On Oct. 11, the U.S. District Court in Alexandria, VA held a hearing for preliminary injunction in Community Associations Institute v. U.S. Department of Treasury. CAI anticipates a ruling on the request shortly. This case is a critical component of CAI’s fight to protect community associations from burdensome requirements mandated under the Corporate Transparency Act.
CAI Membership May Be Needed for Exemption from Corporate Transparency Act
Based on an interpretation in a similar case filed by the National Small Business Association, association standing” may protect all members of the organization. If CAI’s lawsuit is successful in exempting community associations from the act, it is possible the exemption may only apply to community associations that are CAI members.
CAI recommends associations sign up for a homeowner leader group membership. Up to 15 board members may participate, which should cover most community association boards, visit www.caionline.org/join.
CAI’s Three-Pronged Approach to Fighting the Corporate Transparency Act
CAI is committed to a comprehensive strategy in its fight to exempt community associations from the act.
- Lawsuit. CAI v. U.S. Department of Treasury challenges the act’s application to community associations.
- Regulatory Advocacy. Arguing that volunteer entities such as community associations do not pose a risk to federal efforts to combat money laundering and terrorist financing activities, CAI continues to appeal to the Financial Crimes Enforcement Network and the Treasury Department to secure an exemption for community associations
- Advocacy Legislative Efforts. CAI continues to advocate for the passage of HR 9045, legislation that specifically exempts community associations from the act. This bill is the only piece of legislation in Congress that provides an exemption to any sector.
Preliminary Injunction Hearing. The hearing requesting a preliminary injunction was a significant step in the case. While a decision is pending, the arguments presented underscore the potential hardships community associations may face under current regulations. The court’s decision will determine whether enforcement of the act will be halted while the case proceeds. CAI will keep members informed of any updates.
CAI is hopeful for a favorable outcome in the case. Until a decision is reached, community associations must comply with the act by Jan. 1. We encourage all community associations to review current requirements and prepare accordingly. Stay tuned for more updates as we work tirelessly to exempt community associations. For more information and resources, visit www.caionline.org/cta.
When do you expect a ruling on the preliminary injunction motion?
In lieu of guessing a date for a ruling (which is unknown of course), what is your confidence level that a ruling will be reached before the 1 January BOI reporting deadline?
https://colbertlaw.us/court-deals-blow-to-community-associations-attempt-to-block-corporate-transparency-act/
Nothing anywhere on CAI website tells us exactly what the regulation would look like or involve which makes me think this is just an industry advocate org knee jerk rejection of any additional regulation. If it was truly bad CAI would tell us what is involved and why it’s overly burdensome. You don’t do that. It’s probably just filing out a form saying HOAs aren’t laundering money or some such thing and basic accounting requirements to ensure board members aren’t secretly in the take from vendors. Why would we oppose that?
The reporting requirement itself is fairly simple: Uploading a five page form with names, addresses and age of all HOA board members to the FinCEN, along with copies of their drivers licenses or other Government I.D. (How this would actually help catch drug traffickers, terrorists and fraudsters is questionable—since no such individuals would ever submit their information)
The problem is that the CTA law makes it a federal crime to fail to provide the requested info. And when a new member joins an HOA board, the HOA has 30 days to report the new individual’s personal info to FinCEN. Failure to do so is punishable by penalties of up to $10,00 in fines, and up to 2 years in prison. This applies to the organization and to the Board members.
Likelihood of actually receiving such penalties may be fairly low—but that is nevertheless what the law provides for in the case of non-compliance. Would you like to volunteer for a position that automatically carries that level of liability for failure to meet the reporting requirements?