Update on HOAs & required Corp. Transparency Act filing?

I started a thread back in February (https://is.gd/SiHbpX) on how a new law called the Corporate Transparency Act requires HOAs and other organizations to file beneficial ownership information by the end of the year. Subsequently, as others pointed out, there has been pushback both in Congress and in the courts against the CTA itself and also against including HOAs.

A web search just now doesn't turn up any promising new developments since the spring, though, and more recent posts by law offices (https://is.gd/sFuxtv) and other organizations (https://is.gd/AVA04p) seem to assume that the requirement to file by the end of the year is still in effect and still applies to HOAs.

Has anyone heard anything to the contrary?

CAI, the trade organization for HOAs, has filed a lawsuit regarding HOAs being included in CTA. They have an temporary injunction hearing this week or next on this. I went to a webinar last week and one of the attorneys for CAI gave the presentation. He did not seem very hopeful about the temporary injunction, and there is still a question whether or not it would apply to any HOA that wasn't a member of CAI.

Filing on the CTA website is a very easy thing to do. We are all required to do it by January 1, and I would not expect to get any exemption from that in the next couple of months.

C. 10. Are homeowners associations reporting companies?

It depends. Homeowners associations (HOAs) can take different forms. As with any entity, if an HOA was not created by the filing of a document with a secretary of state or similar office, then it is not a domestic reporting company. An incorporated HOA or other HOA that was created by such a filing also may qualify for an exemption from the reporting requirements. For example, HOAs recognized by the IRS as section 501(c)(4) social welfare organizations (or that claim such status and meet the requirements) may qualify for the tax-exempt entity exemption. An incorporated HOA that is not a section 501(c)(4) organization, however, may fall within the reporting company definition and therefore be required to report BOI to FinCEN.

[Updated June 10, 2024]

This opens another can of worms. WHO takes the picture of the BOD's drivers licenses? Where is that photo stored? Both on the picture takers storage
and where the photo is sent? What happens if there is a data breach? Who is ultimately held responsible? Does the photo need to be updated when BOD's
renew their license? Here's a novel idea, just use a regular photo or these government agencies allow shared access to DL photos.
Mona Lisa Vito scoff OMG Vinnie, you're a genius.

You're pointing out some of the privacy concerns that *many* have about the CTA. Board members have to put up with enough crap for the privilege of volunteering their time, they don't need identity theft on top of everything else. Nor does the association need more liability.

A poster in another thread commented that she's just deleting the photos and other personally identifiable information after uploading it to the government website. I'm not sure whether that will satisfy the reporting requirements or not, although it would make it less awful if the HOA's information systems are hacked. And it will mean re-collecting that information every year, although that's maybe not so bad since driver's licenses expire.

And this isn't just a once-a-year-and-you're-done thing. The association has to report every time there is a change in composition of the board, so for most it will be an annual thing at least. Those of us whose boards are revolving doors will be doing this multiple times a year (we'd have had to report 4 times this year already, and I'm not taking any bets on the remainder of the year). This is a significant time sink for a board or manager who already have insufficient time for essential tasks. To me that's another indicator that the good folks who were responsible for creating this legislation didn't give a single thought to community associations.

I plan to change my appearance after reporting my information. /evil-grin

And... in section 6402(6)(b) it says the purpose of collecting the identification is to "confirm beneficial ownership information provided to financial institutions...". Well the whole board doesn't provide ID when an HOA opens a bank account and it's only those bank accounts that are subject ti certain laws relating to money laundering.

These are just questions...not answers.

Also...A "beneficial owner" is an individual who "exercises substantial control over the entity." Well no individual board member does this. And a beneficial owner is not an individual who acts as an agent for someone else.

And a "reporting company" does not include a 501(c) corporation that is tax exempt.

What we did, using a desktop computer, was scan the DL.
Attach the jpeg to the proper place in the filing document.
Sent the document.
Delected the jpeg on the computer.
Emptied the trash can on the computer.

All of this was done in front of the Board.

The copy of the document you filed online does not include the actual jpeg.
It does list the DL number.
I redacted (blacked out) that number prior to putting a copy on the Association files.


The photo is submitted as an attachment to the online filing.
The filing is done through the Financial Crimes Enforcement Network (FinCen) of the US Department of the Treasurary
Their website is: https://www.fincen.gov/

To read FinCen's final ruling on access to the info, see: Fact Sheet: Beneficial Ownership Information Access and Safeguards


In my opinion, it's not "if" but "when" there is a data breach.
Having been included with a data breach of the US Government, I expect the following would happen:

You will get a letter notifying you of the Breach.
You will be given an opportunity to have a year or more of credit monitoring service through a contractor of the Governments choosing.
You will be encouraged to obtain a free copy of your credit report and review it.

