HOA’s New Requirement: Filing the FINCEN BOI Form by Year-End
As the deadline for compliance approaches, HOAs across the country are now required to submit Beneficial Ownership Information (BOI) under the Corporate Transparency Act (CTA). This regulation, enforced by the Financial Crimes Enforcement Network (FINCEN), mandates annual reporting from various entities, including Homeowners Associations (HOAs), to enhance transparency and combat financial crime. Failure to comply could result in severe penalties, which makes understanding this new requirement essential for HOA boards.
The BOI form, due by December 31, requires specific information on each HOA’s directors and officers. While individual homeowners are typically not listed unless they hold substantial ownership (25% or more), the form necessitates that all board members and officers disclose their identities, as they control the association's operations. For most HOAs, this means listing names and roles rather than extensive ownership information, making the task more manageable. The CTA recognizes exceptions, such as tax-exempt HOAs classified under IRS section 501(c)(4), which may avoid filing if they meet certain criteria.
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For an HOA, the filing process offers two main approaches. First, each board member can individually obtain a FINCEN ID by submitting personal identification through FINCEN’s secure portal. This streamlined option allows board members to submit ID information independently, sharing only the FINCEN ID with the filer. The second approach is for the HOA’s designated filer to manually collect each director’s details and supporting documents, such as driver’s licenses or passports, to input directly into the system. While effective, this approach is often more time-intensive and requires higher data security measures.
Importantly, FINCEN has warned against using third-party vendors that offer to handle these filings for a fee, especially newly emerged ones, as they might be prone to misuse personal information. Although some reputable accounting or legal firms may offer filing services, they come at an additional cost, and the filing itself is free if completed directly through FINCEN. FINCEN has further cautioned against scams related to fraudulent forms or emails seeking fees or penalties for late submission. Legitimate communications from FINCEN never request fees for filing or penalties over email or phone.
Once completed, the initial filing is relatively straightforward. But if any changes occur within the HOA’s board, such as new directors or officers, an updated BOI form must be filed within 30 days of the change, adding a layer of responsibility to maintaining compliance. FINCEN provides resources to help HOAs, including a Frequently Asked Questions page, for any doubts during the process.
So, the FINCEN BOI filing might appear daunting at first glance, but it’s ultimately a straightforward requirement that aims to boost transparency across organizational structures in the U.S. By filing early and following proper procedures, HOAs can stay in compliance without the need for third-party intervention or risk of penalties. So, to all HOA boards out there, plan your filing soon and put this task behind you well before the year’s end.
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