What is the Corporate Transparency Act (CTA)? The CTA, effective January 1, 2024, requires reporting companies, including homeowners associations (HOAs), to file beneficial ownership information with the Financial Crimes Enforcement Network (FinCEN). This aims to aid law enforcement in detecting and preventing activities like money laundering and terrorism.
Who is required to report under the CTA? HOAs created by filing a document with a state agency are considered reporting companies. This includes domestic corporations, limited liability companies (LLCs), and other entities like homeowners associations.
Who qualifies as a "Beneficial Owner"? A beneficial owner is anyone who:
Exercises substantial control over the HOA (e.g., board members).
Owns or controls at least 25% of the ownership interests in the HOA.
What information must be reported? For the HOA (Reporting Company):
Full legal name (as per the Articles of Incorporation).
Physical address within the community (not the management company’s address).
Federal Tax ID Number.
For each Beneficial Owner:
Full legal name.
Date of birth.
Residential address.
Driver’s license or passport number, issuing jurisdiction, and an image of the ID document.
How should the required information be collected? A board member, agent, or association manager must gather ID images and personal information. This data must be collected, stored securely, and transferred in compliance with federal and state privacy laws.
What are the privacy laws that apply to collecting and storing this information? When collecting and storing ID information, HOAs must comply with:
Federal laws: FTC Guidelines, Electronic Communications Privacy Act (ECPA), Federal Identity Theft Laws.
California laws (for California HOAs): California Consumer Privacy Act (CCPA), "Shine the Light" Law (California Civil Code Section 1798.81.5), California’s Data Breach Notification Law, and California Penal Code Section 530.5 (Identity Theft).
Are there any exemptions to the CTA for HOAs? Yes, exemptions include:
HOAs that directly employ more than 20 full-time employees and have more than $5 million in gross receipts or sales.
HOAs recognized as 501(c)(4) organizations by the IRS.
Unincorporated associations not created by a state filing.
HOAs that are members of the National Small Business Association as of March 1, 2024.
How do I file the Beneficial Ownership Information Report (BOIR)? You can file:
Directly with FinCEN: Through a fillable PDF or online e-filing form available at www.fincen.gov/boi.
Via third-party providers: Services like HOACTA.app allow board members to submit information directly, with secure data storage and reduced liability for the HOA.
What are the deadlines for filing?
HOAs registered before January 1, 2024: Must file by January 1, 2025.
HOAs registered on or after January 1, 2024: Must file within 90 days of registration.
What happens if there are changes in the beneficial ownership information? HOAs must update their BOIR within 30 days of any changes, including:
New board members.
Changes in driver’s license or passport details.
Residential address changes.
Name changes (e.g., due to marriage or divorce).
What are the penalties for non-compliance?
Unauthorized Disclosure: Up to $591 per day in civil penalties and up to 10 years of imprisonment with a fine of up to $500,000.
Willful Noncompliance: Up to $591 per day in civil penalties, up to 2 years imprisonment, and a fine of up to $10,000.
Is the BOIR available for public inspection? No, the information reported in the BOIR is confidential and not available for public inspection.
