UPDATED: HOAs and COAs: Avoid the $591 fine by filling out the Beneficial Ownership Information Report
Alabama companies and National Small Business Association excluded, LLCs must fill out the BOI form by January 15, 2025 instead of January 1, 2025
Updated on December 26, 2024: On December 23, 2024, the U.S. Court of Appeals for the Fifth Circuit granted the U.S. government’s request for an emergency stay of a nationwide preliminary injunction blocking enforcement of the Corporate Transparency Act (CTA). Companies that had held off on filing until the appeals decision was made now have until January 13, 2025 to file instead of the original deadline of January 1, 2025. HOAs and COAs can file for free, but the information should be completed online or by submitting a PDF.
Updated on December 9, 2024: Last Tuesday, December 3, 2024, the U.S. District Court for the Eastern District of Texas issued an order in favor of the plaintiffs in Texas Cop Shop, Inc. et al. v. Garland et al. The results temporarily halt the enforcement of the beneficial ownership information (BOI) reporting requirements established by the Corporate Transparency Act (CTA). Although HOAs and COAs can voluntarily submit their information, they are temporarily not subject to the January 1, 2025 deadline (or fine) if they don’t initially file the BOI at this time. The Department of the Treasury is appealing that order.
Original post August 2, 2024: If you’re a member of a homeowners association (HOA) or condo association (COA), electronic filing for the Beneficial Ownership Information Report (BOIR) should be a top priority — especially to avoid the $591 fine that can run up to $10K and jail time. Under the Corporate Transparency Act (CTA), companies — including limited liability companies (LLCs) and 501(c)(4) — are required to report ownership information to the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury.
There is no monetary charge to file, and it can securely be done here. After initial BOI reporting, additional filing would only be required if there are significant changes. Unlike LLCs, which include a yearly renewal fee, annual board member updates and confirmation of the registered agent to avoid being labeled “not in good standing” or “involuntary dissolution,” one BOI reporting will suffice.
Which HOAs and COAs have to report BOI? And when?
Financial Crimes Enforcement Network (FinCEN) began accepting reports on January 1, 2024. Any company that was created or registered prior to January 1, 2024 will have until January 1, 2025 to report BOI.
Recommended Read: “AfroTech: Beneficial Ownership Information Reports: What Business Owners Need To Know To Avoid $10K Fine”
If your HOA or COA was created or registered in 2024, you must report your BOI within 90 calendar days after receiving actual or public notice that your company’s creation or registration is effective, whichever is earlier.
If your HOA or COA is created or registered on or after January 1, 2025, you must file BOI within 30 calendar days after receiving actual or public notice that its creation or registration is effective.
Why are HOAs and COAs included in BOI reporting if they’re nonprofits?
First, a 501(c)(3) and a 501(c)(4) are not the same — and neither exemption matters in this case.
According to the IRS, like any Section 501(c)(4) social welfare organization, a homeowners association described under Section 501(c)(4) is required to be operated exclusively for the promotion of social welfare by primarily promoting the common good and general welfare of the people of the community. Homeowners associations benefit certain individuals, typically their members.
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Although HOAs and COAs are often nonprofits, because they’re designed for upkeep of the building or neighborhood instead of being a for-profit organization, they’re not always tax exempt. And if they run any kind of for-profit business (ex. selling merchandise or running a local business within the building or block), they’re definitely going to have to pay taxes on those earnings.
On a separate note: A homeowners’ association that is not exempt under section 501(c)(4) and that is a condominium management association, a residential real estate management association, or a timeshare association generally may elect under the provisions of Code section 528 to receive certain tax benefits that, in effect, permit it to exclude its exempt function income from its gross income. -IRS
For federal tax purposes, homeowners associations are considered corporations, regardless of whether they were created as a nonprofit. Therefore, the association must file annual taxes as a corporation and would need to file the BOI form like any other business.
What happens to HOAs and COAs who don’t file BOI?
In 2021, Congress enacted the bipartisan Corporate Transparency Act to curb illicit finance. This law requires many companies doing business in the United States to report information about who ultimately owns or controls them.
However, the Corporate Transparency Act (CTA) was declared unconstitutional on March 1, 2024 by a federal judge in the U.S. District Court for the Northern District of Alabama. This means Alabama HOAs and Alabama COAs can be excluded from this 2024-25 deadline (as of the date of this publication).
In the National Small Business United v. Yellen decision, the district court also allows members (as of March 1, 2024) in the National Small Business Association (NSBA) to skip the BOI reporting. Twenty-three other types of entities are also exempt from BOI reporting requirements, including publicly traded companies, investment companies, banks and credit unions, and specific nonprofits.
Anyone outside of these groups, including HOAs and COAs, will be fined $591 per day and up to $10K for not filing the BOI after January 1, 2025.
More information on BOI
Click here for the Beneficial Ownership Information Reference Guide.
Click here to download the BOI PDF form or file online.
Click here to download step-by-step instructions.
Click here to visit the official Financial Crimes Enforcement Network site.
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