Corporate Transparency Act (CTA): Key Compliance Steps for Community and Homeowners Associations

By Christopher M. Tingey, Partner, VF Law 

Introduction to the CTA 

The Corporate Transparency Act (CTA) was adopted by Congress in 2021 and went into effect on January 1st 2024.  It is an anti-money-laundering law aimed at gathering more information about corporations and limited liability companies that operate in the United States so that the federal government can take better action to prevent money laundering and terrorist funding.   

Under the law, all corporations and limited liability companies (among other entities) in the United States must file an initial “beneficial ownership interest” report to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).  There are some exempted companies that do not have to report—I will address those below—but, by and large, every for profit and nonprofit corporation and LLC in the United States must report.  That includes all incorporated homeowners associations and condominium associations in Idaho.   

So, practically speaking, what does the statute require and what does it mean for your community association?  Well, I’m glad you asked!  Let’s dive into a primer of some basic CTA questions and answers.  Remember, this is not legal advice for your community association.  Rather, it is simply a brief, not-all-inclusive primer into the CTA.  If you have specific questions, please consult your association’s legal counsel. 

Which Community Associations Must Report Under the Corporate Transparency Act?
All community associations (HOAs, condominium associations, cooperatives) in Idaho who are or have been incorporated must file a beneficial ownership report (BOI) with FinCEN.  The community association is a “reporting company” as defined under the CTA. 

Corporate Transparency Act Deadlines for Community Associations.  

The timing of when your community association was created dictates your filing deadline. 

• If your community association was created/incorporated by December 31, 2023, then it has until December 31, 2024, to file the BOI with FinCEN.    
  
• If your community association was created/incorporated on or after January 1, 2024, then it has 90 days from the date of incorporation to file the BOI with FinCEN, except that: 
  
  • Community associations (corporations) created during the last 90 days of 2024 must file the BOI with FinCEN by December 31, 2024. 

Are Nonprofit Community Associations Required to Report Under the CTA?  

Nonprofit corporation status is irrelevant to the applicability of the CTA to your community association.  Not-for-profit status is not one of the 23 exemptions from the CTA.  While there are 23 exemptions to the filing requirement contained in the CTA, only two could really apply to a community association in Idaho: 

• Your community had $5,000,000.00 in gross receipts and at least 20 full-time employees for the preceding year; or 
  
• Your community is a tax exempt entity (meaning, it is a 501(c) entity registered with the IRS—nonprofit status is not enough). 

    If you do not fall within one of these exemptions, then your community association must file the BOI report with FinCEN. 

Essential Information for the Beneficial Ownership Report (BOI) under CTA? 

That is easy: 

• Full name of each beneficial owner; 
• Street address (not PO Box), whether residential or business, of each beneficial owner; 
• Date of birth of each beneficial owner; 
• Unique identifying number from a valid government-issued ID, such as a driver’s license, passport or state ID for each beneficial owner; and 
• Image of the ID document used to obtain the identifying number (e.g., the driver’s license (both front and back) or passport) of each beneficial owner. 

Who Qualifies as a Beneficial Owner Under the Corporate Transparency Act?  

The statute defines beneficial ownership interest as a person who either: 

• Exercises, either directly or indirectly, substantial control over a reporting company (your association), or 
• Owns or controls at least 25% of the reporting company’s ownership interests. 

Therefore, in community associations still under developer control, the 25% ownership interest provision may come into play.  In non-developer-controlled associations, the substantial control provision will come into play.  That will require all directors (board members) and officers to report.  Depending on the level of control exercised, architectural review committee members or other committee members may also have to report, although that should be reviewed with your legal counsel for your specific situation. 

How to File a BOI Report for Your Community Association Under CTA?  

A community association may either file for itself by having a member of the board of directors or another person gather the required information from all directors and officers and other individuals who have a beneficial ownership interest in your community and file directly on the FinCEN website, OR you can hire someone to file for your association.  CAI-Idaho has several business partners who can help you file for your association. 

Penalties for Missing Corporate Transparency Act Filing Deadlines? 

This is the real kicker.  The CTA has significant penalties for violations: fines for the reporting company (up to $500/day with a maximum of $10,000.00), and jail time for non-reporting beneficial owners (up to 2 years).  You do not want to be out of compliance. 

Are There Ongoing Corporate Transparency Act Reporting Requirements?  

Technically, no. Once you file the BOI report, you are done.  However, if information in the report changes and is no longer accurate, then your community association needs to file an amendment.  You have 30 days from the change to file an amendment with FinCEN.  For example, when a board member’s term ends and a new director is elected in his or her place, your community association has 30 days from the change to file an amended BOI report with FinCEN.  A failure to do so could result in the penalties described above. 

Key Takeaways for Community Associations on Corporate Transparency Act Compliance in 2024. 

With 2024 rapidly coming to a close, it's essential for community associations, including HOAs and condominium associations, to ensure compliance with the Corporate Transparency Act (CTA). Most associations likely have a mandatory reporting requirement under the CTA, so don’t wait until the last minute. Gather the necessary information, develop a filing plan, and submit your initial Beneficial Ownership Report (BOI) on time to avoid penalties. Ensuring timely CTA compliance protects your association from fines and keeps you on the right side of federal reporting obligations.