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Community Associations Must Also Comply with The Corporate Transparency Act

23 Feb

Update Applicable to:Effective date
All covered persons under the CTAJanuary 1, 2025

What happened?

The Corporate Transparency Act (CTA) is a U.S. law that was passed in 2021 and became effective on January 1, 2024.

The CTA impacts community associations (condominium, homeowner (HOA), townhome association or co-op) that are classified as a domestic reporting company under the act.

What are the details?

  • The CTA requires certain businesses to disclose ownership information to the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.
  • Applicability: There are 23 different entities that are exempt from the Corporate Transparency Act.
  • Most associations will be required to comply with the CTA because they are corporate entities, and association board members have substantial control over the association and its finances.
  • The information reported must be updated if there are changes to the initial report that was filed with FinCEN within thirty (30) days of the date of the change (i.e., a change in the board of directors from the community association). 
  • In complying with the CTA, boards must be aware of the (1) reporting deadlines, (2) beneficial ownership information which must be reported, (3) privacy concerns, and (4) penalties for noncompliance (daily fine and prison up to 2 years).

Business Considerations

  • Employers will benefit from determining whether or not the law is applicable to their business by reviewing the definition of a reporting company, and the exemptions to see if they are listed as one of the 23 exempt entities.
  • If your corporate entity is created or registered on or after January 1, 2024, but before December 31, 2024, you will have 90 calendar days after its creation or registration to file its initial BOI report. If your corporate entity was formed before January 1, 2024, you will need to make sure that you file your initial BOI report before January 1, 2025, to avoid any penalties.
  • If you become aware that there have been changes in the board members’ names, addresses, dates of birth, etc., or have to make corrections or additions to your previously submitted report, you will need to make sure that you file a revised report within 30 days of becoming aware of the change.


Source References

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