In recent months, there has been some confusion about the effects of the Corporate Transparency Act (“CTA”) on Colorado Common Interest Communities (HOAs, POAs, Condominiums, Cooperatives, etc.). The CTA was enacted in 2021 to limit illicit financial activity, but, since passage, there has been some debate about if Common Interest Communities are subject to the law.
Confusion arose a few months ago when a District Court in the Northern District of Alabama ruled that the CTA is unconstitutional because Congress exceeded its power by enacting it. Likely, this ruling will be appealed however, subsequent to the Alabama ruling, on June 10, 2024, the Financial Crimes Enforcement Network (“FinCEN”) updated its CTA Frequently Asked Questions to further confirm that in most cases, a homeowners’ association is a reporting company.
It is important to point out that the CTA is a federal law, not a state law. Therefore, the applicability of the CTA is nationwide. Essentially, the CTA requires nonprofit corporations to disclose certain information about “beneficial owners” on or before December 31, 2024. Common Interest Communities are often organized as nonprofit corporations under Colorado and federal law. The law explains that a “beneficial owner” includes directors, officers, and any owners who own more than 25% of the units in the association, or an individual who exercises “substantial control” over a reporting entity. Now, that deadline is quickly approaching at the end of this calendar year.
FinCEN created a registration portal in which associations can file the Beneficial Ownership Information Report, or “BOIR”. Board members can follow a detailed instruction guide for beneficial owners:
Unfortunately, the HOA Center is not able to advise boards on how to complete the process. If board members have specific questions about the filing process, they should consider reaching out to FinCEN or speaking with a qualified Colorado attorney.