Corporate Transparency Act: What it means for you?
What is the Corporate Transparency Act? Are any community associations currently exempt from it? What are the penalties for a community association’s noncompliance with the act? These are common questions from community association board members and community managers regarding the act.
What is the potential impact of the act?
Under this law, volunteer board members of the vast majority of condominiums, homeowners associations, and housing cooperatives will be required to submit sensitive personal identification information to the federal government. Although the act aims to combat the financing of terrorism activities and money laundering, its broad application affects community associations. Failure of community association boards to comply—intentional or not—could result in up to $10,000 in fines and up to two years in prison. CAI believes this application is unnecessary and potentially unconstitutional and filed a lawsuit in September to challenge the application of the act on community association boards.
The act was signed into law Dec. 2020. It requires community associations with fewer than 20 employees and less than $5 million in annual revenue to disclose beneficial owners’ information to the Department of Treasury’s Financial Crimes Enforcement Network.
While CAI supports the goal of stopping money laundering and funding schemes for terrorist activity, it imposes potential burdens on community association volunteers. A preliminary court decision published earlier this year in a case filed by the National Small Business Association implies that membership in NSBA may shield individuals and companies from onerous filing requirements of the act.
After extensive efforts to work with the U.S. Department of Treasury and FINCEN to secure an exemption for community associations, CAI filed a lawsuit against the Treasury Department in September.
CAI complied FAQs to help answer questions about the act and what’s required from community associations.
Community associations must comply with the act’s requirements by Jan. 1 if the lawsuit is not resolved, the law has not been amended, or an exemption has not been approved. A preliminary hearing on CAI’s case is scheduled for Oct. 11.
Get More Expert Advice
Join CAI’s online community for access to the industry’s most in-demand community association resources.
Thousands of your peers are sharing advice.
Laura Otto is the Senior Editor of Digital Content at CAI. A seasoned journalist, Laura previously worked for a creative, advocacy agency in Washington, D.C., where she wrote and edited content for a variety of public health clients. Prior to that, Laura served as a senior writer and editor for the George Washington University School of Medicine and Health Sciences. Laura is a graduate of Temple University in Philadelphia.