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Please Contact Your Represenatives concerning the Corporate Transparance Act

Started by TimB4 • 20 replies • 315 views

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TimB4 (Tennessee)
Posts: 21,059
Posted:
Base on an earlier thread, Subject: The Corporate Transparency Act: Coming to Your Community Soon, started by Cathy, I chose to contact my congressional representatives and Senators about exempting HOAs and COAs from the act. I contacted them through their website.

This afternoon, I received a call from the office of one of my representatives. They wanted to know how this is impacting my Association and asked about exemptions.

I explained about membership apathy and that having to report personal info to the government will likely lower the volunteer pool.
I noted that, through hackers, the government has had my information taken on more than one occasion.

I explained that HOAs and COAs are typically non-profits, but we fall under 501c(4) category and are therefore, not exempt from the act (501c(3) non-profits are).

If we want change, I encourage those serving on their boards to contact your representatives and senators.
If enough of us contact them, perhaps things will change.

If you don't know who your representatives or senators are, see:

Find Your Representative from the US House of Representatives

Contacting U.S. Senators from the US Senate

Once again Cathy, Thank you for bringing the issue to the forum.
ElleN (Idaho)
Posts: 4,420
Posted:
Quote:
Posted By TimB4 on 02/02/2024 11:18 AM

I explained that HOAs and COAs are typically non-profits, but we fall under 501c(4) category and are therefore, not exempt from the act (501c(3) non-profits are).
I hope you meant to post that HOAs and COAs are rarely 501(c)(4) organizations. As a result the overwhelming majority of HOAs and COAs are subject to the new Corporate Transparency Act.

That one of your members of Congress reached out to you is great. I think few could explain the situation better than you.
TimB4 (Tennessee)
Posts: 21,059
Posted:
You are correct.
RogerJ1 (Texas)
Posts: 550
Posted:
Quote:
Posted By TimB4 on 02/02/2024 11:18 AM
Base on an earlier thread, Subject: The Corporate Transparency Act: Coming to Your Community Soon, started by Cathy, I chose to contact my congressional representatives and Senators about exempting HOAs and COAs from the act. I contacted them through their website.

This afternoon, I received a call from the office of one of my representatives. They wanted to know how this is impacting my Association and asked about exemptions.

I explained about membership apathy and that having to report personal info to the government will likely lower the volunteer pool.
I noted that, through hackers, the government has had my information taken on more than one occasion.

I explained that HOAs and COAs are typically non-profits, but we fall under 501c(4) category and are therefore, not exempt from the act (501c(3) non-profits are).

If we want change, I encourage those serving on their boards to contact your representatives and senators.
If enough of us contact them, perhaps things will change.

If you don't know who your representatives or senators are, see:

Find Your Representative from the US House of Representatives

Contacting U.S. Senators from the US Senate

Once again Cathy, Thank you for bringing the issue to the forum.

The initial article cited states: "Additionally, associations organized as tax exempt entities under section 501(c) of the Internal Revenue Code are exempt." So all 501s are exempt, no?

https://www.chadwickwashington.com/2023/10/10/the-corporate-transparency-act-ctas-beneficial-ownership-information-reporting-requirements-what-do-community-associations-need-to-know/
RogerJ1 (Texas)
Posts: 550
Posted:
Quote:
Posted By TimB4 on 02/02/2024 11:18 AM
Base on an earlier thread, Subject: The Corporate Transparency Act: Coming to Your Community Soon, started by Cathy, I chose to contact my congressional representatives and Senators about exempting HOAs and COAs from the act. I contacted them through their website.

This afternoon, I received a call from the office of one of my representatives. They wanted to know how this is impacting my Association and asked about exemptions.

I explained about membership apathy and that having to report personal info to the government will likely lower the volunteer pool.
I noted that, through hackers, the government has had my information taken on more than one occasion.

I explained that HOAs and COAs are typically non-profits, but we fall under 501c(4) category and are therefore, not exempt from the act (501c(3) non-profits are).

If we want change, I encourage those serving on their boards to contact your representatives and senators.
If enough of us contact them, perhaps things will change.

If you don't know who your representatives or senators are, see:

Find Your Representative from the US House of Representatives

Contacting U.S. Senators from the US Senate

Once again Cathy, Thank you for bringing the issue to the forum.

