The Corporate Transparency Act and Community Associations: Where Things Stand

The Corporate Transparency Act has been one of the most volatile compliance topics in the community-association field since its 2024 effective date. The substantive picture for HOAs has changed multiple times in court. This is the stable summary — the statute, the rule, where things stand, and what a board should be doing regardless.

What the CTA requires

The Corporate Transparency Act, enacted as part of the National Defense Authorization Act for Fiscal Year 2021 (Pub. L. 116-283), is codified at 31 U.S.C. § 5336. It directs the Treasury Department's Financial Crimes Enforcement Network (FinCEN) to maintain a non-public registry of "beneficial owners" of "reporting companies." FinCEN's implementing rule appears at 31 C.F.R. § 1010.380.

A "beneficial owner" is, generally, an individual who exercises substantial control over the reporting company or owns or controls at least 25% of the ownership interests. For nonprofit corporations like HOAs, the "substantial control" prong is what matters — directors and certain senior officers qualify.

HOAs as reporting companies — the contested issue

The CTA exempts 23 categories of entities, including charitable organizations under IRC § 501(c)(3). Community associations are typically organized under state nonprofit law but are taxed as either IRC § 528 (homeowners associations) or IRC § 277. Neither tax category qualifies for the § 501(c)(3) exemption. Result: under FinCEN's rule as written, most HOAs are reporting companies and must file beneficial-ownership information (BOI) reports.

The Community Associations Institute has advocated since 2022 for either a statutory or regulatory exemption for community associations, on grounds that the law was aimed at anonymous shell companies and HOAs already operate with publicly disclosed officers and directors.

The litigation and the injunctions

Multiple federal lawsuits have challenged the CTA on constitutional grounds:

• National Small Business United v. Yellen, N.D. Ala. March 2024 — held the CTA unconstitutional as to plaintiffs.
• Texas Top Cop Shop v. Garland, E.D. Tex. December 2024 — issued a nationwide preliminary injunction against enforcement of the CTA against the plaintiffs and (in scope debated) others.
• Subsequent appellate and FinCEN responses produced multiple stays and partial enforcement windows in early 2025.

The result has been a series of moving enforcement deadlines. Boards should not rely on any specific deadline cited in this article — confirm the current enforcement status with the association's counsel and FinCEN before filing or skipping the filing.

What a BOI report contains

If a community association is required to file (either generally or under a future revised rule), the BOI report names:

• Each individual beneficial owner — full legal name, date of birth, current residential address.
• A unique identifying number from an acceptable identification document (passport, driver's license).
• An image of that identification document.

For an HOA, that typically means each director and the officers exercising substantial control.

What boards should be doing now

• Identify your filer. Whether the BOI obligation runs to the association directly or through counsel/manager, identify the person or firm responsible for monitoring the status and filing if required.
• Maintain a clean director roster. Names, dates of birth, identification, current address. The data needed to file should not have to be assembled from scratch within a 30-day filing window after a board change.
• Director onboarding and offboarding. Any change in directors creates a 30-day update-filing window under FinCEN's rule (where the rule is in force). Build the documentation into the post-election checklist.
• Don't rely on outdated guidance. Articles, FAQs, and even FinCEN guidance from 2023 and early 2024 have been superseded by the litigation and subsequent rulemaking. Verify currency before acting.

Penalties

The statutory penalties for willful non-filing or false filing are substantial — up to $500 per day in civil penalties (capped at $10,000) and criminal penalties up to two years' imprisonment under 31 U.S.C. § 5336(h). The penalties run against the individual responsible for filing, not (or not only) the association as an entity. That makes accurate, documented, counsel-confirmed filing especially important for the directors personally.

References

• Corporate Transparency Act, Pub. L. 116-283, Div. F (2021); 31 U.S.C. § 5336.
• FinCEN final rule, 31 C.F.R. § 1010.380.
• National Small Business United v. Yellen, N.D. Ala. (March 1, 2024).
• Texas Top Cop Shop v. Garland, E.D. Tex. (December 3, 2024).
• Community Associations Institute advocacy and member alerts on CTA.
• FinCEN Beneficial Ownership Information Reporting guidance (consult current version).

This area is unsettled and changes frequently. Confirm the current enforcement posture with counsel before relying on any specific deadline or filing requirement.