Corporate Transparency Act -Finn CEIN reporting

Our HOA manages less than 200 homes, pool and common areas in Tennessee. Just this month we (the Board of Directors) were informed about the Corporate Transparency Act reporting requirements. This is totally new to us, none have ever heard of these requirements. Several of our board members have decided to drop off the board if this is a requirement for a volunteer position.

Anyone else finding themselves in this situation? If so, how did you handle the push back? We already have trouble getting enough residents to be on the board.
SharonB

You'll find a number of threads covering this topic on this website.

Many of us have expressed concern about the chilling effect this may have on people's willingness to serve on boards. This is especially true in condo communities since many people tend to equate "carefree condo living" with "I don't have to stir a finger".

Community Associations Institute (CAI) has filed a lawsuit against the Treasury, as have a number of organizations that represent small non-profit corporations. The lawsuit specifically mentions concerns about people's reluctance to serve on boards as a consequence of the CTA's reporting requirement. And the CTA has already been declared unconstitutional by an Alabama court. Unfortunately that ruling only affects members of the National Small Business Association, on whose behalf the NSBA filed the suit. But if one court ruled this way, it may open the doors for similar rulings.

There is also a bill in the US House of Representatives that proposes exempting community associations and other small corporate entities from the provisions of the CTA.

As for now, my condo association's board members all plan to report their information. I agreed to serve with the understanding that I'm willing to stay on the board until we no longer are subject to the CTA - *somebody* has to keep us out of receivership. It helps that two of us have had to go through background checks, fingerprinting, chats with humorless men in dark suits, and other verifications in the past, so it's not like our government doesn't already have our information.

So, stay informed.

Lobby your congresspersons to encourage support for H.R. 9045.

And hang out on this website because I'm sure people will be posting about their experiences.

Our property management company, which was just taken over by another company, has offered to complete the forms for $304. We only have 96 units and 5 board members. Should we do it ourselves, or let them do it?

This video walks you through the online form. If you don't want to listen to the whys and hows of CTA, the walk through starts about 20 minutes in. It's very helpful.

https://beckerlawyers.com/webinar-corporate-transparency-act-mandatory-reporting-for-community-associations-due-by-january-1-2025/

CathyA3's Rant du Jour:

I read through the latest legal filings dealing with CAI's lawsuit against the Treasury. These dealt with the request for a preliminary injection on the reporting requirements and the judge's denial of same. These were very typical of the filings I've seen: much legalese justifying the government's need to track the bad guys and CAI's response of "they ain't here, you're looking in the wrong place".

Anyone who has lived for years in HOAs or condos and who has served on the board is in on the dirty secret: the folks in charge of these things are not financial geniuses. If anything, many community associations are underfunded and on a downward trajectory to financial disaster. I've been watching a large condo association in my area that's a slow moving dumpster fire thanks to years of too-low assessments paired with unwise spending. It's too bad. This is a nice community that serves the population that isn't rolling in dough but can still afford to own their homes. Best case for them will be eventual de-conversion, because the membership can't afford to dig their way out of the financial hole they're in. Their current maneuvering complies with state law but doesn't begin to remedy the situation.

So, you have boards that can't handle routine expenses, checking accounts, and maybe CDs for their reserves (assuming they've been smart enough to even have reserves). They spend their days arguing over parking and dog poop and the colors on people's front doors. Does anyone seriously think they're hiding high-end financial crimes in this mess?

Meanwhile, take a look at the entities that are exempt from the CTA's reporting requirements: Banks. Insurance companies. Accounting firms. Registered brokers and dealers. Pooled investment vehicles that are operated or advised by a bank, credit union, broker, dealer, investment company, registered investment adviser, or venture capital fund adviser. And then you have the Wild, Wild, West of the crypto-currency exchanges that are not regulated by anyone or anything.

Where would you try to hide monkey business? In a large institution that where small transactions can disappear among all the other normal business that's going on, or in a small corporation that can't afford to replace the roofs?

And then there is the unspoken idiocy of thinking that the real bad guys are going to be reporting anything to the government.

Are there financial shenanigans in a few community association's? Of course. But they're typically petty thievery or abuse of the association's debit card. And they're for personal gain. The thief isn't financing terrorist organizations, she's buying herself something that she can't afford on her normal income. And you know what? These penny-ante things are found by homeowners who look closely at the monthly financials and ask questions. The government isn't going to find them in an ever-changing list of condo board members that only confirms the fact that nobody wants to serve on condo association boards.