The initial article cited states: "Additionally, associations organized as tax exempt entities under section 501(c) of the Internal Revenue Code are exempt." So all 501s are exempt, no?

https://www.chadwickwashington.com/2023/10/10/the-corporate-transparency-act-ctas-beneficial-ownership-information-reporting-requirements-what-do-community-associations-need-to-know/
RogerJ1 (Texas)
Posts: 550
Posted:
The government site on the law states all tax exempt entities are exempt from this law:

https://www.fincen.gov/boi-faqs#C_2
ElleN (Idaho)
Posts: 4,420
Posted:
Quote:
Posted By RogerJ1 on 02/02/2024 6:59 PM
The government site on the law states all tax exempt entities are exempt from this law:

https://www.fincen.gov/boi-faqs#C_2
HOAs and COAs are rarely tax-exempt entities. Instead, most HOAs and COAs fall under IRC 528 (and not IRC 501(c)).
RogerJ1 (Texas)
Posts: 550
Posted:
Quote:
Posted By ElleN on 02/02/2024 7:05 PM
Posted By RogerJ1 on 02/02/2024 6:59 PM
The government site on the law states all tax exempt entities are exempt from this law:

https://www.fincen.gov/boi-faqs#C_2
HOAs and COAs are rarely tax-exempt entities. Instead, most HOAs and COAs fall under IRC 528 (and not IRC 501(c)).

I understand that but I was responding to a post where the person stated that 501(c)(4) entities were NOT exempt from the act but 501(c)(3) entities are. I want to clarify where someone is seeing that as I find all 501s are exempt.
WendyM5 (North Carolina)
Posts: 1,522
Posted:
"Having to report personal info to the government will likely lower the volunteer pool"

Do you mean like doing your taxes every year? Or getting a driver's license, or any other totally reasonable request for the govt to get your info?
Seriously I am in favor of the CTA. If people are so paranoid that they don't want the government to have the same basic contact info, it already has, they shouldn't be on the board anyway.
vis ta vie
RogerJ1 (Texas)
Posts: 550
Posted:
Quote:
Posted By WendyM5 on 02/03/2024 11:01 AM
"Having to report personal info to the government will likely lower the volunteer pool"

Do you mean like doing your taxes every year? Or getting a driver's license, or any other totally reasonable request for the govt to get your info?
Seriously I am in favor of the CTA. If people are so paranoid that they don't want the government to have the same basic contact info, it already has, they shouldn't be on the board anyway.

I attended a CPA continuing educating coarse where the sign-in sheet asked for SSN on pre-printed old sheet but the SSN request was X-out with a message, "do not include your SSN." When the sheet got to me, all the preceding people had listed their SSNs. Also the course topic was identity theft.
KennethS2 (California)
Posts: 36
Posted:
According to our attorney 501(c)4 are not tax exempt only 501(c)(3) and therefore HOAs and COAs are currently included in the CTA unless you meet one of the other exempt status.

From Davis-Stirling: Corporate Transparency Act was designed for large corporations. Unfortunately, it is not. It applies to corporations; including non-profits, with less than $5 million in assets and fewer than 20 employees. The Feds think small corporations, especially homeowner associations, launder money and finance terrorist activities.

On January 1, 2024 the new reporting requirement goes into effect that will require most associations in California to file a Beneficial Ownership Information Report with the U.S. Department of Treasury’s Financial Crimes Enforcement Network. The Community Associations Institute is working to exempt associations from this regulation. Let's hope they are successful. There are over 55,000 HOAs in California.

What a mess.... Your government at work!
ElleN (Idaho)
Posts: 4,420
Posted:
Quote:
Posted By KennethS2 on 02/03/2024 11:50 AM
According to our attorney 501(c)4 are not tax exempt
?

A 501(c)(4) organization most certainly is tax exempt. See https://www.irs.gov/charities-non-profits/other-non-profits/social-welfare-organizations and a buzillion other sites.
RogerJ1 (Texas)
Posts: 550
Posted:
Quote:
Posted By ElleN on 02/03/2024 11:55 AM
Posted By KennethS2 on 02/03/2024 11:50 AM
According to our attorney 501(c)4 are not tax exempt
?

