From AHLA, by Christopher Conn and Patrick Dunbar:
The Corporate Transparency Act (CTA), effective from January 1, 2024, mandates domestic and foreign legal entities operating in the U.S. to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), with certain exemptions. This is to regulate “shell” companies often associated with illicit activities. Health care providers, unless exempt, will also need to comply with these disclosure requirements.
Two types of reporting companies exist under the CTA: domestic and foreign. Domestic entities are those created by filing organizational documents with a secretary of state, while foreign entities are organized under foreign laws but conduct business in the U.S. Health care providers organized as partnerships, sole proprietorships, or other entities not typically required to file with state governments may avoid being classified as a reporting company.
If classified as a reporting company, health care providers must identify their “beneficial owners” and report this information to FinCEN. A beneficial owner under the CTA is a person or entity that exercises substantial control over a reporting company or owns or controls at least 25% of the ownership interests of the reporting company.
Non-exempt reporting companies must file beneficial ownership information (BOI) reports with FinCEN, containing specific information about the company, its beneficial owners, and its applicants. Timing requirements for these disclosures vary based on the date of entity formation and changes to previously disclosed information.
The CTA imposes civil and criminal penalties for willful failure to report, or intentionally providing false or fraudulent BOI. Health care providers must ensure disclosure consistency across multiple regulatory and licensing bodies. They should also be aware of the administrative challenges posed by the CTA, including determining beneficial ownership and timely reporting of BOI updates.