a Joint Live/Work Quarters for Artists use to legal residential occupancy.

The City Council’s enactment of the legislation creating the Special SoHo-NoHo Mixed Use District (SNX District) in 2021 provided a pathway to convert lofts in the area to legal residential occupancy, but imposed an onerous requirement for substantial payments in order to do so.  This decision declares such payments unconstitutional on grounds that they had no ”essential nexus “ to the government’s land use interests, did not ensure that the government acted to further its stated purpose, and that there was no “rough proportionality” between the impact of the fee and the land use interests it was supposed to protect.

We are fairly confident that there will be a further appeal by the City of New York to the New York State Court of Appeals and we will keep our clients and colleagues informed of any new developments.

For further information, please contact Margaret D. Baisley, Esq. in our SoHo office at 561 Broadway, 212 966 0066 Ext. 4136, MBaisley@sbjlaw.com

Thank you to everyone who joined us at New York’s Biggest & Best Co-op, Condo & Apt Expo on Tuesday, November 19th!

Thank you to everyone who joined us at New York’s Biggest & Best Co-op, Condo & Apt Expo! Your participation made the event a tremendous success, and we’re grateful for your attendance.

Special thanks to our SBJ speakers, Ken JacobsEric Blaha , and Jason Rogovich for their insightful presentation on “Repairs – Who Makes Them, Who Approves Them, & Who Pays?” It was a fantastic opportunity to share key insights on navigating repairs in co-ops and condos.”

We hope you found valuable content and gained new insights into navigating legal issues in co-op and condo communities.

To view our presentation, please see link here: Repairs who makes them who approves them and who pays PDF

Join Eric Blaha on Wednesday, December 4th, at 5:00PM, to complete your Fair Housing training requirements!

To All Board Members and Property Managers,

If you need to fulfill your mandatory Fair Housing training requirements under the new Westchester County law or other New York State law, please register for free by clicking the link below:

CLICK HERE to register for Fair Housing training on Wednesday,  December 4th,  2024, at 5:00 pm.

Eric will cover important topics such as:

  • Introduction to Fair Housing Laws
  • Housing Discrimination
  • Emotional Support Animals
  • Reasonable Accommodations
  • Purchase Application Disclosures
  • Complaints and Lawsuits
  • Fiduciary Duties
  • Q&A, and much more …

To attend a remote training session, you must pre-register by clicking on one of the above links and providing your full name. Plan to attend approximately 2 hours of online training using the Zoom webinar platform to obtain your certificate of completion. Course materials will be made available upon completion of your attendance. Non-Westchester County residents check your local jurisdiction’s training requirements.

We look forward to seeing you soon.

Join Eric Blaha on October 28, 2024, at 5:00PM, to complete your Fair Housing training requirements! Alternate Date Available

To All Board Members and Property Managers,

If you need to fulfill your mandatory Fair Housing training requirements under the new Westchester County law or other New York State law, please register for free by clicking the link below:

CLICK HERE to register for Fair Housing training on Monday,  October 28th,  2024, at 5:00 pm.

CLICK HERE to register for Fair Housing training on Wednesday,  December 4th,  2024, at 5:00 pm.

Eric will cover important topics such as:

  • Introduction to Fair Housing Laws
  • Housing Discrimination
  • Emotional Support Animals
  • Reasonable Accommodations
  • Purchase Application Disclosures
  • Complaints and Lawsuits
  • Fiduciary Duties
  • Q&A, and much more …

To attend a remote training session, you must pre-register by clicking on one of the above links and providing your full name. Plan to attend approximately 2 hours of online training using the Zoom webinar platform to obtain your certificate of completion. Course materials will be made available upon completion of your attendance. Non-Westchester County residents check your local jurisdiction’s training requirements.

We look forward to seeing you soon.

The Smith Buss & Jacobs Team Gives Back at the Native Plant and Butterfly Garden in Yonkers

On Saturday, October 5th, the dedicated Smith Buss & Jacobs team joined forces to volunteer at the Native Plant and Butterfly Garden with the Hudson River Audubon Society in Yonkers.

A big thank you goes out to all the amazing volunteers! Together, they made a lasting impact by planting, weeding, and removing invasive plants, contributing to the betterment of the community and the planet.

Their hard work and dedication reflect SBJ’s strong commitment to giving back, and the event wouldn’t have been a success without their efforts. Thank you to everyone who helped make a positive difference!

Join Eric Blaha on September 10, 2024, at 5:00PM, to complete your Fair Housing training requirements! Alternate Date Available

To All Board Members and Property Managers,

If you need to fulfill your mandatory Fair Housing training requirements under the new Westchester County law or other New York State law, please register for free by clicking the link below:

CLICK HERE to register for Fair Housing training on Tuesday,  September 10th,  2024, at 5:00 pm

CLICK HERE to register for Fair Housing training on Monday,  October 28th,  2024, at 5:00 pm.

Eric will cover important topics such as:

  • Introduction to Fair Housing Laws
  • Housing Discrimination
  • Emotional Support Animals
  • Reasonable Accommodations
  • Purchase Application Disclosures
  • Complaints and Lawsuits
  • Fiduciary Duties
  • Q&A, and much more …

To attend a remote training session, you must pre-register by clicking on one of the above links and providing your full name. Plan to attend approximately 2 hours of online training using the Zoom webinar platform to obtain your certificate of completion. Course materials will be made available upon completion of your attendance. Non-Westchester County residents check your local jurisdiction’s training requirements.

We look forward to seeing you soon.

SBJ Team Outing at Yankee Stadium!

On August 22, 2024, SBJ enjoyed a fantastic team outing at Yankee Stadium. It was a wonderful opportunity to bond, celebrate and enjoy some great baseball.

Events like these remind us of the importance of team spirit. We are grateful for the chance to connect and strengthen our relationships outside of the office.

Thank you to everyone who made this event possible. Here’s to many more team outings and continued success together!

 

Smith Buss & Jacobs, LLP is proud to have been a sponsor and participant at the 2024 Morris-Jumel Mansion George Washington Dinner!

Smith Buss & Jacobs, LLP is proud to have been a sponsor and participant at the 2024 Morris-Jumel Mansion George Washington Dinner!

On Sunday, July 14, 2024, we celebrated Liberty, Equality, and Brotherhood. Liberté, Égalité, Fraternité. It was a wonderful evening filled with meaningful conversations and a shared commitment to these timeless values. Thanks to Emma Lupu’s connections, SBJ could be a sponsor and participant. It was such a delightful event.