It's maddening. And it will do nothing to stop international terrorism.

LoriM15 - I don't know who you are but I say THANKS! for the video. It was great summary of what is going on. I am passing it along to my condo for those who like to hear.

It took a lot of bits and pieces and was put in a good soup to digest. I really appreciate it.

Not all condos and HOAs are required to submit CTA filings. I recently determined that mine is not required to file. Here are my notes:

The FAQs on the FINCEN website say:

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.
https://www.fincen.gov/boi-faqs#C_10

Also, the flow chart on page 9 of this guide is helpful:
https://www.fincen.gov/sites/default/files/shared/BOI_Small_Compliance_Guide.v1.1-FINAL.pdf

In my case, the analysis was:
1) Is the company a corporation or LLC? No, we are a trust.

2) Was the company created by filing a document with the secretary of State? No, our condo association as created by the filing of a "Declaration of Trust" at the country registry of deeds.

3) Is the Registry of Deeds a "similar office" to the Secretary of State? No, the deed registry is a county-level office, which performs a different function than the secretary of state.

Conclusion: this particular association is not a "reporting company"!

?

A trust can incorporate. In other words, a condominium community can be both a trust and a corporation.

If your condominium is an unincorporated trust, then okay. But it can also be an incorporated trust.

Why would a condominium trust incorporate? For the added legal protections of being a corporation.

maybe they should stop driving too because the governmnet requires the same info of them to get a drivers license. IN fact you literally send a copy of your DL to comply with the new law.

you jsut have people that dont' want to be on teh board and are using CTA as an excuse to leave.

These points are missed by so many people who say "oh well, the government already has my information" and "I have nothing to hide".

I encourage everyone to ready through the legal filings in CAI's lawsuit against the Treasury, because they address these points. You can find the legal filings .

Quotes from the filings:

The CTA aims to collect beneficial ownership information from entities to facilitate the detection and prosecution of financial crime. Yet, the CTA was also expressly designed to circumvent traditional Fourth Amendment protections. FinCEN’s then-Director testified to Congress that the CTA would eliminate the need for investigators to comply with fundamental safeguards, such as obtaining grand jury subpoenas or search warrants, to obtain beneficial ownership information.

The CTA establishes a vast database of personal identifying information that may be shared with other law enforcement agencies and foreign governments and used for various law enforcement purposes. The CTA authorizes FinCEN to disclose beneficial ownership information to:
(1) a “Federal agency engaged in national security, intelligence, or law enforcement activity, for use in furtherance of such activity;”
(2) a “State, local or Trial law enforcement agency, if a court of competent jurisdiction … has authorized the law enforcement agency to seek the information in a criminal or civil investigation;”
(3) a “law enforcement agency, prosecutor, or judge of another country” via “a request from a Federal agency” pursuant to “an international treaty, agreement, convention, or official request made by law enforcement, judicial, or prosecutorial authorities in trusted foreign countries” for “authorized investigation or national security or intelligence activity” by the foreign country;
(4) a “financial institution subject to customer due diligence [CDD] requirements, with the consent of the reporting company, to facilitate compliance” with CDD requirements; and
(5) a “Federal functional regulator or other appropriate regulatory agency” such as the Securities and Exchange Commission.

Additionally, the CTA mandates that FinCEN’s beneficial owner information “be accessible for inspection or disclosure to officers and employees” of Treasury Department officials, including IRS agents for “tax administration."

Congress has long recognized the significant deterrent effect that the threat of personal liability has on volunteerism. Nearly thirty years ago, Congress enacted the Volunteer Protection Act (VPA) to protect against “liability abuses related to volunteers serving nonprofit organizations.” 42 U.S.C. § 14501(b). In passing the VPA, Congress acknowledged volunteers’ “legitimate fears … about frivolous, arbitrary, or capricious lawsuits” and noted that the “willingness of volunteers to offer their services is deterred” by potential liability.

People, this stuff should scare the crap out of you. Being subjected to investigation because of the persons or entities you associate with? Really? Maybe I'm more paranoid than most (disclosure: one of my parents grew up in WWII Germany, and my childhood was a history lesson like no other). But give those in authority a tool, and they will find a use for it. And you won't enjoy the experience if that tool is used on you.

Hi Sharon,

You are unfortunately not alone. I have seen instances of several boards responding this way. I think the way to approach this is to look at the alternatives. Communities could be charged as much as $10,000 if they do not file. Or, it could pay a lot for a receiver who doesn't know your community well.

Hopefully HOAs do become exempt from the reporting requirement.