CTA Update

As you may or may not be aware, a new federal law called the Corporate Transparency Act (“CTA”) took effect on January 1, 2024, and it requires most legally formed entities (Corporations, LLCs, etc.), including incorporated Associations, to file with the federal government what is known as a Beneficial Ownership Information Report (“BOI Report”). The filing deadline for Associations formed prior to 2024 is December 31, 2024, while the filing deadline for Associations formed in 2024 is 90 days from the date of formation. On an ongoing basis, if previously reported information changes, an entirely new report must be filed within 30 days of the change occurring.

There are significant potential penalties incurred for entities that willfully fail to comply – civil penalties of up to $591 per day of continued noncompliance, and criminal penalties of up to 2 years imprisonment and fines of up to $10,000.

BOI Reports must be filed with the Financial Crimes Enforcement Network (“FinCEN”), which is a bureau of the U.S. Treasury Department. The CTA was passed with the intent of combatting illicit financial activity (e.g. money laundering, terrorist financing, etc.) by requiring transparency behind the ownership and operations of entities formed or registered to do business in the U.S.

Specifically, BOI Reports require the disclosure of information on (i) the entity itself, (ii) the entity’s “beneficial owners,” and (iii) except for entities formed prior to 2024, the entity’s “company applicants” (i.e. the individual(s) that formed the entity). The term “beneficial owner” is defined to include both (a) individuals having a 25%+ ownership/control interest in the entity, and (b) individuals that exercise substantial control over the entity, which includes individuals that have substantial influence over important decisions for the entity. Therefore, your Association’s Board Members should be included as beneficial owners in your Association’s BOI Report.

We have partnered with the corporate services company Perfect Form to both complete and file your Association’s initial BOI Report, and to complete and file any required updated reports for your Association on an ongoing basis. We have negotiated an initial filing fee of $150 per Association, and the ongoing compliance fee is $50 per year, which includes filing as many required updated reports as may be needed as previously reported information (e.g. when there is Board turnover) changes.

So that your Association’s initial BOI Report can be timely filed, every Board Member must obtain and provide to Perfect Form your FinCEN ID, along with your email address, by no later than October 31, 2024. The process to obtain your FinCEN ID should take just a few minutes, and there is no cost. Please go to fincenid.fincen.gov to complete the process. Please note that to obtain your FinCEN ID, you will need to include a scan of an ID document, which may be a driver’s license, state/local/tribe-issued ID, U.S. passport, or, only if you have none of the other types, a foreign passport. If you have questions as you proceed, please refer to the demo video that Perfect Form put together, or please reach out to us or to Perfect Form directly: (980) 231-0232; support@perfectform.com.

We recommend including in future election notices a requirement that all newly elected Board Members obtain and provide to us a FinCEN ID in order to be able to serve on the Board.

Please note that if at any time any of the information you used to obtain your FinCEN ID changes, you must log into your account that you established when initially obtaining your FinCEN ID and update your information on file with FinCEN within 30 days of the change occurring.

Below is a list of the information you will need to collect and provide to Perfect Form via their secure online platform so that they can file your BOI Report in satisfaction of the CTA.

Entity Info

● Entity Name and any alternate names

● Tax ID number

● Formation/Registered Location - U.S. State or territory

● Principal place of business - U.S. address

Beneficial Owner and Company Applicant Info

● FinCEN ID (Note that Perfect Form recommends requiring all of your Association’s Board Members to obtain a FinCEN ID in order to simplify the process)

● Email address

● First, middle and last names

● Birthdate

● Residential address (for Company Applicants only, their business address should be provided

instead if the individual formed the entity in the course of their business)

● ID document (driver’s license, passport or state/local/tribe-issued ID)

Please do not hesitate to contact our office at 216-771-2600 if you have any additional questions or concerns.

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