BLOG | Counsels’ Corner: The Corporate Transparency Act (CTA) Hits Co-ops – and Condos?
By: Kenneth J. Finger, Esq., Dorothy M. Finger, Esq., Carl L. Finger, Esq., and Daniel S. Finger, Esq.
(WHITE PLAINS) By the end of 2024, business entities created by the filing of a document with the New York Secretary of State must report to the United States Financial Crimes Enforcement Network (FinCEN) under the Corporate Transparency Act (“CTA”) and the regulations promulgated pursuant to the CTA.
In New York State, a corporation is created by filing a Certificate of Incorporation with the Secretary of State. Such corporations include cooperatives.
Condominiums, however, are created by the filing of the declaration with the office charged with recording land records. A copy of the declaration is required to be filed with the Secretary of State, but that requirement appears to be more administrative and ministerial. Therefore, it appears that the CTA does not generally apply to condominiums. However, some condominiums have incorporated and such corporations would likely need to comply with the CTA and the regulations.
Thus, Cooperatives (and incorporated Condominiums) must file an initial report with a variety of information, explained in the following summaries, and reports within 30 days of any change to the information. Certain exemptions exist and any entity should review the exemptions with counsel to see if one might apply.
Reporting companies must provide the following information: (1) the legal name of the company, (2) any trade name (DBA) used by the company, (3) the current street address of its principal place of business and if the principal place of business is not in the U.S., then the address from which it conducts business in the U.S., and (4) the Taxpayer Identification Number.
Entities required to file under the CTA (“Reporting Companies”) must provide information about themselves and about their “Beneficial Owners” of the company. Beneficial Owners include parties who exercise “substantial control” or own 25 percent of the entity.
As to Beneficial Owners, the Reporting Company must provide the (1) full legal name, (2) date of birth; (3) residential street address (4) Unique identifying number contained in a valid passport, government or tribal identification document, or state-issued driver’s license, and the jurisdiction issuing the document, and (5) an image of the document.
Beneficial Owners are “substantial control” parties which are those who serve as senior officers, have authority over the appointment or removal of any senior officer or a majority of the Board of Directors (or a similar body), or of a Reporting Company, or those who direct, determine, decide, or have substantial influence over important decisions of the Reporting Company. Directors on a Cooperative Board of Directors are, presumably, Beneficial Owners.
The willful failure to report complete or updated beneficial ownership information to FinCEN, or the willful provision of or attempt to provide false or fraudulent beneficial ownership information, may result in a civil or criminal penalties, including civil penalties of up to $500 for each day that the violation continues, or criminal penalties including imprisonment for up to two years and/or a fine of up to $10,000. Senior officers of a Reporting Company who fail to file a required Beneficial Ownership Interest Report may be held accountable for that failure.
Help Is on the Way
Filing BOIR (www.filingboir.com), currently under development, is being designed specifically for managing agents and property managers. Filing BOIR will include the following property manager specific benefits:
1. Single account for entering, maintaining, and submitting information for all filing entities managed by a managing agent and/or by a property manager.
2. Multiple users/team members per account permitted.
3. Board member portal for board members to complete their portion of the submission and upload required documentation.
4. Automatic reminders to board members to complete their portion.
5. Automatic reminders to managing agents or property managers as to incomplete filing entities.
6. Automatic reports to managing agents or property managers for all account filing entities.
7. Automatic submission upon completion and approval.
8. Unlimited corrections with information retained from prior filings.
9. Unlimited amendments with information retained from prior filings (including Board changes each year upon vacancy and appointment, or Annual Meeting and Election).
10. Membership fee per filing entity annually for ease of invoicing to client entities.
Editor’s Note: The authors are attorneys with Finger and Finger, A Professional Corporation. The firm, based in White Plains, is Chief Counsel to The Building and Realty Institute of Westchester and the Mid-Hudson Region (BRI) and its component associations.
This article was featured in the January/February 2024 edition of IMPACT newspaperopens PDF file .