As the end of the year approaches, there has been no determination that community associations will be relieved of the requirement to comply with the Corporate Transparency Act (CTA). While we remain hopeful of a legislative or legal solution, you must be prepared to file the required information no later than January 1, 2025.
Who must comply with the CTA?
All of our community association clients and each of their board members must comply.
What is required for compliance?
The association must report to FinCEN its full legal name, any trade names, street address of its principal place of business, the state in which it was formed, and its EIN. It must also report the following about each board member: a FinCEN identifier OR name, birthdate, residential address, and an identifying number from a non-expired driver’s license or passport, along with an image of the referenced document. There is no annual reporting requirement, however, all changes to this information must be reported to FinCEN within 30 days.
When must the initial reporting be made?
For associations which were formed before January 1, 2024, the initial report must be filed no later than January 1, 2025.
What are the penalties for noncompliance?
Willful violations of the CTA may subject associations and board members to penalties and imprisonment. A person who willfully violates the reporting requirements may be subject to civil penalties of up to $500 for each day that the violation continues (adjusted annually for inflation), criminal penalties of up to two years imprisonment, and a fine of up to $10,000.
What should we do now?
Make a plan now to determine how the association and board members will comply with the CTA by 1/1/25. Board members or management can file the initial report and make required changes but it is critical they are diligent in doing so. There are many third party companies that will do this for a fee. Your management company may have a platform offering this service. Subject to written agreement, Stark & Stark can file the association’s initial report and any changes we are properly advised of.
If you will engage Stark & Stark to file the initial report on behalf of the association please advise us in writing no later than September 30, 2024. Upon receipt of your written request we will provide you with additional information including our fee for the filing and a sample agreement setting forth our respective obligations.
If you have questions about the association’s compliance with the CTA, please contact us.