A 501(c)(4) organization most certainly is tax exempt. See https://www.irs.gov/charities-non-profits/other-non-profits/social-welfare-organizations and a buzillion other sites.

That attorney's advice makes no sense so it must be a miscommunication because all 501s are tax exempt - it is what they are.

https://www.irs.gov/charities-non-profits/other-tax-exempt-organizations
AidylP1 (California)
Posts: 108
Posted:
Quote:
Posted By ElleN on 02/03/2024 11:55 AM
Posted By KennethS2 on 02/03/2024 11:50 AM
According to our attorney 501(c)4 are not tax exempt
?

A 501(c)(4) organization most certainly is tax exempt. See https://www.irs.gov/charities-non-profits/other-non-profits/social-welfare-organizations and a buzillion other sites.

https://www.davis-stirling.com/HOME/N/Nonprofit-v-Charitable#axzz2YSm9iKzp

In California, community associations are primarily nonprofit mutual benefit corporations. Prior to changes in the tax code, homeowner associations were set up as under the IRS Code as a 501(c)(7) or sometimes as a 501(c)(4) organization. Now, they primarily fall under IRS 528, which was created specifically for HOAs. Even though they are nonprofit corporations, homeowner associations must file tax returns and pay taxes. Following is a summary of some of the more common 501(c) tax categories:

501(c)(4). Civic Leagues and Social Welfare Organizations. Donations to these associations are not tax deductible. Homeowner associations that qualify as exempt organizations are exempt from income taxes, except for any unrelated business activities. See www.501c4taxexempt.com.

Kinda shoots your post to sheds.
ElleN (Idaho)
Posts: 4,420
Posted:
AidylP1: What you posted backs up what I posted.
AidylP1 (California)
Posts: 108
Posted:
Quote:
Posted By ElleN on 02/03/2024 12:44 PM
AidylP1: What you posted backs up what I posted.

It doesn't...blah..blah...blah..blah...blah..blah
ElleN (Idaho)
Posts: 4,420
Posted:
AidlyP1, it is wonderful for readers here to see a HOA manager repeatedly put out false information.
WendyM5 (North Carolina)
Posts: 1,522
Posted:
I did the filing for ht CTA on line. Literally took 15 mintues after i got other board members to send their driver license photo to me. They can apply for an ID number if they dont' want to give me thier DL as well.
So much hoopla over nothng. Super easy and fast to do. I'm sure some lawyers will be getting $200 to fill this stupid form out for hoas.
vis ta vie
CathyA3 (Ohio)
Posts: 6,299
Posted:
Frankly, I'm less worried about what the government does with my data than I am about what the HOA will do with it. For many board members and even managers, data security isn't on their radar at all and I don't trust them to protect my personally identifiable information. The info asked for in the CTA is more sensitive than the kinds of info that HOAs typically deal with. There may be some exceptions - for instance, 55+ communities periodically have to verify ages of the residents in order to maintain their designation, so they may see photo IDs that provide birth dates. But HOAs generally don't care about such things.

The CTA is meant to be intrusive. It exists because they want to track money launderers and other criminal sorts. Most folks agree that the law was never intended to catch HOA boards in its net, but it doesn't specifically exempt HOAs. So here we are.

RogerJ1 (Texas)
Posts: 550
Posted:
Quote:
Posted By TimB4 on 02/04/2024 4:16 PM
Aidyl,

Thank you for mentioning IRC 528. I was unaware of that specific ruling/statute

For others who might be unaware, see: R. HOMEOWNERS' ASSOCIATIONS UNDER IRC 501(c)(4), 501(c)(7) AND 528 from the IRS

OR 26 U.S. Code § 528 - Certain homeowners associations from Cornell Law School


Thank you for the reference. It highlights the risk the current brain-dead Board subjected an association. The POA is small and is a 501(c)(4). As the IRS wants such an entity to do if it is small, and as the last 8+ boards did, the Association filed the 990N "e postcard" form that asks one or two basic questions on revenue and asset size. But the new board filed late, and paid a CPA to file a more complicated 990-EZ which includes a question asking the purpose of the entity, which the very simple 990N does not ask. The reason this Board gave was "to increase home values" which from my understanding is one of the reasons the IRS would deny a tax exemption. So the brain dead bunch brought attention, filing late and switching forms after many years, gave a purpose reason that might take away the exemption.

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