Should Homeowners Associations Pay Attention to The Corporate Transparency Act? Yes!

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In a noteworthy development, homeowners associations are now obligated to comply with reporting regulations outlined in the Corporate Transparency Act. Individuals with significant control or substantial ownership in the company must submit their initial beneficial ownership information reports by January 1, 2025.

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To read the correspondence between Paul Mengert and Senator Budd concerning the Corporate Transparency Act, please check out AMG CEO’s Emails To and From Senator Ted Budd About the Corporate Transparency Act.

AMG CEO's Emails To and From Senator Ted Budd About the Corporate Transparency Act

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Dear Senator Budd, 

 I am writing to you regarding the Corporate Transparency Act (CTA) and the unintended impact  on the 350,000 homeowners associations, condo associations, and housing coops in the U.S. 

I am asking as a constituent that you SUPPORT H.R. 5119 – Protect Small Business and Prevent Illicit Financial Activity Act, which passed the House on 12/12/23. Over 80 Senators and Representatives sent a letter to FINCEN urging a 1-year delay of all CTA reporting requirements; I need you to help protect constituents like me from federal regulations which shouldn’t be applied to us. 

Community associations (HOAs, condo associations, and housing coops) are usually organized in states as non-profit corporations. They usually do not have a non-profit tax determination by the IRS, but they do file taxes as a non-profit corporation using the 1120-H U.S. Income Tax Return for Homeowners Associations.     

The intent of the Anti-Money Laundering and Corporate Transparency Act was to help detect and report suspicious activity including the predicate offenses to money laundering and terrorist finance, to facilitate tracking money that has been sourced through criminal or terrorist activity to safeguard the national security and the financial system of the U.S.    

It seems clear this Act was not intended to apply to volunteer-driven nonprofit corporations that are locally based with the sole purpose of providing municipal-like services to residents.

As your constituent, I am very concerned about the following: 

  1. A volunteer board of directors’ compliance with the Beneficial Ownership Information (BOI).  

  2. Filing personal information that will be accessible to many institutions and organizations of volunteers.  

  3. The extreme civil and criminal penalties for non-compliance.  

Community associations will have to hire professionals to ensure CTA compliance, which will lead to higher living costs. Volunteers will decline service on their boards of directors due to the exposure to liability. Please help your constituents by supporting H.R. 5119 in the Senate.

Sincerely,

Paul K. Mengert, CEO ASSOCIATION MANAGEMENT GROUP

Dear Mr. Mengert,

Thank you for contacting me about new reporting requirements under the Corporate Transparency Act. It is an honor to represent the people of North Carolina and I appreciate the opportunity to hear from you on this issue.

As you know, the Corporate Transparency Act (CTA) requires corporations, limited liability companies, and other entities registered to do business in the United States to regularly report information about their beneficial owners to the Financial Crimes Enforcement Network (FinCEN). While this provision was intended to target shell companies engaged in illicit financial transactions, the law requires most companies with 20 or fewer employees and less than $5 million in revenue to make this disclosure. This dramatically increases the compliance burden on nearly every small business in America, and places steep penalties on any business that fails to report.

Over the past several months I have heard from many North Carolina small businesses who were unaware of this change in the law, and a study from the National Federation of Independent Business found that 90% of respondents were entirely unfamiliar with these new requirements.

Given this lack of awareness, on December 18, 2023 I joined a bipartisan, bicameral letter to the Department of Treasury and FinCEN requesting that implementation of this provision be delayed beyond the initial January 1, 2024 start date. Legitimate small businesses should not be caught in the crossfire between regulators and illicit actors, and both Treasury and FinCEN must work harder to educate small businesses before implementing this new regulation.

If you are interested in learning more about what is going on in Congress and my work in Washington D.C. for North Carolinians, you may visit my website at budd.senate.gov. If you need assistance with issues related to Social Security, Medicare, veteran benefits, visas, or other items involving a federal agency, you may call my office at 202-224-3154.

 Sincerely,
                                                                  
Ted Budd
United States Senator

Budget Ratification: Understanding the Ghost of Budgets PAST When Preparing for the Future

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Annually, community associations tackle the responsibility of crafting a budget for the upcoming year, mandated by the North Carolina Planned Community Act and the North Carolina Condominium Act. Boards of Directors are required to formulate, adopt, and present the proposed annual budget to the membership for ratification. This article outlines the distinctions between community associations and a step-by-step process for budget ratification.

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Happy Homeowners: Speak Up Before Laws Are Reformed

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It’s time for happy homeowners to speak up about their community association experiences. A legislative committee in North Carolina has been examining the need for potential reform to community association laws. With 67% of residents expressing satisfaction and an additional 22% rating their association experience as neutral, there is strong support for the current system. Click the link below for more information.

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Get Your Home Ready for Spring. HOA Spring-Cleaning Tips

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Spring is on the horizon and it’s time to declutter and refresh your home. Get refreshed on the guidelines set by your HOA. Maintaining a well-kept home contributes to the overall curb appeal and property values of your entire community. Here are a few tips for exterior home spring cleaning if you live in an HOA.

  • Curb Appeal First: Focus on your home's exterior. This is what everyone sees first. Keep your lawn well-maintained, flower beds weeded, driveway and walkways edged, following HOA mowing height and landscaping regulations. Remove any dead leaves, and branches, and prune overgrown trees.  If you add new trees and shrubs make sure to follow guidelines for planting trees.

  • Gutter Care: Clogged gutters can damage your roof. Clean them out thoroughly, removing leaves, debris, and any other material sitting in the gutters. Heavy gutters can break loose and cause damage to the house.

  • Clean Your Siding or Brick: Power washing your home’s exterior siding or brick can make a change in the look of your home. Pro Tip: Use the appropriate cleaning materials for the type of exterior you have. If you have not cleaned your home for several seasons, check your HOA guidelines for how often this needs to be done.

  • Inspect the Roof: Inspect the roof for any loose shingles or damage. If you contract roof repairs, make sure your roofer has the necessary permits and complies with HOA contractor guidelines.

  • Outdoor Storage: Move equipment or other items stored outdoors into the garage or shed. Check with your HOA guidelines to find out what items can be stored outside the home.

  • Porch Maintenance: Give your porch a makeover. Clean furniture and other leisure space furnishings. Wash screens or windows. Sparkling windows brighten your home and boost curb appeal.

  • Pool Maintenance: It might be time to uncover your pool from the winter season. This is a good time to call your pool maintenance company to check on the pool and give it a good cleaning.

  • Garage Projects: If your garage door faces the street, pressure wash or clean it. It may need a coat of paint.  Following HOA guidelines for exterior home painting.

Before starting any project, including cleaning, painting, or landscaping, double-check your HOA's rules and regulations. This ensures your efforts comply with community standards and avoid any violations.

Maintaining a beautiful and well-kept home adds to the aesthetic beauty of your community. Contact your HOA management if you have questions about guidelines.