Transparency act enforcement paused while scope is examined
Late last week, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network, known as FinCEN, announced yet another change in policy concerning the Corporate Transparency Act. FinCEN stated that it will not issue any fines or penalties or take any other enforcement actions against any companies (which includes not-for-profit condominium, townhouse and homeowner associations) based on any failure to file or update the Beneficial Ownership Information reports pursuant to the CTA by the current deadlines (March 21).
No fines or penalties will be issued, and no enforcement actions will be taken, until a forthcoming interim final rule becomes effective and the new relevant due dates in the interim final rule have passed. According to FinCEN, this change in enforcement policy continues “Treasury’s commitment to reducing regulatory burden on businesses, as well as prioritizing under the [CTA] reporting of BOI for those entities that pose the most significant law enforcement and national security risks.”
No later than March 21, FinCEN intends to issue an interim final rule that extends BOI reporting deadlines, recognizing the need to provide new guidance and clarity as quickly as possible. FinCEN also intends to solicit public comments on potential revisions to existing BOI reporting requirements. FinCEN will consider those comments as part of a notice of proposed rulemaking anticipated to be issued later this year to minimize the burden on small businesses while ensuring that BOI is highly useful to important national security, intelligence and law enforcement activities, as well to determine what, if any, modifications to the deadlines should be considered.
The Community Associations Institute has been working diligently to convince the federal government and relevant agencies to exempt not-for-profit condominium, townhouse and homeowners’ associations that are subject to the requirements of the CTA as currently worded.
We will continue to monitor this situation closely and will keep our readers up to date on any new developments. Ultimately, we are hopeful that FinCEN will adopt revised filing requirements that will permanently exempt community associations and their boards from having to file forms as outlined in the CTA.
Q: For some unknown reason, our condominium association’s fiscal year begins on March 1. The board would like to change it to reflect a calendar year fiscal year. Is there any way the board can change the association’s fiscal year designation?
A: The answer to this question should be contained within the association’s governing documents (declaration, bylaws or articles of incorporation). To protect itself, a board will typically ask the association’s counsel to review the governing documents for a clear legal opinion as to what authority the board may have and what is required to change the fiscal year.
Current or more up-to-date governing documents will often give the board the discretion to change the association’s fiscal year by a simple majority vote of the board. It is not uncommon, however, for an association’s declaration and/or bylaws to specifically designate the association’s fiscal year. If that’s the case, then an amendment to the declaration and/or bylaws may be required along with the possibility of a minimum percentage of the owners’ approval, depending upon the precise language of the association’s declaration and/or bylaws.
If a board is considering changing the existing fiscal year, it is very important to also discuss the financial, budgetary and cash flow ramifications with either the association’s accountant or management’s financial department or experts.
• Matthew Moodhe is an attorney with Kovitz Shifrin Nesbit in the Chicago suburbs. Send questions for the column to him at CondoTalk@ksnlaw.com. The firm provides legal service to condominium, townhouse, homeowner associations and housing cooperatives. This column is not a substitute for consultation with legal counsel.