The Corporate Transparency Act (CTA) goes into effect in 2024. It will require “beneficial owners” of small and medium-sized businesses – which includes homeowners and condominium associations – to report the name, birthdate, residential street address, a driver’s license or passport number (or other approved document), and a copy of that document for each “beneficial owner” of the business. The term “beneficial owner” is broadly interpreted. In most instances, this information must be updated every time the reported information is changed. That means if an owner gets a new drivers’ license, the Association has to tell the federal government. A failure to timely report can result in fines and a penalty of $500 per day. For more information, click here.
Fortunately, there may be a relatively easy and lawful way for homeowners and condo associations to exempt themselves from this requirement. It appears
- Nonprofit corporations, recognized under IRS code section 501(c), prior to December 31, 2024, do not have to meet the CTA reporting requirement.
- Homeowners and condominium associations can often qualify to become a 501(c) nonprofit corporation.
If your association would like to find out whether it may qualify for this exemption by changing its corporate form to a 501(c) nonprofit corporation, please contact Maren Calvert at Schwabe as soon as possible. The IRS can take 6 months or more to process your application.
This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.