August 9, 2024

7 Steps for Homeowner Associations to Comply with the Corporate Transparency Act (CTA)

What HOAs Need to Know

If you are a board member or officer of a homeowner association, condo association or other residential real estate association (in any case, an “Association”), considering for the first time how to comply with the Corporate Transparency Act (CTA), it may seem overwhelming.

The CTA is a new Federal law that requires most U.S. companies – including almost all Associations - to file a beneficial ownership information (BOI) report with FinCEN. Most business people have never heard of FinCEN – the Financial Crimes Enforcement Network of the U.S. Treasury.

We have been working on the CTA for years, however, and can walk you through the process in seven steps.

Seven Steps for Compliance

Does the CTA Apply to Your Association?
Is your Association Exempt?
When is Your Filing Deadline?
Who Are your Beneficial Owners?
Do You Need to Report a Company Applicant?
Collect BOI Data
Compile Report and File

Step 1: Does the CTA Apply to Your Association?

What kind of Association do you have? Check your Company’s formation documents or consult with your attorney to find out.

If your Association is a corporation, limited liability company or other entity that was created by the filing of a document with a secretary of state or any similar office under the law of a State or Indian tribe, then your company is a “domestic reporting company” and the CTA applies.
If your Association is an “unincorporated association” or an entity that does not exist by virtue of having filed a document with a secretary of state, the CTA might not apply to your Association. Check with your attorney before reaching a final conclusion.

Step 2: Is your Association Exempt?

A reporting company – including an Association - may be exempt from filing a report if it falls into one of the 23 exempt categories. If the entity is exempt, it does not need to file.

Most Associations are tax-exempt but fall outside the CTA exemption for tax-exempt entities. If you think your Association might be tax-exempt under Internal Revenue Code Section 501(c), as your attorney to determine whether your Association is exempt under the CTA.

If your Association is not exempt, then it will need to file.

Step 3: When is Your Filing Deadline?

An incorporated Association that was in existence before January 1, 2024 must file an initial report not later than January 1, 2025.
A newly-incorporated Association formed or registered on or after January 1, 2024 but before January 1, 2025, must file an initial report within 90 days after the date of formation or registration.
A newly-incorporated Association formed or registered on or after January 1, 2025 must file an initial report within 30 days after the date of formation or registration.

Step 4: Who Are your Beneficial Owners?

An Association’s BOI report will need to identify each of its beneficial owners.

A “beneficial owner” of a reporting company is any individual who, directly or indirectly, either (a) exercises substantial control over the reporting company or (b) owns or controls at least 25 percent of the ownership interests of the reporting company.

Since most Associations are organized as non-profit corporations, they will not have any owners, but will need to identify beneficial owners under the “substantial control” test.

An individual “exercises substantial control” over an Association if that individual:

Is a senior officer (defined to include any president, chief executive officer, chief operating officer, chief financial officer or general counsel);
Has the power to appoint or remove (i) any senior officer, or (ii) a majority of the board of directors (or similar body) of the Association;
Has “substantial influence over important decisions”; or
Has any other form of substantial control over the Association.

Most incorporated Associations will need to include their board members as beneficial owners under the substantial control test. If your company’s governance structures are complex or unusual, you may need the help of an attorney.

Step 5: Do You Need to Report a Company Applicant?

If your Association was formed on or after January 1, 2024, it will need to disclose the name of its “company applicant.” Associations in existence prior to January 1, 2024 do not need to disclose their company applicant.

FinCEN’s regulations define “company applicant” as:

with respect to a domestic reporting company, “the individual who directly files the document that creates the domestic reporting company,” and
with respect to a foreign reporting company, the individual who directly files the document that first registers the foreign reporting company.”

If there is more than one individual involved in the filing of the document that forms the domestic reporting company (or that registers the foreign reporting company to do business in the U.S.), the “company applicant” is both:

the individual who directly files the document that creates the company and also
the individual “who is primarily responsible for directing or controlling such filing.”

If your Association was formed by your attorney, your attorney should be able to tell you who was the company applicant.

If your Association was formed by a corporate service provider, that service provider should be able to tell you who was the company applicant.

Many law firms and corporate service providers have obtained a “FinCEN ID” for their company applicants.

A FinCEN ID is a twelve digit code (in the form nnnn-nnnn-nnnn) which may sometimes be stamped on the articles of organization by the company applicant.
If you have this twelve digit FinCEN ID for your company applicant, you do not need any additional information about the company applicant; the FinCEN ID will be sufficient for filing purposes.

Step 6: Collect BOI Data

At this step, you know that your Association is not exempt and must file. You also know whether your Association needs to disclose a company applicant and you know the names of your beneficial owners. In Step 6, you need to collect all the data required to complete the BOI report:

For the Association:
- Its full legal name
- Any trade or “doing business as” names
- A complete current address consisting of:
  - in the case of an Association with a principal place of business in the United States, the street address of the principal place of business, and
  - in all other cases, the street address of the primary location in the United States where the Association conducts business.
- The state, tribal, or foreign jurisdiction of formation
- For a foreign reporting company, the state or tribal jurisdiction where the company first registers
- The IRS Taxpayer Identification Number (TIN) (including an Employer Identification Number) or where a foreign reporting company has not been issued a TIN, a tax identification number issued by a foreign jurisdiction, and the name of that jurisdiction
For each beneficial owner:
- Full legal name
- Date Of Birth
- Current, as of the date of report, residential or business street address
- Unique identifying number from an acceptable identification document defined as:
  - A non-expired U.S passport
  - A non-expired identification document issued by the state, local government, or Indian tribe
  - A non-expired driver’s license issued by a state, or
  - If the individual lacks all of the forgoing documents a non-expired foreign passport
- Image of the document with that unique identifying number
For each company applicant (if required):
- Full legal name
- Date Of Birth
- Current, as of the date of report, residential or business street address
- Unique identifying number from an acceptable identification document defined as:
  - A non-expired U.S passport
  - A non-expired identification document issued by the state, local government, or Indian tribe
  - A non-expired driver’s license issued by a state, or
  - If the individual lacks all of the forgoing documents a non-expired foreign passport
- Image of the document with that unique identifying number

Step 7: Compile Report and File

After you have collected all the information outlined in Step 6, your Association is ready to file. If you have collected the required information through the FinCEN Report Company system, your data is safe and secure in our online platform. Simply following the prompts inside the FinCEN Report Company system to select the applicable filing product and file your BOI report.

Vantaca + FinCEN Report Integration
For HOA boards partnered with management companies using Vantaca, we’re excited to share that there’s now seamless integration with FinCEN Report. This integration simplifies the process of managing CTA compliance requirements and reporting, making it easier for associations to stay on top of evolving regulations. For more details on how to file, we encourage you to reach out to your association management company and learn more about how Vantaca is making CTA compliance straightforward and hassle-free.

Visit our Corporate Transparency Act Resource Center for more information!

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