Important Notice: Beneficial Ownership Information (BOI) Reporting Requirements for HOA Compliance
Subject: Compliance Requirements for Homeowners Associations and Property Managers Under the Corporate Transparency Act
The Corporate Transparency Act (CTA), effective January 1, 2024, aims to prevent misuse of shell companies for activities such as money laundering by requiring most U.S. companies to disclose details about their owners and founders to the Financial Crimes Enforcement Network (FinCEN). This law impacts entities including homeowners associations (HOAs), who will have specific Beneficial Ownership Information (BOI) reporting requirements to meet.
Importance of HOA BOI Reporting Requirements
The BOI reporting requirements mandate that specific companies provide FinCEN with details on primary owners, such as names, addresses, birthdates, and ID numbers. FinCEN aims to increase transparency in ownership, making it more challenging for individuals to misuse HOAs for illicit purposes. Non-compliance can result in significant penalties, including daily fines of up to $500, total fines up to $10,000, or even imprisonment for up to two years.
BOI Filing Requirements for HOAs
Most HOAs will be required to submit BOI reports, with the exception of those organized as 501(c)(3) tax-exempt organizations. Generally, HOAs do not qualify as charitable organizations under the Tax Code, and therefore must comply.
Deadlines for BOI Filings
Key deadlines for submitting BOI reports include:
- Companies established before January 1, 2024: Submit initial BOI reports by January 1, 2025.
- Companies formed on or after January 1, 2024: File BOI reports within 90 days of establishment.
- Companies established on or after January 1, 2025: File initial reports within 30 days of formation.
It is essential for HOAs to update their BOI reports within 30 days of any changes, such as board member replacements or updates to beneficial owners’ details.
Understanding Beneficial Ownership in HOAs
In an HOA, beneficial owners typically include:
- Members of the Board of Directors who have substantial control.
- Individuals with a 25% or more ownership stake in the HOA (a rare situation due to the nature of HOA structure).
Filing Process and Required Information
Only one report needs to be filed for the association; however, the filing must include information for each board member, as board members are considered the beneficial owners for CTA purposes. For each board member, we will need:
- Legal name
- Address
- Date of birth
- License number (or other government-issued number such as a passport or state identification)
- A copy of a government-issued photo identification
Additionally, a new report must be submitted whenever there is a change in the Trustees.
Skyline Realty’s Role in the BOI Compliance Process
We will be filing the proper forms, and someone from our office will contact the designated board members or HOA president to obtain the required information. Skyline Realty will handle the entire process to ensure compliance with the deadline.