Reston Association is throwing its support behind federal legislation that would exempt community associations from having to report information about their owners under a law designed to root out fraud and other shady dealings.
The organization sent letters to Rep. Gerry Connolly and senators Tim Kaine and Mark Warner yesterday (Tuesday) urging them to co-sponsor the Community Association Reporting Exemption Act, which would exempt some homeowners and community associations from requirements that RA calls “burdensome.”
RA leaders argue that the current reporting requirements, which were established by the Corporate Transparency Act (CTA) in 2021, discourage volunteers from partaking in HOA leadership roles in the community.
“These volunteers play an essential role in supporting the vitality of their communities, but they may be driven away by the fear of severe penalties,” RA CEO Mac Cummins wrote in the letters. “It is imperative that Congress acts to protect these community leaders and ensure that well-intentioned regulations do not inadvertently undermine the spirit of volunteerism and community engagement.”
Enacted by Congress in 2021, the CTA requires companies formed or operating in the U.S. to report the names, addresses and other identifying information about their “beneficial owners” to the Department of Treasury’s Financial Crimes Enforcement Network.
Anyone who has a significant ownership stake in the organization, whether as a shareholder or a company leader with influence on its operations and decisions, is considered a beneficial owner, according to the U.S. Chamber of Commerce. The CTA took effect on Jan. 1 of this year, with a filing deadline of Jan. 1, 2025.
The Treasury Department says the legislation’s goal is to combat fraud, money laundering and other illicit activities by preventing individuals and businesses from hiding money in anonymous shell companies.
As a not-for-profit organization, RA is exempt from the CTA, but its 160-plus sub-associations aren’t, including the various neighborhood clusters. As currently written, the law applies to community associations that are not nonprofits, have fewer than 20 employees, and get less than $5 million in annual revenue.
Failure to comply could result in up to $10,000 in fines and up to two years in prison, according to Cummins.
“While we support the aim of combating money laundering and terrorist financing, this requirement is not appropriate for community association boards of directors,” the RA CEO wrote.
The Community Association Reporting Exemption Act, which was introduced and referred to the House Committee on Financial Services on July 15, would take a “crucial first step in resolving this issue,” he said.
According to RA, the Community Associations Institute, a Falls Church-based membership organization that represents HOAs and community associations around the world, also supports an exemption, filing a lawsuit last month to challenge the CTA.
The largest community association in Virginia, RA represents over 22,000 homes and 65,000 members, per its letters to Warner, Kaine and Connolly.
The organization is starting to take a more public, proactive approach to lobbying elected officials after its board of directors adopted a strategic plan in February that identified advocacy as a priority. The proposal to allow a casino in Fairfax County has become a particular focus.
According to materials for the Board of Directors’ meeting last Thursday (Sept. 26), RA has hired two vendors for a total of $185,000 this year to assist with its anti-casino advocacy with another $30,000 expected to be needed for a communications firm that will be chosen next year.
RA staff have proposed $130,000 for advocacy work in a draft budget for 2025 that was presented to the board for a discussion and public hearing last week.
“This money would be used for a variety of purposes based on Association needs for consultants and or help in our advocacy efforts at the County or State levels,” RA said in a summary of the proposed budget.
