What is the Corporate Transparency Act?
The Corporate Transparency Act ("The Act") was enacted by Congress on January 1, 2021, as part of the National Defense Authorization Act. The Act includes significant reforms to anti-money laundering laws and its intent is to combat money laundering and other financial crimes by requiring a broad range of entities to disclose information about their owners and persons who exercise control to the Financial Crimes Enforcement Network (FinCEN), a bureau of the United States Treasury.
Since we are in the fourth quarter of 2024, now is the time for POAs to gather the information necessary to complete the BOI forms, which must be submitted to FinCEN by the January 1, 2025 deadline. There are severe criminal and civil penalties for a willful failure to comply with the Corporate Transparency Act.
For CTA and POAs, “beneficial owners” include the president and all board members. The only potential exception for filing is if the IRS issued a determination letter to the POA that it qualifies as tax exempt under Section 501c of the Internal Revenue Code AND the POA has continuously filed Form 990 to maintain its 501c status. Most POAs and HOAs now file tax returns on Form 1120-H under Section 528 of the tax code and have voluntarily given up their 501c status.
The filing process for both the corporation and the directors is very simple but it should not wait until January 1.
Resources for POA Boards
Much research has been completed on behalf of the Carolina Trace Association and the POAs. Please see the following documents that should help educate Board members as well as what is involved in creating a FinCEN ID.
