Corporate Transparency Act
On December 3, 2024, the U.S. District Court in the Eastern District of Texas issued a 79-page opinion granting a preliminary injunction preventing the U.S. government from enforcing the CTA against all entities covered by the CTA nationwide.
For the time being, this means that any entity, including community associations deemed “reporting companies” under the CTA, will not be required to report information to FinCEN about an association’s “beneficial owners,” or the members of the governing board.
It will be necessary to continue to follow developing events in this case. It is likely that the U.S. Department of Justice will seek a stay of the preliminary injunction, first at the District Court, then, if denied, at the Fifth Circuit Court of Appeals. If such a stay were granted, it could mean that all reporting companies, including community associations, would once again be required to report to FinCEN.
As we previously noted in updates related to the CTA, it is unlikely that the constitutionality of the CTA will be ultimately decided prior to a U.S. Supreme Court decision, which is unlikely to occur until sometime next year due to various factors.
For now, however, it is sufficient to understand that no entity required to report by January 1, 2025, need file a report with FinCEN. Many Florida Counties were granted an extension of the January 1, 2025, deadline to July 1, 2025, in consideration of the impact by the recent hurricanes.
Palm Beach County was included as one of the counties that received the extension.
We will apprise of further updates as this matter continues to progress. You may consider contacting your association attorney, should you have further questions.
Last week, it was announced that the filing requirement for the Federal Corporate Transparency Act has been indefinitely suspended. Attorney Mark Friedman of the Becker Law Firmsends the following:
“On December 3, 2024, the U.S. District Court in the Eastern District of Texas issued a 79-page opinion granting a preliminary injunction preventing the U.S. government from enforcing the CTA against all entities covered by the CTA nationwide. For the time being, this means that community associations will not be required to report information to FinCEN about an association’s “beneficial owners,” or the members of the governing board. For now, it is sufficient to understand that no entity required to report by January 1, 2025 needs to file a report with FinCEN.”
UCO will update unit owners on developments regarding this matter.
The beneficial ownership information (BOI) under the Federal Corporate Transparency Act (CTA) took effect this year with a January 1, 2025 deadline to register. All Associations must make this filing, and also make update filings each time there is a change on the Association’s Board. The reporting only needs to be filed one time, UNLESS to update or correct information. For example, if there are new individuals elected or appointed to the Board of Directors.
On October 29, 2024, the Financial Crimes Enforcement Network (FinCEN) extended the initial reporting deadlines to July 1, 2025, for associations in counties affected by Hurricane Milton where (1) Federal Emergency Management Agency (FEMA) assistance is available; and (2) IRS tax filing deadlines have been extended. Palm Beach County is subject to this extension.
Click here to see the FinCEN Notice.
The Federal Corporate Transparency Act took effect this year, with a January 1, 2025 deadline to register. All CV Associations must make this filing, and also make update filings each time there is a change on the Association’s Board. This filing should be made by the Association’s Property Manager or Accountant. Beneficial ownership information reporting is not an annual requirement. A report only needs to be submitted once, unless the filer needs to update or correct information. An example of this would be when new persons are elected or appointed to the Board.
On October 29, 2024, the Financial Crimes Enforcement Network (FinCEN) extended the initial reporting deadlines to July 1, 2025, for associations in counties affected by Hurricane Milton. This includes Palm Beach County. A bulletin from the U.S. Treasury Department is appended to this report.
Certain Filing Deadlines in Affected Areas Extended Six Months
List of Florida Counties impacted can be found here
CORPORATE TRANSPARENCY ACT- The Federal Corporate Transparency Act took effect this year, with a January 1, 2025, deadline for existing corporations to register. The CTA requires certain types of entities to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. Condominium Associations are corporations, and must comply with this new Federal requirement. Associations and individual Board members can be penalized for non-compliance.
Since this new law potentially affects all CV Associations, UCO asked for guidance from UCO’s Attorney, who confirmed that all CV Associations must make this filing, and also make update filings each time there is a change on the Association’s Board. This new Federal filing requirement is in addition to the Florida Department of State Annual Report, which must be filed before May 1 each year. Beneficial ownership information reporting is not an annual requirement. A report only needs to be submitted once, unless the filer needs to update or correct information. An example of this would be when new persons are elected or appointed to the Board.
As we learn more about this new requirement, it becomes clear that this new filing is essentially an accounting function. Whoever files an association’s tax returns (like a bookkeeper or accountant) would be an obvious choice for making this filing as well. For most CV Associations, accounting is handled by the property management companies (Seacrest, Pruitt, etc.). PM Fester Pruitt has indicated that the accounting firm that handles his clients, MMA Accounting and Tax Services, will make the CTA filing for a nominal additional fee. On 7/11, I met with senior managers at Seacrest Services, who are working on a plan to make the CTA filing for their CV clients. Seacrest clients should “stay tuned” for more information.
