The federal Corporate Transparency Act (CTA), which came into effect on January 1, 2024, establishes vital compliance requirements designed to combat financial crimes such as money laundering. Health care entities, including hospitals and physician practices, must fully understand their obligations under this law to avoid significant penalties, including daily fines and potential imprisonment.
Who Does the Corporate Transparency Act Impact?
Health care organizations are directly affected by the CTA unless they qualify for one of the 23 exemption categories. Many health care entities, particularly smaller organizations, may struggle to meet the “Large Operating Entity” exemption due to staffing or organizational structure complexities. It is crucial to review these criteria carefully to determine if your entity is exempt from filing.
What is Required Under the Corporate Transparency Act?
Nonexempt entities must file a Beneficial Owner Information Report with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). This report must include detailed personal information about “Beneficial Owners” — individuals who hold at least 25% ownership or possess significant control over the entity.
The CTA includes the following compliance deadlines:
- Entities formed before January 1, 2024: File by January 1, 2025.
- Entities formed in 2024: File within 90 days of formation.
- Entities formed after January 1, 2025: File within 30 days of formation.
Key Takeaways for Health Care Entities
- Evaluate Exemptions: Carefully assess whether your entity qualifies for any exemptions, such as being a wholly owned subsidiary of a tax-exempt organization. Ensure you understand the specific categories that apply.
- Identify Beneficial Owners: Ensure accurate and up-to-date information is collected for all individuals with at least 25% ownership or significant control. This is crucial for filing the report correctly and avoiding penalties.
- Streamline Reporting: Consider obtaining a FinCEN ID to simplify updates and filings for Beneficial Owners. This will allow for more efficient future reporting.
- Beware of Scams: Be vigilant against fraudulent agents who may offer to file on your behalf. Protect your sensitive information and work only with reputable sources.
Risks of Noncompliance
Noncompliance with the Corporate Transparency Act can lead to serious consequences. Fines of $500 per day (up to $10,000 per incident) and imprisonment for up to two years may be imposed. Additionally, agencies like CMS can use FinCEN data to verify provider information, leading to further scrutiny and possible legal action.
Take Action Today
The deadline for compliance is fast approaching. Health care organizations must begin preparing their filings immediately to ensure they meet the required timelines. Consult with legal counsel to receive specific guidance tailored to your organization. For detailed information on filing a Beneficial Owner Information Report, visit FinCEN’s FAQ page.
Take the necessary steps to ensure compliance with the Corporate Transparency Act today and protect your organization from costly penalties and legal repercussions.
Contact Stanford Physician Advocate Today
For further assistance navigating the complexities of the Corporate Transparency Act and ensuring compliance, reach out to Stanford Physician Advocate. Our expert team can provide the tailored legal support your health care organization needs to meet these requirements.