Throughout 2024, the Corporate Transparency Act has been a hot topic for how it will affect community associations across the country. In this blog series, we will delve into the intricacies of the Corporate Transparency Act, exploring its implications for community associations, the specific requirements they must fulfill, and the broader impact this legislation is set to have on the corporate landscape. Stay tuned as we guide you through the steps necessary to navigate this new regulatory environment and highlight the benefits of increased transparency in our communal affairs.
Understanding the Corporate Transparency Act
The Corporate Transparency Act (CTA) is a significant piece of legislation aimed at increasing transparency among U.S. organizations. It requires that organizations submit Beneficial Ownership Information (BOI) reports to the Financial Crimes Enforcement Network (FinCEN). These reports must include detailed information about the company, its owners, and controllers. The primary aim is to combat activities such as money laundering, sanctions evasion, and terrorist financing by maintaining an up-to-date database of business ownership.
While there have been efforts to exempt community associations from this mandate, they are currently required to comply. However, this requirement might change if future lobbying efforts successful.
Compliance Requirements for Community Associations
Community associations, like other organizations, are required to file BOI reports with FinCEN. This involves providing detailed information about the Association and each board member. The required information includes:
- Association Information:
- Legal Name of the Association
- Physical Address of the Association
- Tax ID Information
- Board Member Information:
- Legal Name
- Birthdate
- Home Address
- Identifying numbers from a driver's license, state ID, or passport
- A photo of the identification document (driver's license, state ID, or passport)
Consequences of Non-Compliance
Failure to comply with the CTA can result in severe penalties for community associations. These penalties may include:
- Fines: Up to $500 per day, with a maximum of $10,000.
- Criminal Penalties: Possible imprisonment for up to 2 years.
- Civil Penalties: Additional fines and penalties as determined by authorities.
It is crucial to note that, although this regulation is relatively new, non-compliance could expose the Board of Directors and the association to both federal and civil penalties.
Filing Deadlines and Update Schedules
Community associations must adhere to specific filing deadlines and update schedules under the CTA. Associations formed before January 1, 2024, have until midnight on December 31, 2024, to report their BOI. New associations formed on or after January 1, 2024, must report their BOI within 90 days of their formation.
Additionally, any changes in board member information must be updated within 30 days. This includes changes in board members, their residential addresses, legal names, or any updates to previously submitted identification details such as name, address, or unique identifying number.
Submission Options for Community Associations
Community associations have a couple of options for submitting their BOI reports:
1. **Self-Submission**: The association's Board of Directors can choose to submit the information themselves through fincen.gov. This option requires the board to ensure that all members have submitted their information and to keep it updated as changes occur.
2. **Third-Party Service**: Associations can also utilize services, such as Priestley Management Company’s CTA administrative services, which handle the submission process for Boards.
Overall, community associations will need to adhere to the regulations outlined in the Corporate Transparence Act. If you are interested in learning more about the corporate transparency act, we encourage you to contact Priestley Management Company by Clicking here.