UCO is aware that a particular individual, part of an unofficial discussion group at the CV Clubhouse, is advocating that CV board members make this filing themselves (“I am going to show you how easy it is to do this. You don't need to pay anyone hundreds of dollars to do something that you can do yourself in 5 minutes.”). UCO, and all CV property management companies, strongly advise against this, just as we would advise Associations not to file their own taxes. If a Board member does decide to “DIY” this filing, the entire Board should approve this move.
Seacrest Services has prepared a packet for assisting the Boards with filing the Beneficial Ownership Information to the Dept of Treasury. This information is to be filed with the Federal Government by January 1, 2025. For more details including processing fees or to obtain the application forms contact your property manager.
For several months, there has been much discussion about the new filing requirement from the Dept of Treasury to register the “Beneficial Owners” of corporations. Your Condominium Association, despite being not-for-profit, is still technically registered as a corporation per state law. This fact has been seen as an oversight on part of the Federal Government and is being challenged to exempt Condo Associations from having to make this filing.
Despite these ongoing lawsuits, Attorneys in the State are recommending that Associations simply file the report to avoid any penalties. Previously, Associations have been directed to consult with the Association Attorney for assistance with filing this report but in recent weeks, attorneys have been directing clients elsewhere.
We are aware of the concern that the Association Boards have with this new requirement. Seacrest Services is looking into how we can assist the Boards with filing this report with the Dept of Treasury. This filing would be considered an additional service with processing fees. The Board members would have to collect and supply all the necessary information that needs to be submitted as part of the filing process.
To mitigate the risk of misfiling, all Board Members will be registered, meaning each will need to supply a State Issued Photo ID (ex. driver’s License), full name, address, date of birth without exception. We are working diligently to put together a packet for Boards to complete and return, once ready, you will be notified of the details for this additional service.
Passed in 2021, the Corporate Transparency Act took effect this year with a January 1, 2025, deadline for existing corporations to register. This controversial requirement has drawn resistance due to its legal language including Condominiums as corporations that must file.
Although this law is currently being challenged as being unconstitutional, attorneys are recommending that Associations register to prevent any risk of facing fines. It is also being recommended that Associations make use of their attorney’s office to ensure that the documentation is properly filed with the government.
Associations must register each of their Board Members and include copies of their photo IDs. If for any reason there is any change of the Board Members during the term, this report must be refiled within thirty (30) days of that change. This would mean that the report would not simply be filed after the Annual Membership meeting, should a Board Member resign, sell, or otherwise vacate their position on the Board, the report would need to be resubmitted in the same way that Sunbiz must be amended.
The report will need to be filed online and include the following information/documentation: https://www.fincen.gov/boi
- -FinCED ID number (requested as part of the application)
- -The physical address of the Association
- -Tax ID Number (this can be found on Sunbiz)
- -The Associations Legal name (you should check Sunbiz to confirm the legal name)
- -The information of each Board member:
- Name
- Address
- Date of Birth
- ID number
- -A copy of the photo ID of each Board member
This article is to hopefully give clarity based on the information provided in the articles listed below. We recommend that you click the following link, which provides step by step instructions for the filing as provided on the official website: https://boiefiling.fincen.gov/help
Deadlines are nearing, but there's a slim chance you won't have to meet them. What to do. What to do.
We're referring to the Corporate Transparency Act. We've reported on the dramatic effect it can have on your condo or HOA.
In this tip, we check in with our CTA experts to see if there's been any relief for boards trapped in this law many call overbroad.
In fact, there has been movement on the CTA, reports Danielle Wang, of counsel at the law firm of Sands Anderson PC in Williamsburg and Richmond, Va., and the leader of its community associations team. "That's in the form of a case, National Small Business United v. Yellin, out of the Northern District of Alabama," she explains. "The court said the CTA exceeded Congress's power and issued a declaratory judgment and injunction.
"But just because one district court has made a decision, that decision doesn't apply to the rest of the country," explains Wang. "In particular, the injunction enjoins the federal government only in regard to one business owner that's part of that case and other individuals who are part of the NSBU."
Also, FinCEN, the organization tasked with enforcement, has announced it will enforce the CTA's requirements consistent with the court's order. In other words, it's not enforcing against the parties in the case but continuing to do so for the rest of those affected by the act, until it's otherwise directed.
"So that judgment is limited to only that jurisdiction," says Wang. "And even if it was broader, the injunction is limited enough that I don't think it excludes community associations from enforcement yet. Industry groups are lobbying hard to carve out exceptions for community associations or for clarification from the federal government to exclude community associations.
"They're also lobbying for bills protecting small businesses and for the Protecting Small Business Information Act," she adds. "There are a number of bills floating around to address this."
Until something changes, it's time for you to comply with the CTA's provisions. Find out why that may mean waiting a bit in our new article, The Latest on the Burdensome CTA: What Your Condo/HOA Should Do Now. (Behind paywall)