Understanding the Corporate Transparency Act: What Your HOA Needs to Know

What is the Corporate Transparency Act (CTA)?

The Corporate Transparency Act (CTA) was enacted to increase transparency in business ownership and prevent financial crimes. Under this law, many businesses—including most Homeowners Associations (HOAs)—were expected to file Beneficial Ownership Information (BOI) with the Financial Crimes Enforcement Network (FinCEN) by an initial deadline of January 1, 2025.

However, a recent federal court order has changed this requirement. As of now, reporting companies are not required to file BOI with FinCEN and will not face penalties for failing to do so while the order remains in force. Despite this, companies may still voluntarily submit BOI reports if they choose.

Legal Update: Court Rulings Affect BOI Filing Requirement

On January 23, 2025, the Supreme Court granted the government's motion to stay a nationwide injunction issued by a federal judge in Texas (Texas Top Cop Shop, Inc. v. McHenry). However, a separate nationwide order from a different federal judge in Texas (Smith v. U.S. Department of the Treasury) remains in effect.

Because of this, reporting companies are not currently required to file beneficial ownership information with FinCEN. Companies also will not face liability for failing to file while the Smith order is in place. Voluntary submissions of BOI reports are still permitted.

What This Means for HOAs

Before the court order, most HOAs were expected to file BOI reports unless they met an exemption—such as 501(c) tax-exempt status.

A Beneficial Owner was generally defined as:

• Board members
• Anyone who owns 25% or more of the units in the HOA

Initially, failing to file on time could have led to fines of $500 per day and potential criminal penalties. However, due to the court order, these penalties no longer apply at this time.What Happens Next?While the court order currently blocks enforcement, the situation may change depending on further legal developments. HOAs should stay informed and prepared for possible updates.

Do HOAs still have to file under the CTA?
No, not at this time. Due to the Smith v. U.S. Department of the Treasury ruling, FinCEN is not requiring filings while the order remains in force.

What happens if my HOA doesn’t file?
There are no penalties for failing to file while the court order is in effect. However, HOAs can choose to submit their BOI voluntarily.

Will the filing requirement return?
Possibly. The situation remains fluid due to ongoing litigation. HOAs should keep track of updates from FinCEN and legal professionals.

Final ThoughtsAlthough the Corporate Transparency Act’s BOI filing requirement was initially set for January 1, 2025, court rulings have paused enforcement. HOAs should remain aware of potential changes and be ready to comply if required in the future.For the latest updates, visit FinCEN’s website.