In 2021, the U.S. government enacted the Corporate Transparency Act (CTA) to increase transparency around company ownership. Aimed at reducing financial crimes like money laundering and tax evasion, the CTA requires many organizations, including certain nonprofits and HOAs, to report key information about their board members or “beneficial owners.” Here’s a quick guide for HOA board members on what the CTA means for you and your community.

Why Was the Corporate Transparency Act Enacted?

The CTA was passed to address gaps in corporate reporting that made it easy for anonymous companies to hide financial activities. By requiring companies to register their beneficial ownership information with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), the government seeks to curb illegal activities and increase accountability within corporations and nonprofits.

What Does This Mean for HOA Board Members?

While many board members of HOAs volunteer their time to support their communities, the CTA still holds them to specific reporting standards. Here’s what HOA board members need to know:

• Reporting Requirements: If your HOA falls under the CTA requirements, board members (or those with a significant influence in decision-making) must disclose personal information, including full legal name, date of birth, address, and an identification number (like a driver’s license or passport). This information is submitted to FinCEN and kept in a secure, non-public registry.
• Who Is Affected? Not all HOAs will need to report under the CTA. However, smaller associations without specific exemptions may need to comply. Consulting with a legal professional is advised to determine if your HOA qualifies for an exemption.
• Deadlines:
  • Existing HOAs registered before January 1, 2024, must submit this information by January 1, 2025.
  • Newly Formed HOAs (after January 1, 2024) have 30 days from their formation to report.

How Does This Impact Your Role as a Volunteer?

For volunteer board members, the CTA introduces an additional responsibility. Although the reporting process is not complex, failing to comply could result in fines or penalties for the association. While this responsibility adds a layer to your duties, the goal is to ensure transparency and security for your community and other organizations across the country.

Next Steps for HOA Board Members

1. Determine Your HOA’s Reporting Status: Work with legal counsel or a professional management service like HOAServicesUSA.com to confirm if your HOA must comply with the CTA.
2. Prepare to Report: If required, be ready to provide the necessary information by your HOA’s reporting deadline to avoid penalties.
3. Stay Informed: The CTA may evolve, and staying updated will help your Board ensure continued compliance.

Final Thoughts The Corporate Transparency Act may feel like an extra task, but it’s designed to create a more transparent and secure financial environment. If you’re unsure about your HOA’s responsibilities, reach out to HOAServicesUSA.com for guidance and support. We’re here to help you navigate these requirements so you can focus on building a vibrant, well-managed community.