Oregon HOAs Should Continue to Prepare for Compliance with Corporate Transparency Act

By Kyle Grant

The Corporate Transparency Act (CTA), enacted to combat financial crimes, requires certain entities to report beneficial ownership information (BOI) to the Financial Crimes Enforcement Network (FinCEN). While legal challenges and court decisions have created temporary delays, Oregon HOAs, as nonprofit corporations, are still technically required to comply with the CTA reporting requirements. Despite the current stay, it is critical for Oregon HOAs to prepare for compliance to avoid potential challenges down the line.

Recent Legal Developments

Two key legal actions have affected the immediate enforcement of the CTA Reporting Rule:

1. Supreme Court Action: The Supreme Court granted a stay of the nationwide preliminary injunction in Texas Top Cop Shop v. McHenry (formerly Garland), allowing the case to proceed before the Fifth Circuit in late March.
2. Nationwide Stay on Reporting Rule: A Texas court, in Smith v. U.S. Department of Treasury, issued a nationwide stay of the Reporting Rule itself, pausing the requirement for entities to file BOI reports while the case is pending. FinCEN’s guidance confirms that reporting companies are not currently required to file BOI reports or face liability during this period. However, voluntary compliance is encouraged.
3. Legislative Exemptions: Efforts are underway to gain exemptions for HOAs, but this could take time, and it is not yet clear if such exemptions will be taken up by Congress.

Implications for Oregon HOAs

Since most HOAs in Oregon are structured as nonprofit corporations, they fall under the scope of the CTA unless they meet specific exemptions. Although the current stay temporarily halts enforcement, the reporting requirements remain in place and will likely be enforced in the future. Key considerations include:

• No Immediate Liability: The stay prevents enforcement during this period, but HOAs may need to be ready to comply once the legal challenges are resolved.
• Proactive Compliance: Given the uncertainty, voluntarily gathering and submitting BOI during this pause is what we are still recommending for HOAs.

Recommended Next Steps

• Verify Your Reporting Obligations: Ensure the status of your HOA aligns with CTA requirements for nonprofit corporations.
• Gather BOI Information: Identify and document individuals who meet the reporting criteria, such as board members or officers with substantial control.
• Stay Updated: Monitor ongoing legal developments and FinCEN guidance to understand when compliance will become mandatory.
• Seek Legal Guidance: Work with our in-house experts at Tonkon to clarify obligations and prepare your HOA for compliance. We have dedicated staff who can assist if needed.

By taking these steps now, Oregon HOAs can reduce risk, ensure compliance readiness, and demonstrate a commitment to transparency. If you have any questions or need assistance, please don’t hesitate to reach out.