On September 10, 2024, the Community Associations Institute – an international organization that works to provide education, information, and resources to those professionals working in the community association world as well as homeowners who voluntarily serve their communities – filed a lawsuit against the U.S. Department of the Treasury, Treasury Secretary Janet Yellen, and the Director of the Financial Crimes Enforcement Network (FinCEN), challenging the application of the Corporate Transparency Act (CTA) to community associations.
As of January 1, 2025, any homeowners association – including condominium, townhome, cooperatives, and single family home associations – with fewer than 20 employees and less than $5 million in annual revenue must disclose certain information regarding “beneficial owners” to the FinCEN. The CTA’s definition of “beneficial owner” covers the members of a homeowners association’s board of directors. Although many entities are exempt from the CTA’s filing requirement, homeowners associations are not among those entities. The penalties for failure to file are stiff.
As part of the lawsuit, CAI also filed a request for a preliminary injunction to preclude enforcement of the CTA against CAI’s members during the pendency of the lawsuit. The hearing on that request is scheduled to take place October 11, 2024. It is highly unlikely the court would make a decision on the request for injunction at the hearing. Hellmuth & Johnson will continue to keep you updated on the proceedings.
For more information on the CTA and its impact on homeowners associations, please view the video from CAI’s CEO, Tom Skiba.