CTA REPORTING REQUIREMENT

The Federal Corporate Transparency Act (“CTA”), which was adopted to aid the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) in detecting terrorist funding, corruption, tax fraud, and other illegal activity, requires community associations to file a Beneficial Ownership Information form by January 1, 2025 (for existing entities formed prior to January 1, 2024).

The actual form that will need to be filed has not been released yet, but it is expected that associations will be required to provide:

• Entity name and tax identification number.

• Names of board members, including birthdate, address, and identifying number from driver’s license, state ID, or passport.

• Identity of the individual with substantial control over the financial reporting for the association.

• Changes, corrections, and additions to the filing must be made within 30 days of when the change occurs and is known.

It seems clear that the CTA was not intended to cover community associations but because of the broad language it has widely been interpreted as encompassing community entities. The filing is due by January 1, 2025, therefore, any existing association need not file anything immediately under the CTA at this point.

While there are penalties for not complying with the filing requirements, the actual filing and information expected to be required does not appear that it will be difficult for communities to comply with.

More than one industry group is pursuing an exemption to exclude community associations from filing including Community Associations Institute (“CAI”). A lot can change in a year and it is possible that an exemption for communities will be issued. MEEB will continue to monitor this issue and advise our clients of any developments.