Effective January 1, 2024, many Homeowners Associations (HOAs) became subject to new Federal requirements to report personal information of individuals who are their senior officers and other beneficial owners to the Financial Crime Enforcement Network (FinCEN), a bureau of the U.S. Treasury Department. 

New HOAs created on or after January 1, 2024, will only have 90 days after receiving notice of entity creation from the New York Secretary of State to file their initial beneficial owner information (BOI) reports. HOAs in existence prior to January 1, 2024, must make an initial report no later than January 1, 2025.

Very likely, YES.

A Reporting Company under the Corporate Transparency Act (the Reporting Act) includes in relevant part any corporation, limited liability company, partnership or similar entity which is created by filing a document with a state government unless one of the limited exemptions in the Reporting Act applies. 

Many HOAs in New York State are formed by filing a Certificate of Incorporation under the New York Not-For-Profit Corporation Law and are exempt from State income taxation.  Absent an exemption under the Reporting Act, these HOAs are Reporting Companies which must report.  An HOA that has not been incorporated under state law or otherwise been created by filing with state government is not a Reporting Company.

There is an exemption in the Reporting Act for federally tax-exempt entities which are exempt under Section 501(c) of the Internal Revenue Code of 1986, as amended (the Code). However, many HOAs typically rely on the exemption that applies to HOAs, condominium management associations and residential real estate management associations under Code Section 528 and, therefore, are not eligible for the exemption from reporting.  Older HOAs that received an exemption from the Internal Revenue Service under Code Section 501(c)(4) are exempt from reporting as long as that exemption remains in effect. 

A new HOA that is a Reporting Company must report information for any individual applying to a state government to incorporate or form a Reporting Company and any beneficial owner of the Reporting Company. An HOA that is a Reporting Company and was in existence on or before January 1, 2024, must report information for any beneficial owner of the Reporting Company.

Under the law, a “beneficial owner” is generally any individual who, directly or indirectly, through contract, arrangement, understanding, relationship or otherwise:

  • Owns or controls 25% or more of an interest in the Reporting Company; or
  • Otherwise exercises substantial control over the Reporting Company (e.g., President, CFO, Manager).

A Reporting Company can have multiple beneficial owners. FinCEN expects that every Reporting Company will be substantially controlled by one or more individuals and, therefore, every Reporting Company will be able to identify and report to FinCEN at least one beneficial owner.

Reporting Companies must report for each individual who is a Beneficial Owner:

  • Full legal name;
  • Date of birth;
  • Residential or business address;
  • A “unique identifying number” from a driver’s license, passport or other government‐issued identification card; and
  • An image of that driver’s license, passport or other government‐issued identification card.

Reporting violations under the Reporting Act consist of:

  • A Reporting Company’s willful failure to report complete or updated beneficial ownership information;
  • A Reporting Company’s willful provision of or attempt to provide false or fraudulent beneficial ownership information; and
  • A person willfully causing a Reporting Company not to file a required report or to report incomplete or false beneficial ownership information.

Civil Penalties: Up to $500 for each day that the violation continues or has not been remedied.

Criminal Penalties: Imprisonment for up to two years and/or a fine of up to $10,000.

Senior officers or principals of an entity that fails to file a required report may be held accountable for that failure.