Curious about the potential effects of the recently enacted Corporate Transparency Act on your HOA? Let’s explore how BOI reporting might impact your community.
Understanding the Corporate Transparency Act: What You Need to Do
The Corporate Transparency Act (CTA) aims to prevent money laundering. It does so by requiring certain U.S.A. companies to share information about their primary owners and founders. This information is submitted to the Financial Crimes Enforcement Network (FinCEN).
The new law started on January 1, 2024, and affects groups like homeowner associations (HOAs). It also affects various other groups and entities, including corporations, limited liability companies (LLCs), partnerships, and other business entities operating in the United States. Following CTA rules is essential for all these groups.
Breaking Down BOI Reporting: What It Means
BOI (Beneficial Ownership Information) reporting requires specific companies, known as reporting companies, to provide FinCEN with information about their primary owners. This information encompasses names, addresses, birthdates, and ID numbers. Older companies must comply by January 1, 2025, while newer ones adhere to different deadlines.
CTA Deadlines To know:
- For companies that were established prior to January 1, 2024, the deadline for submitting their initial BOI reports is January 1, 2025.
- Regarding companies formed on or after January 1, 2024, they are obligated to file their initial BOI reports within 90 days from the date of their establishment.
- In the case of companies established on or after January 1, 2025, they will be granted a 30-day window from their date of formation to submit their initial reports.
Change Of Information in Corporate Transparency Act Reporting
Reporting companies must continuously update their BOI report when there are changes in information, such as a company’s address or a new Doing Business As (DBA) name, within 30 days of the change. Similarly, any alterations to a beneficial owner’s details, including name, address, or unique identifying number, should also be reported promptly.
It’s important to note that the renewal of an identification document does not necessitate a filing, unless it results in a new identification number on the driver’s license or passport. Reporting companies should maintain communication with beneficial owners to ensure timely reporting of any changes.
Understanding HOA Beneficial Owners and Company Applicants
Beneficial owners play a vital role in a company’s operations or control. Therefore, HOAs must identify beneficial owners meeting two criteria: 25% or more ownership stake in the HOA and significant control. These owners can include investors with ownership in multiple units exceeding the 25% threshold and members of the HOAs’ Board of Directors.
Typically, members of the Board of Directors hold significant control over the HOA. Consequently, their information must be included in the HOA’s BOI report, along with individuals who own 25% or more.
It’s important to note that there are no penalties for providing additional information on a BOI report. In cases of uncertainty regarding an individual’s status as a beneficial owner, it is advisable to include their information in the HOAs’ BOI report as a best practice.
Do HOAs Need to Follow Corporate Transparency Act Rules?
Most HOAs will need to file BOI reports, except for those organized as 501(c)(3) tax-exempt organizations. HOAs typically operate as non-profit corporations but don’t meet the criteria for charitable organizations under the Tax Code.
Therefore, most HOAs must file BOI reports with FinCEN. It’s crucial for HOAs to educate potential beneficial owners and company applicants about FinCEN’s new reporting requirements and seek advice from a trusted advisor to ensure they comply.
Failing to submit a BOI report can lead to penalties. These penalties may include daily fines of up to $500, total fines reaching $10,000, or imprisonment for a maximum of two years. Furthermore, FinCEN has the authority to hold reporting companies, beneficial owners, senior officers, and company applicants responsible for these penalties.
Using FincenFetch for BOI Reporting: Simplifying Compliance Efforts
FincenFetch is a powerful tool designed to streamline the process of BOI reporting for organizations, including homeowner associations (HOAs). To illustrate, this user-friendly platform simplifies the collection and organization of required information, making compliance efforts efficient and effective.
- Simplifies BOI reporting for organizations, including HOAs
- Collects essential details about beneficial owners and company applicants
- Ensures accurate, error-free reporting to FinCEN
- Provides timely reminders and notifications for reporting deadlines
- User-friendly interface for easy compliance
- Allows organizations to focus on core operations while meeting regulatory obligations.
Helping HOA’s File BOI Reports
With this platform, HOAs can quickly gather essential details about beneficial owners and company applicants, such as names, addresses, birthdates, and identification numbers. The platform ensures accurate compilation and formatting of all necessary information according to FinCEN’s requirements, reducing the likelihood of errors or omissions.
Moreover, FincenFetch offers features to help HOAs stay on track with reporting deadlines. It provides reminders and notifications to ensure that updates or changes to beneficial ownership information are promptly communicated to FinCEN within the required timeframe.
By leveraging FincenFetch, HOAs can file BOI reports with confidence and peace of mind. The platform’s intuitive interface and comprehensive functionality make the compliance process more manageable, allowing organizations to focus on their core operations while fulfilling regulatory obligations effectively.
Embracing Compliance: Moving Forward Together
Following the Corporate Transparency Act is essential for all affected groups, including HOAs. By understanding the rules and using tools like FincenFetch, it’s easier to follow the rules and avoid penalties.
Taking small steps to teach members and follow reporting rules will make things easier in the future. Schedule a demo now to learn more!