The Ubiquitous HOA
The Corporate Transparency Act (“CTA”) requires that certain entities file annual reports with the Financial Crimes Enforcement Network (“FINCEN”) by December 31. In Community Associations v. Yellen, E.D.Va. Case No. 24-CV0-1597, Doc. 40 (Oct. 24, 2024), the U.S. District Court for the Eastern District of Virginia held that this requirement also applies to a Homeowners Association (“HOA”). This means that most HOAs out there now must file their FINCEN report by December 31 or face very serious fines ― $500 per day.
This article will attempt to give some helpful hints to HOAs boards as to how they can comply with the FINCEN requirements. It’s not really that difficult, and most HOA boards will be able to easily meet the filing requirements without paying some third-party vendor to do it for them.
The CTA requires that most entities, including most HOAs, file a form known as the “BOI” for Beneficial Ownership Information. The are exceptions to everything, of course, and the FINCEN Frequently Asked Questions page explains:
“C.10. Are homeowners associations reporting companies? It depends. Homeowners associations (HOAs) can take different forms. As with any entity, if an HOA was not created by the filing of a document with a secretary of state or similar office, then it is not a domestic reporting company. An incorporated HOA or other HOA that was created by such a filing also may qualify for an exemption from the reporting requirements. For example, HOAs recognized by the IRS as section 501(c)(4) social welfare organizations (or that claim such status and meet the requirements) may qualify for the tax-exempt entity exemption. An incorporated HOA that is not a section 501(c)(4) organization, however, may fall within the reporting company definition and therefore be required to report BOI to FinCEN.”
Unless the HOA is very small, meaning only four homeowners if any such HOAs even exist, the individual homeowners will not have to be disclosed as beneficial owners since they will typically not own 25% of the HOA which is the minimum ownership floor.
The individual directors of the HOA, however, must be disclosed in the filing since they exercise substantial control over the company. The individual officers of the HOA will also have to be disclosed in the filing, although usually the board members and officers of an HOA will overlap. So, board members and officers must be disclosed in the filing.
The main FINCEN informational page is at
and the main filing page is at
Basically, there is an easy way and a slighly more cumbersome way for HOAs to make this filing.
The easy way is that each HOA board member or officer obtains their own FINCEN ID, which is basically just an identifying number given by FINCEN. This ID may be obtained here and it requires the applicant to give some very basic information, such as e-mail address and physical address, and then also upload an image (PDF is easiest) of their driver’s license or passport, etc. This can all be done in the privacy of their own home or office and whoever is doing the filing for the HOA will never see any of this information given, but only the ID number itself.
Once each HOA board member or officer has obtained their number and given it to whoever is making the filing, the filing itself for the HOA becomes very easy. Whoever is doing the filing only needs to enter some basic information about the HOA, such as its state of incorporation and address, and then give the ID numbers of each HOA director or officer. This takes maybe 5 minutes, tops. Hit the “submit” button and you’re done. It’s Miller Time!
The more cumbersome way is for whoever is doing the filing to accumulate all HOA director’s and officer’s addresses and images of their identifying documents (again, driver’s license or passport) and manually enter it. In the end, this sort of filing is just as good, but it will take much longer to input all this data and upload everybody’s images. Obviously, this whole process will be so much easier if everybody just gets their own FINCEN ID.
There is no charge to file the BOI report. It’s free if you do it through FINCEN. Note that there are many third-party vendors out there who will gladly charge a fee to do this, but in the end you will spend the exact same amount of time giving them all the data that they will then input for you. I believe that this is a waste of money.
Further, many of these third-party vendors have cropped up overnight and there are serious questions as to their validity. You pay them the money, and they may or may not make the filing for you. They might also end up selling your information (remember, you’ll have to give them images of your driver’s license or passport) to who knows who, or even perhaps misusing it for their own nefarious purposes. I think it is fine if you get your accountant or attorney to do these filings for you, even if they charge for it, since they are not going to misuse your information. But I would take a pass on these third-party vendors if you can at all avoid it. In fact, FINCEN itself is now giving the following warning that:
“These fraudulent scams may include:
- Correspondence that references a “Form 4022” or “Form 5102” is fraudulent. FinCEN does not have a “Form 4022” or a “Form 5102.” Do not send BOI to anyone by completing these forms.
- Correspondence or other documents referencing a “US Business Regulations Dept.” This correspondence is fraudulent; there is no government entity by this name.
“Please be on the lookout for anything that may indicate correspondence you receive is fraudulent. For example, be cautious of any of the following:
- Correspondence requesting payment. There is NO fee to file BOI directly with FinCEN. FinCEN does NOT send correspondence requesting payment to file BOI. Do not send money in response to any mailing regarding filing your beneficial ownership information report that claims to be from FinCEN or another government agency.
- Correspondence that asks the recipient to click on a suspicious URL or to scan a suspicious QR code. Those e-mails or letters could be fraudulent. Do not click any suspicious links or attachments or scan any suspicious QR codes.
- Correspondence regarding penalties. FinCEN does NOT send initial correspondence regarding CTA penalties via e-mail or over the phone. Do not submit payments via phone, mail, or websites as requests/directions to do so are fraudulent.
“Use caution when you receive correspondence from an unknown party. Verify the sender. Never give personal information, including regarding beneficial ownership to anyone unless you trust the other party.”
Good advice indeed. This BOI reporting will probably seem a little intimidating at first, but once you’ve been through the process you will see that there is actually very little to it, or what some might refer to as a big nothingburger.
Please note, however, that if the HOA’s board or officers change then an updated BOI must be filed within 30 days after that change. Also note that if you have questions, you can find most answers on FINCEN’s BOI Frequently Asked Questions page or by contacting FINCEN through its contacts web page.
Oh, and please don’t wait until the last second to file. Just do the filing as quickly as you can and get it out of sight, out of mind.
