What is the CTA?
The CTA is a federal law that is focused on combating illicit financial activity. It’s intended to prevent money laundering, tax fraud, terrorist financing, and other illegal financial activity that could occur through shell companies or other non-transparent ownership structures.
The CTA creates a new reporting requirement under which Reporting Companies must file a Beneficial Ownership Information (“BOI”) report with the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the Dept of Treasury. This report must contain certain information on the Beneficial Owners of the Association.
FinCEN has published a list of FAQs to assist with BOI reporting filing compliance.
Does the Association have to file a BOI Report?
Yes. C.10 of the FAQs confirms that most associations fall under the definition of “Reporting Company” and, therefore, must file a BOI report. While there are certain exemptions, most associations do not meet them. Exemptions are addressed in Section L. of the FAQs.
Who is a Beneficial Owner of the Association?
A Beneficial Owner is any individual who:
- Directly or indirectly exercises substantial control over a reporting company, or
- Owns or controls at least 25% of a reporting company’s ownership interest.
A person who exercises substantial control is one who is an “important decision-maker”, which is defined in part as someone who “directs, determines, or has substantial influence” over important decisions of the Association. This would include Board members, as clarified in D.13 of the FAQs.
What is included in the BOI Report?
The BOI report must include the following information regarding the Association:
- Legal name of association, including any DBA
- Tax ID number
- Country/Jurisdiction of formation
- Address (street address of principal place of business).
The BOI report must also provide the following info regarding Beneficial Owners:
- Legal Name
- DOB
- Residential Address
- Copy of an acceptable ID, which can be any of the following: (i) Driver’s License, (ii) State ID, and (iii) Passport.
By when must the BOI report be filed?
If the Association was created prior to Jan 1, 2024, it must file by Jan 1, 2025. If the Association was created in 2024, see section below entitled “New Associations”.
Must the Association update the BOI report annually?
No. Only one BOI report must be filed.
Must the Association update the BOI report for any changes?
Yes, every time there is a change in:
- Beneficial Owners information (i.e., directors get off or on the board, director has new address, director has new driver’s license or other ID that they have submitted under the original filing), or
- Association information (i.e., new name, new DBA, new principal place of business address).
The Association has 30 days from the change to file an updated BOI report with FinCEN.
Are there penalties for failure to file?
Yes. Per Section K of the FAQs, willful violation of the CTA could result in the following penalties: $500 for each day the violation continues, criminal penalties of up to two years of imprisonment, and fine of $10,000.00.
New Associations
If an association was created (i.e., Articles of Incorporation were filed) on or after January 1, 2024, the BOI report must also provide information regarding the Company Applicant.
Up to two individuals can qualify as Company Applicant:
- The person who directly filed the Articles of Incorporation; and
- If more than one person was involved in filing the Articles, then the person who is primarily responsible for directing or controlling the filing.
The Company Applicant Info needed is similar to that of the BOI:
- Legal Name
- DOB
- Address (if Company Applicant works in a corporation, then business address is used)
- Copy of an acceptable ID, which can be any of the following: (i) Driver’s License, (ii) State ID, and (iii) Passport.
If the Association was created in 2024, it must file within 90 calendar days of receiving notice that the Association was created (i.e., the Secretary of State sends notice that the filing was accepted).
If the Association was created on or after Jan 1, 2025, the Association must file within 30 calendar days of receiving notice that the Association was created.
Although the CTA is currently being challenged as unconstitutional in multiple states, and although CAI recently filed a lawsuit against the Dept. of Treasury requesting that associations be exempt from the CTA, such efforts will take time, and associations should assume they need to file a BOI Report.
What is Altitude Doing to Assist?
Altitude has decided that it will act as a third-party service provider in filing BOI reports for associations. We will assist in filing the initial BOI report, monitoring for needed changes, and updating such reports under the CTA. For more information on our CTA service, see our CTA Information sheet, and please contact us at 303.432.9999 or [email protected] if you’d like us to assist your Association and Board members with filing.