FinCEN, CTA, and BOI

Updated: 12/18/2024

The latest twist in this saga is that Congress has recently released their latest Government Spending Bill, which includes a one-year delay for the CTA/BOI filing information.  This spending bill will be voted on sometime this week.  If passed, and if the temporary injunction is lifted, this would put off the filing requirements until January 1, 2026. 

The current standing is that the temporary injunction from the court in Texas is still in place, and the filing requirement is not enforceable.  Red Leaf is standing by to see where Congress and the courts go with all these things.  As of the date of this update, Red Leaf is in a holding pattern, awaiting further information.

Updated: 12/8/2024

HOA Board Members:

I am writing to provide a brief overview of the recent requirements from the Financial Crimes Enforcement Network (FINCEN) under the Corporate Transparency Act (CTA), and the associated Beneficial Ownership Information (BOI) filing requirements that affect HOAs.

Overview of CTA, FINCEN, and BOI Filing Requirements

Under the CTA, HOAs are required to file Beneficial Ownership Information (BOI) with FINCEN. This requirement is designed to improve transparency and deter financial crimes by maintaining accurate records of the individuals who own or control certain organizations, including nonprofit corporations like HOAs. The deadline for these filings was set as January 1, 2025.

Recent Court Cases and the BOI Filing Requirements

The standing of the CTA has been through a number of very recent court cases. In earlier cases, it was believed that HOAs would be exempt from filing BOI requirements, however those cases came back specifically requiring HOA’s to file BOI Information.

The latest case to make the news issued a temporary injunction against enforcement of the CTA on December 3rd. In this case, the enforcement of the BOI filing requirements has been temporarily blocked by the court. However, this is an actively litigating case, and this determination could be reversed. With that noted, various legal experts are recommending that HOAs prepare to file the Beneficial Ownership Information in the event the courts reverse the block, and the January 1st deadline is still enforced.

It’s important to note that non-compliance with the filing requirements – if reinstated – can carry heavy fines, and even criminal penalties. Red Leaf is here to help ensure your HOA is compliant, but we will need your assistance to make sure it’s done in a timely manner.

Compliance Planning

To be clear: enforcement of the Beneficial Ownership Information filing is currently block by the courts.  As of the update date at the top of this page, compliance cannot be enforced.  That is – filing the BOI information is not necessary.

Red Leaf follows various legal sources to give us insight to help us know how to help advise our clients.  (Reminder – we are not attorneys, and can’t give legal advice.)  Our sources are presenting a few options for HOA boards.  Boiled down, those are:

• • Do nothing – Wait for the courts to finalize their actions and determine if the CTA/BOI requirements are enforceable.
  • Prepare to file BOI information, but wait to file – Have the information on hand, but don’t actually file until the courts determine the filing requirements are enforceable.
  • File the BOI information voluntarily – Just do it and get it over with, to prevent the posibility of penalties once enforcement is determined.

Red Leaf is not making these decisions for boards, but attempting to provide some guidance to boards so they can make an informed decision, or can choose to engage an attorney to receive futher guidance.  Our goal is to help keep our clients in compliance with these requirements – if/or when, they become enforceable again.  Our recommendation, if we were to make one, is to be prepared to file, and wait it out.

What are the Court Actions About?

Very briefly, multiple cases have been taken to the courts in recent months, with various arguments.  The cases have been looking at these arguments against the CTA and BOI requirements:

• • Privacy Concerns – the personal information being requested has been viewed as potentially violating privacy rights.
  • Burden on Small Businesses – the administrative burden on small businesses (and HOAs) without clear justification has been criticized.
  • Federal Overreach – the CTA might tread on states’ rights to regulate business formation and operation by imposing federal requirements on state-chartered entities.
  • Constitutionality Challenge – the temporary injunction blocking enforcement cites that the CTA is “likely unconstitutional” and may be outside the legislative scope of Congress.

Assistance with BOI Filing

To make this process easier, Red Leaf is offering to handle the BOI filing on behalf of our client HOAs for a fee of $100 per year. This service will include updates as board membership changes, ensuring ongoing compliance without burdening the board members.  With the ‘on again, off again’ nature of this compliance issue, Red Leaf is in an odd position – offering a service for HOAs that may not be legally required, or that may be required and with penalties for not meeting a short deadline at the whim of the courts.  Due to the circumstances, Red Leaf is offering the following options:

• • Wait it out.
  • Prepare but don’t file: Red Leaf will gather the necessary filing information and have it ready to file – if needed ($60 for prep, $40 for filing and updates through 2025 – if required)
  • Voluntary Filing: Red Leaf will gather the necessary filing information and get it filed prior to January 1, 2025 ($100, including updates through 2025)
  • Self-Filing: Boards have the option of self-filing at any time, and can update the filings as board members enter and leave the board.

Next Steps

Board Members should consider the options listed above, and determine what is the best course of action for their community.  Red Leaf is working to help board members understand these requirements – while working them out for ourselves, too.  We will answer questions as we are able.

(Legal Disclaimer: Please note Red Leaf cannot provide legal advice. Any information shared is based on our understanding of relevant laws and regulations and should not be considered legal counsel. For specific legal advice, we recommend consulting a qualified attorney.)

Related Blog Posts and Links:

• • Altitude Community Law – CTA Update – It’s On
  • Altitude Community Law – DOJ Files Notice of Appeal
  • Altitude Community Law – Corporate Transparency Act Info Sheet
  • VF Law – Corporate Transparency Act Compliance Guide
  • Community Associations Institute – Corporate Transparency Act
  • Community Associations Institute – Corporate Transparency Act Blocked Nationwide