Physician Practices & the Corporate Transparency Act: What You Need to Know & Do

Many physician-practice owners now have an additional task to complete this year: filing basic information about themselves with FinCen, a bureau of the U.S. Department of Treasury, to comply with the Corporate Transparency Act.

The Corporate Transparency Act (CTA) is a new federal law that was enacted in 2021 and took effect on January 1, 2024. The law is meant to combat the use of shell companies to launder money — particularly money related to bioterrorism, the drug trade and human trafficking — by requiring small businesses that might otherwise fly under the radar to disclose their beneficial owners.

A beneficial owner is defined as any individual who owns or controls at least 25% of the ownership interest in the company. Beneficial owners also include individuals who exercise substantial control over the company, even if they do not have an ownership interest, such as the president, CEO, COO and CFO.

The law is designed to cast a wide net over entities that, except in the case of taxes, are not regulated by federal agencies, regardless of the degree to which they are regulated at the state level. It applies to millions of businesses across the U.S., including many medical practices that are incorporated. If you filed paperwork with your state to form your business, whether it be a corporation, professional corporation (PC) or limited liability company (LLC), the law most likely applies to you. This includes solo medical corporations. If you have a medical practice that is incorporated and its owners include solo medical corporations, both the practice and the solo medical corporations are required to file.

On the other hand, a sole proprietorship or general partnership that is not registered with a secretary of state or similar state office is not required to file. The CTA also does not apply to 501(c) non-profit organizations or inactive entities and may not apply to large medical groups that have more than 20 full-time employees and gross receipts over $5 million. If you think one of those exceptions might apply to you, view the checklist that can be found in the Small Entity Compliance Guide or consult with your attorney.

The CTA’s application to common corporate structures in the healthcare industry (such as relationships with management services organizations, or MSOs) raises questions. Medical groups will need to consider whether individual leaders of an MSO should be reported as beneficial owners of an affiliated medical group. Like other healthcare compliance issues, each reporting company should consider the facts and circumstances of its existing relationships and whether an MSO relationship will impact its submission.

When and How to File

Medical practices that existed before January 1, 2024, must file before January 1, 2025. New entities formed in 2024 need to file within 90 days of receiving actual or public notice that your company’s creation or registration is effective, whichever is earlier. You do not have to refile every year — only when certain key information changes.

You can file electronically through a secure filing system available at https://boiefiling.fincen.gov/ and then selecting BOI E-filing. There is no fee for submitting this information. Filing is fairly simple, and the government has confirmed that any information submitted will be kept confidential, only to be shared with certain recipients under specific circumstances.

Please note that FinCen is aware of fraudulent attempts to solicit information from individuals who are subject to these reporting requirements. Exercise extreme caution with emails or text messages offering links to help you with your filing or claiming to be from the government. Always go directly to the official government website.

When filing, you will need to provide the information listed below.

Company Information

• Legal name of the company and any DBAs
• Current address of the business
• Jurisdiction of formation/registration
• Taxpayer Identification Number (TIN)

Beneficial Owner Information (BOI)

• Legal name
• Date of birth
• Current residential address (not the business address)
• An identifying number, such as U.S. driver’s license number or passport number, along with a copy of the identification

Additionally, companies formed on or after January 1, 2024, must also include information on the individual who supervised the preparation of the certificate of formation of the reporting company as well as the individual who filed such document with the secretary of state in the state of formation (referred to as the “company applicant”). 

Any person who willfully violates the BOI reporting requirements may be subject to civil penalties of up to $500 for each day the violation continues, which is adjusted annually for inflation (and is currently set at $591). Certain violations, such as willfully providing false information, are also associated with up to two years imprisonment and a fine of up to $10,000.

For more information, view the following resources:

• An Introduction to Beneficial Ownership Information Reporting
• Beneficial Ownership Information FAQs