The Corporate Transparency Act is a new federal law that took effect on January 1, 2024. It applies to millions of businesses across the USA, including many medical practices. To assist you with compliance, we encourage you to read the information below.
What is the Corporate Transparency Act (CTA)?
The CTA was passed in 2019 to combat the use of shell companies to launder money, particularly money related to terrorism, the drug trade, and human trafficking by requiring small businesses that might otherwise fly “under the radar” to disclose their owners. Its requirements took effect on January 1, 2024.
Do I have to file?
While there are exceptions for larger companies or those otherwise regulated, the CTA will apply to most small medical practices that are incorporated. If you filed paperwork with the State to form your business (whether corporation, professional corporation, or LLC), the law probably applies to you. This includes solo medical practice corporations (i.e. John Smith, MD, Inc.). Note that if you have a medical practice that is incorporated and its owners include solo medical corporations, both the practice and the solo medical corporations need to file!
The law does not apply to 501(c) nonprofits. It might also not apply to large medical groups that have more than 20 full-time employees and gross receipts over $5 million. If you think this exception might apply to you, you should go through the checklist provided by the government that can be found in the BOI Small Entity Compliance Guide at www.CAPphysicians.com/BOIGuide or consult an attorney.
Is the information I provide made public?
No. Only federal agencies have access to the information without your permission. The general public does not have access.
When do I have to file?
Entities that existed before January 1, 2024, were required to file before January 1, 2024. If you form a new entity in 2024, you needed to file within 90 days.
Note that you do NOT have to re-file every year. However, you will need to update your filing if your
information changes.
What information do I need to provide?
For the company, you need to report:
The full legal name of the company
Any fictitious business names (i.e. DBAs)
The current address
The jurisdiction of formation (for CAP members this is probably California)
Its tax ID number
For the beneficial owners (see below), you need to report:
Their full legal name
Their date of birth
The current RESIDENCE address. The company’s business address is not sufficient.
An identifying number. The easiest is their California driver’s license number but a passport
number works too.
Who is a “beneficial owner”?
A beneficial owner is any individual who owns or controls at least 25% of the ownership interest in the company OR exercises substantial control over the company, even if they do not have an ownership interest. A company can have multiple beneficial owners. They will include senior officers, such as the President, COO, CEO, and
CFO, as well as anyone who owns 25% or more. Every company will have at least one beneficial owner. When in doubt, disclose!
How do I file?
Go to: https://boiefiling.fincen.gov/ and follow the links.
What if I just don’t file?
Willful failure to file carries a civil penalty of $500 PER DAY and possibly two years in prison.
Anything else?
Exercise extreme caution with emails or text messages offering links to “help” you with your filing or claiming to be from the government. There are scammers out there using people’s concerns about compliance to insert malicious software into their computers! Go to the official government website if you need help.
I’m still confused!
The government has prepared several informational pamphlets, which you can access here:
An Introduction to Beneficial Ownership Information from the U.S Department of the Treasury
www.CAPphysicians.com/BOI
Beneficial Ownership Information: Small Entity Compliance Guide
www.CAPphysicians.com/BOIGuide
If you are still uncertain, you should consult an attorney who can advise you on the specifics of your practice.