In 2021, a federal law called the Corporate Transparency Act (CTA) was passed by Congress, requiring LLCs, most corporations and other entities, likely including community associations and condominiums, to register with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury. The CTA became effective on January 1, 2024.

Although there are mixed opinions about whether the CTA applies to HOAs and condos, FirstService Residential is proactively assisting board members serving HOAs and condos in understanding and navigating this act.

On March 1, 2024, U.S. District Court Judge Liles C. Burke wrote an opinion declaring the Corporate Transparency Act (CTA) unconstitutional after a lawsuit brought by the National Small Business Association. The Court subsequently ordered the government to cease enforcing the CTA against the plaintiffs. The ruling is expected to be appealed; therefore this issue will remain in federal court for some time.  

It is still being determined how this ruling will affect businesses that are not members of the National Small Business Association. It does, however, highlight issues with the CTA's requirements. As of March 12, the US Department of Justice filed an appeal of the decision.

Here are 6 things boards should know if it's decided the CTA ultimately applies to HOAs and condos:

1. What is the Corporate Transparency Act? 

Congress enacted the Corporate Transparency Act in 2021 to expand anti-money laundering laws to combat corruption, tax fraud, terrorist financing, and other illicit activities. Associations are included within its scope and must submit Beneficial Ownership Information (BOI).

2. What is Beneficial Ownership Information (BOI)?

BOI includes:

  • The name of the association.

  • Board members' legal names, addresses, birthdates and driver's licenses or passport numbers.

  • BOI must be filed by anyone with substantial control over the association's financial reporting. 

3. When should this information be submitted?

Existing Associations

Beneficial Ownership Information (BOI) reports must be filed by January 1, 2025, if the association was created or registered to do business before January 1, 2024.
New Associations

Associations formed on or after January 1, 2024, and before January 1, 2025, will have 90 calendar days after receiving notice of the associations’ creation or registration to complete the initial report. This 90-calendar day deadline runs from when the associations receive notice that their creation or registration is effective or after a secretary of state or similar office first provides public notice of its creation or registration, whichever is earlier.  

Associations created or registered on or after January 1, 2025, will have 30 calendar days from actual or public notice of their creation or registration is effective to file their initial BOI reports.

Both New and Existing Associations

The association must make updates, corrections, and additions to the filing (i.e., a board member is replaced, moves, etc.) within 30 days of learning the change.

4. What are the consequences of failing to submit Beneficial Ownership Information (BOI)? 

Failure to submit BOI can result in civil fines of $500 per day, criminal fines of up to $10,000, and up to 24 months in prison.

5. How should Beneficial Ownership Information (BOI) be submitted?

Required information can be submitted via the Financial Crimes Enforcement Network (FinCEN) website at:

6. How is FirstService Residential responding?

FirstService Residential is diligently working with association attorneys and others to understand the potential impact the CTA may have on board members and their roles within associations.

A bipartisan coalition of more than 80 senators and representatives has sent a letter to FinCEN to advocate for a one-year postponement of all reporting obligations. We believe the CTA should not apply to community associations, as the Community Association Institute (CAI) has stated. We support CAI’s current efforts, including:

  • Requesting a delay in implementing the Beneficial Ownership Information (BOI) reporting requirements by supporting H.R. 4035/S. 2623 and H.R. 5119.

  • Requesting community associations be exempt from the act and the subsequent Beneficial Ownership Information (BOI) reporting requirements.

  • CAI is urging board members and industry professionals to reach out to their Senators and request them to postpone the enforcement of the Corporate Transparency Act, and explain if community associations are subject to CTA reporting requirements.

  • Urging confidentiality of the individual corporate filings of the Beneficial Ownership Information (BOI) reporting through the rulemaking process.

 Please consult your association’s attorney and CPA to determine whether your association must comply with the CTA.

Our team will continue to monitor this conversation while supporting our boards in their critical work as volunteers serving their communities.

Friday March 22, 2024