As your dedicated legal advisors, we’re here to inform you about critical legislative developments that could impact your operations. The 2021 Corporate Transparency Act (CTA) introduces significant changes in the way business entities, including community associations organized as not-for-profit corporations, report their ownership details.
Overview of the Corporate Transparency Act
The CTA mandates that various domestic entities, such as corporations and limited liability partnerships—formed through filings with a secretary of state or similar state office—adhere to new federal reporting requirements. This directive extends to community associations, as they are recognized as business entities.
Under the Act, these entities must disclose specific information about their “beneficial owners” to the Financial Crimes Enforcement Network (FinCEN), a bureau within the U.S. Department of the Treasury. A beneficial owner is defined as someone who exercises substantial control over the entity. For community associations, this generally includes positions such as the president and vice president.
Reporting Requirements Under the CTA
Entities covered by the CTA must report the following details for each beneficial owner:
- Full legal name
- Date of birth
- Residential or business address
- Unique identifying number from an approved document (e.g., Social Security number, driver’s license number, or passport number)
- A photocopy of the non-expired identification document
It’s important to note that while the Act currently specifies certain executive roles as beneficial owners, it remains to be seen whether other officers and directors will also be required to provide this personal information in future updates.
Why This Matters for Your Association
Compliance with the CTA is not just about adhering to legal obligations—it’s about safeguarding your association against the risks associated with non-compliance, which can include hefty fines and potential criminal charges. Additionally, transparency in ownership can improve trust and streamline operations, particularly in financial dealings and external audits.
How Our Law Firm Can Help
Navigating the complexities of the CTA can be daunting, but you don’t have to manage it alone:
- Compliance Strategy: We will assess whether your association is subject to the CTA and help you understand the roles that are considered beneficial owners.
- Document Preparation and Filing: Our team will assist in collecting the necessary information and managing the filing process with FinCEN.
- Continuous Monitoring and Support: As regulations evolve, we will provide updates and guidance to ensure your association remains compliant.
- Strategic Integration: We offer insights on how to integrate these requirements smoothly with your current operational practices, enhancing both governance and transparency.
Act Now
With the enforcement date approaching, preparing early is crucial to ensure that your association complies with the new regulations without any disruptions. Contact us today to schedule a consultation to discuss your specific needs and how we can help you navigate these changes.
