Recently the United States Supreme Court granted a stay of the injunction previously granted by the Fifth Circuit Court of Appeals, which injunction nullified the (BOIR) registration requirement of the Corporate Transparency Act (the “CTA”).  This new ruling reinstates the filing requirement under the CTA and allows the original appeal to be fully reviewed by the Fifth Circuit Court of Appeal (of course, subject to further appeal to the Supreme Court).  

What Happens If A Director Refuses To Register? Ridiculous FinCEN-imposed penalties include $591 per day (civil) and $10,000 and up to 2 years in prison (criminal). Fines could be levied against the association or the directors individually. However, since the association entity cannot serve prison time, the individual beneficial owners deemed to have willfully caused noncompliance for failure to report complete and updated information may serve prison time. We think its time to register.

Begin By Each Director Obtaining Their Own FinCEN Identifier. Most of our industry agrees that each director of a community association is a beneficial owner because any majority of directors “exercise substantial control over the reporting company.” Developer/Declarants who own 25% or more of the separate interests are beneficial owners. Because not all directors feel comfortable providing their driver’s license to the association, and because we don’t want the association to be the guardian of personal information, each director should be required to obtain their own FinCEN number.

STEP 1: Directors: (1) Take a photo of the front of your driver’s license or passport and save it to your desktop. Social security numbers, email addresses and phone numbers are not required. (2) Log into: https://boiefiling.fincen.gov and complete the questionnaire. In less than 10 minutes, each director will be provided a unique FinCEN Identifier. (3) Provide that to your treasurer, who will undertake STEP 2. IGNORE WEBSITES INSISTING YOU REGISTER, ONLY USE THE FINCEN WEBSITE.

STEP 2: Treasurers: (1) Have ready the precise legal name of the association; any trade names or d/b/a names; (2) the physical address of the principal place of business; (3) the jurisdiction of formation (California); (4) the association’s tax ID number, and (5) each director’s unique FinCEN Identifier. Then log into: https://boiefiling.fincen.gov and complete the questionnaire. In less than 15 minutes, the association will be registered.

The BOIR Needs To Be Regularly Updated! Associations have an ongoing duty to update information within 30 days of a change. Unfortunately, community associations will likely engage in submitting updates more frequently than other types of corporate entities by virtue of annual elections. Other changes will trigger the need for updates including, but not limited to, drivers license or passport changes, residential address changes, name changes, etc. There currently is no option to update the BOIR and all reporting company and beneficial owner information will need to be submitted again for each update.

Consider putting in place mechanisms to require and remind directors to comply with reporting requirements. Amend the Election Rules and candidate nomination forms to notify candidates of the CTA reporting requirements. Adopt or revise your Code of Ethics to require cooperation of directors with the CTA and other similar reporting requirements.

Treasurers and Managers: If you hit a snag, or are not comfortable doing this on your own, we will help you and your clients. Contact our firm to set up a zoom and we will coach you through the registration process for $375.