- Business name.
- Legal name of board members, birthdate, home address, an identifying number from a driver’s license, state ID, or passport.
- Individual with substantial control. The same information (name, birthdate, home address, identifying number) of person (s) who exercise substantial control over financial reporting for the community association corporation. It is unclear whether a community manager and/or management company qualify as an individual with substantial control. This is yet to be confirmed. CAI will continue to evaluate this and provide guidance accordingly.
- Changes, corrections, and additions to the filing must occur within 30 days of when you become aware of the change (i.e., board member moves, is replaced, etc.).
Noncompliance of filing could result in civil penalties of $500 per day and criminal penalties of up to $10,000 and up to 24 months in prison. We need your help to get community associations exempted from the Corporate Transparency Act’s filing requirements!
About the Corporate Transparency Act
The intent of the legislation was to help detect and report suspicious activity related to money laundering and terrorist finance, to facilitate tracking money that has been sourced through criminal or terrorist activity to safeguard the national security and the financial system of the U.S. This law applies to corporations that have less than $5 million in gross receipts or sales, fewer than 20 employees, and don’t otherwise meet broad exemptions like banks, credit unions, investment companies, venture capital, securities exchange or clearing agency, insurance companies, public utilities, accounting firms, tax-exempt organizations as qualified and determined with status by the IRS, i.e. 501c4 organizations, large operating companies, and inactive entities.
The consensus by community association lawyers is community associations incorporated at the state level will be impacted by this new law and will have a responsibility to file information with FinCEN through the Beneficial Ownership Information reporting requirements.
The legislation explicitly outlines 23 exemptions from reporting requirements (with power reserved for additional exemptions via regulatory action), and one exemption is granted to IRS tax-exempt organizations. Community associations operate like tax-exempt entities—with many small assessments and constrained expenditures. We assert that our members should be extended the same exemption afforded to tax-exempt organizations as outlined in the law. The legislation also explicitly exempts entities that exercise governmental authority. Community associations, while private, exist primarily to govern common interest communities. They are providers of essential services similar to local governments.
How You Can Help
FinCEN has the power, under the Corporate Transparency Act, to create regulations to implement the Act, and critically, review the current list of exemptions and adjust it as needed. Much like any federal agency, FinCEN has an established process for engaging on these kinds of reviews and adjusting regulations as needed. However, FinCEN has been so far unwilling to begin a formal review of the list of exemptions, and add community associations. To encourage FinCEN to do the right thing, we are asking that you and your neighbors reach out to your elected representatives in Congress to have them put pressure on FinCEN to use the regulatory power granted to it by the Corporate Transparency Act to review the list of exemptions and add community associations. Funding for FinCEN and other federal agencies ultimately must come from Congress; when Congress asks for something, FinCEN will listen.
Please, take time today to reach out to your representatives in Congress, and to share this important request with your neighbors!