Legal Updates on the Federal Corporate Transparency Act (CTA)
In the evening on December 23, 2024, the United States Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) issued updated guidance in response to the ruling and extended the filing deadline for Beneficial Ownership Information (BOI) from January 1, 2025, to January 13, 2025. This limited extension did not affect the extended reporting deadline for disaster relief purposes (ex. “A reporting company also must be located in an area that is designated both by FEMA as qualifying for individual or public assistance and by the Internal Revenue Service as eligible for tax filing relief.”).
On December 26, 2024, the Fifth Circuit vacated its own stay, reinstating the preliminary injunction and once again preventing FinCEN from enforcing the CTA’s reporting requirements.
FinCEN issued the following statement: “In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with FinCEN and are not subject to liability if they fail to do so while the order remains in force. However, reporting companies may continue to voluntarily submit beneficial ownership information reports.”
Read the full legal update here: Corporate Transparency Act Legal Whiplash: What Community Association Board Members Need to Know
What is the Corporate Transparency Act (CTA)?
The Corporate Transparency Act (CTA) is a federal law requiring certain corporations or “reporting companies” to disclose ownership information to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.
Does the Corporate Transparency Act (CTA) impact condominium, homeowner (HOA) and townhome community associations?
Yes. As defined by the CTA, the term “reporting companies” encompasses corporations. Since most community associations operate as nonprofit corporations, they are included within the scope of the CTA’s requirements.
Does the Corporate Transparency Act (CTA) impact community association board members?
Yes. As defined by the CTA, a “beneficial owner” is any individual who, directly or indirectly, exercises “substantial control” over the community association and is an “important decison-maker.”
Does the Corporate Transparency Act (CTA) have deadlines and penalties?
Yes. Community associations incorporated prior to January 1, 2024 must company with the CTA’s requirements by January 1, 2025.
As for penalties, an individual who violates the CTA’s requirements may be subject to civil penalties of up to “$500 for each day that the violation continues” along with “criminal penalties of up to two years imprisonment and a fine of up to $10,000.”
What is required to comply with the Corporate Transparency Act (CTA)?
Each “beneficial owner” must complete specific reporting documentation and provide FinCEN with their full legal name, date of birth, current address, and a unique identifying number from an acceptable government issued ID (ex. driver’s license, passport).
Next steps for community association board members
Board members and property managers are advised to consult with their association’s attorney to start their preparations immediately. Community associations cannot ignore the impact of this new law and will need to demonstrate a sense of urgency to comply the Corporate Transparency Act (CTA).
Fill out the form below to contact KSN if you have questions about this new law. KSN attorneys can:
- Confirm your community association is subject to the Corporate Transparency Act
- File the correct documentation with the U.S. Department of the Treasury
- Provide the proper information and personal identification to the U.S. Department of the Treasury in a secure manner that protects your private information
Additionally, the CTA specifies that FinCEN must be updated within 30 calendar days if there are changes to the community association’s board of directors (ex. after an election, if a board member steps down, etc.).
Corporate Transparency Act (CTA) educational resources
Videos
KSN Podcasts discussing the Corporate Transparency Act (CTA)
KSN blog articles discussing the Corporate Transperency Act (CTA)
