As we have previously discussed, despite some pieces of litigation challenging the Corporate Transparency Act (CTA), the CTA is still in place for now and companies and organizations need to grapple with compliance. The CTA reporting requirements may be on the chopping block for the incoming Trump administration, but for now they are still in place and must be followed.
The basics FAQ on who needs to file, how to file, and the potential exemptions may be seen here.
Naturally, even a simple requirement of filing ownership to create transparency spawns a thousand questions and a million scenarios. The latest is whether homeowner associations, condominium associations, and similar organizations need to comply and file Beneficial Owner Information Reports (BOIR) as required by the CTA file. Naturally, the lawyer’s typical answer is “it depends.”
A recent case in the United States District Court for the Eastern District of Virginia evaluated whether community associations were exempt from filing requirements. The case, Community Associations Institute v. Janet Yellen engaged in an extended analysis of the CTA, its history, and its implications for associations. The bottom line was that while tax exempt organizations are not required to file under the CTA, this exemption does not necessarily apply to organizations that fail to seek exemption from the IRS.
Where does this leave associations? Best practice at this point is to file the BOIR for your organization unless you have sought and obtained a formal tax exemption from the IRS. We can ask the practice question of whether any of this will remain in place during 2025 and whether a new administration will prioritize enforcement of these requirements. For the time being the CTA filing requirements are in place, the penalties for non-compliance are stiff, and bluntly the forms are relatively simple and straight forward. Best to simply file for this year and see what happens moving forward.
If you have questions about the CTA’s requirements or just want to ensure your business is on the right track, please feel free to reach out to Timothy Hughes at Bean, Kinney & Korman, P.C. at (703) 526-5582 or thughes@beankinney.com. Our firm practices in Virginia, Maryland, and the District of Columbia in addition to various other jurisdictions and can help you through this process.
This article is for informational purposes only and does not contain or convey legal advice. Consult a lawyer. Any views or opinions expressed herein are those of the authors and are not necessarily the views of any client.