BTW: You may obtain free copies of your credit report (the site the government tells you to go to): https://www.annualcreditreport.com/index.action

That is all that will happen if there is a breach.

Keep in mind, there have been several data breaches with different companies and your info is most likely already on the dark web.
Personally, I've frozen our families credit reports so nobody can obtain a copy unless you unfreeze it.
This way, it's very difficult for someone to open a credit account or obtain a loan with your info.


Realistically, probably nobody.


Excellent Question.
Here is the page with those answers: H. 2. What are some likely triggers for needing to update a beneficial ownership information report? From FinCen websites frequently asked questions

An attorneys interpretation Beneficial Ownership Information report ongoing update requirements from an attorneys website


I know your joking but realistically you have to identify the document being used.
The choices are (have to pick one):
State Issued Drivers License
State or Tribal Issued ID
US Passport
Foreign Passport

General Resources

FinCen Help & Resources links to step by step instructions

Welcome to the BOI E-Filing System from the FinCen website

Benefical Ownership Information Home Page from the FinCen Website

Frequently Asked Questions from FinCen website

Here's an interesting angle:

Internal Revenue Code § 528. Certain Homeowner Associations.

(a) General rule. A homeowners association (as defined in subsection (c)) shall be subject to taxation under this subtitle only to the extent provided in this section. A homeowners association shall be considered an organization exempt from income taxes for the purpose of any law which refers to organizations exempt from income taxes.

What's wrong with this argument? CTA states "tax exempt entities" are exempt from CTA. IRS 528 above says for the purposes of laws, homeowner associations are tax exempt entities.

And no I am not trying to prevent anyone from complying with CTA.

However, the CTA specifies those entities who are exempt.
See: Beneficial Ownership Information Reporting Frequently Asked Questions from FinCen
#7 identifies who has to report
#8 identifies who can be exempt from reporting

Hence, that part of the IRS code is not relevant in my opinion.
If you think it is relevant, I would suggest getting a legal opinion.

From CAI regarding the lawsuit:

"On Oct. 11, the United States District Court in Alexandria, VA held a hearing in Community Associations Institute v. U.S. Department of Treasury. ... A decision surrounding CAI’s request for a preliminary injunction in the case is expected in the coming days or weeks."

Stay tuned.

The webinar is very helpful about the mechanics of filing.

The main point ("look how easy this is") is disingenuous, though. Most of the objections I've seen to the CTA have little to do with the ease of reporting - although for larger associations with a lot of turnover on their boards, keeping up with the changes may very well be burdensome. The issues that have people really up in arms are privacy concerns, the fact that the CTA involves surveillance in the absence of probably cause, and the fact that some parts of the CTA have been found to be unconstitutional by a court. The fact that it's easy for me to help the government violate my constitutional rights isn't reassuring. It's a slap in the face.

The online filing is also not "no big deal" as some have claimed. Like many online forms, it asks for some pieces of information without explaining what the information is and how it would be used. It's kinda the running joke about those endless terms of service agreements that most people click past without reading: did I just give away my first-born child? We're providing information without being fully informed of the implications of that.

I also note that people who think they can just delete photos of driver's licenses from association computers to avoid liability for data theft are also missing the point. The association has to file whenever beneficial owner information changes, and that includes new driver's licenses or passports. If you get run over by a bus and new folks have to deal with this, how are they going to know what was reported previously? You've destroyed the paper trail.

This "no big deal" has some real potential for costly screw ups, especially when you consider the civil and criminal penalties attached to non-compliance. Once again, we expect unqualified volunteers to behave like professional corporate officers even though we have YEARS of ample evidence that they're mostly not up to the task. What could possible go wrong, huh?

It was a bit ironic that the lawyers on the webinar agreed that an association shouldn't have to hire a lawyer to deal with this. This raises the question: so why are community association lawyers all over the country providing educational webinars and whatnot if this is just normal business for boards? All this education strongly suggests that it is not. Might this have something to do with *criminal penalties" being levied for typical board incompetence??? Hmmmmm...????

The lawyers on the webinar also made something of a big deal about the concept of "substantial control" as a justification for why community association board members are beneficial owners who should report. But how much control do boards actually have if a pack of upset homeowners can kick them to the curb or abuse them until they quit?

Imagine a bunch of irate shareholders being able to remove a company's entire board because they're upset over the price of toilet paper. Ridiculous, isn't it? No for profit company could operate that way. Which is the point: community association boards are not comparable to the boards of for-profit corporations. IMHO, the CTA demonstrates a widespread misunderstanding of how community associations actually work - which is surprising considering how many people live in one. The legislatures looked at the superficial similarities without thinking about whether they go any deeper.

Oooooh, I'm so irked about this.