The Corporate Transparency Act: What HOAs Need to Know in 2025
Most HOAs aren’t too concerned with federal filing deadlines, and it's probably not a priority for most HOA boards. But with the Corporate Transparency Act now in effect, it’s something every board needs to take seriously.
But what is the Corporate Transparency Act, and how should HOAs respond?
Simply put, CTA is a new law aimed at preventing financial crimes. It requires most businesses, including HOAs, to report who’s in control of the organization. And yes, that likely includes your community.
Here’s the important part…
Unless your HOA is a 501(c)(3), which most aren’t, you’re considered a “reporting company” and must file. That means submitting your HOA’s legal name, address, state of formation, and EIN, plus info on each “beneficial owner.” For HOAs, that usually means board members and officers with decision-making power.
To comply, you must do the following:
First, you need the beneficial owner's legal name, home address, birthdate, and a copy of a valid ID. If your HOA was formed before 2024, the deadline to file is January 1, 2025. New HOAs get 90 days. If something changes, like a newly elected board member, you have 30 days to update.
The penalties for missing the deadline aren’t small. You could face daily fines of $500 per day or even criminal charges of up to $10,000 and up to 2 years in prison if violations are willful…
Seen below is a non-exhaustive list of items you’ll need to file:
So be careful, and make sure your HOA complies!
Key Definitions that might help:
Corporate Transparency Act (CTA): A federal law that requires most businesses, including HOAs, to report who has control or influence over the organization.
Reporting Company: Refers to any entity (like an HOA) that must file ownership information with the federal government under the CTA, unless it qualifies for an exemption.
Beneficial Owner: A person who has significant control over the HOA, such as a board member or officer with decision-making authority.
501(c)(3): A nonprofit status under the IRS code. HOAs with this designation are usually exempt from the CTA, but most HOAs do not qualify.
EIN (Employer Identification Number): A unique number assigned to your HOA by the IRS for tax and legal purposes, which must be included in CTA filings.
Valid ID: Refers to government-issued identification (like a driver’s license or passport) that must be submitted for each beneficial owner.
Filing Deadline: The due date by which your HOA must submit CTA information. HOAs formed before 2024 must file by January 1, 2025; new HOAs have 90 days after formation.
