Unveiling the Corporation Transparency Act: A Must-Know Guide for Private Practice Clinicians!

- November 27, 2023

The landscape of private practice is ever-evolving, and as a clinician, staying informed about legislative changes is crucial for the success and compliance of your practice. One such significant development is the Corporation Transparency Act (CTA), enacted in 2021, bringing a new era of transparency and accountability. In this comprehensive guide, we’ll unveil the key aspects of the CTA and provide essential insights for clinicians in private practice.

This landmark legislation aims to combat financial crimes, enhance national security, and ultimately, strengthen the integrity of the U.S. financial system. While primarily targeting large corporations, the CTA also extends its reach to private practice clinicians, requiring them to disclose their beneficial ownership information (BOI).

Understanding the Corporation Transparency Act (CTA)

The Transparency Mandate: The Corporation Transparency Act, signed into law to enhance corporate transparency and combat illicit financial activities, has direct implications for private practices structured as corporations. This includes medical practices, mental health clinics, and healthcare consulting firms.

Key Provisions:

Beneficial Ownership Reporting: Clinicians must disclose beneficial ownership information, shedding light on individuals with significant control or financial interest in the practice.
Reporting Entities: The CTA applies to a broad range of entities, including corporations, limited liability companies (LLCs), and other similar structures.

Impact on Private Practice Clinicians

For private practice clinicians, the CTA introduces a mandatory reporting obligation. Clinicians who own or control more than 10% of the voting interests or financial interests of a private practice entity (e.g., LLC, PLLC, etc) must file a report with the Financial Crimes Enforcement Network (FinCEN). This report, known as a Beneficial Ownership Information (BOI) filing, requires detailed information about the beneficial owners of the practice, including their names, addresses, and Social Security numbers.

1. Enhanced Accountability:

The CTA aims to reduce financial crimes by increasing transparency. Clinicians must be prepared to disclose ownership structures, promoting accountability within their practices.

2. Legal and Financial Implications:

Non-compliance with the CTA may result in legal consequences and financial penalties. Clinicians need to understand the reporting requirements and take necessary steps to ensure compliance. The CTA states that willful failure to report may result in civil or criminal penalties ($500 for each day of noncompliance, imprisonments, or fine up to $10,000.

3. Operational Adjustments:

Private practices may need to make operational adjustments to adhere to the CTA like the initial filing and ongoing updates. This could also involve reviewing and modifying corporate structures to meet the new reporting standards but unlikely for most clinicians in solo private practice.

Steps to Ensure Compliance

Fincen has created small business, entity compliance guide for beneficial ownership information reporting requirements. This guide is available in several languages and can be downloaded from the link above. Below are some steps to ensure compliance.

1. Review Current Ownership Structures:

Evaluate the current ownership structures of your practice to identify individuals with significant control or financial interest. In other words, know what type of business structure your private practice under the Corporate Commission of your state and who has majority ownership of that business entity.

2. Update Corporate Records:

Ensure that corporate records accurately reflect the beneficial ownership information required by the CTA. Regularly update these records to stay in compliance.

3. Seek Legal Counsel:

Consult with legal professionals who specialize in healthcare compliance to navigate the specific implications of the CTA on your private practice.

4. Educate Your Team:

Share information about the CTA with your team, emphasizing the importance of compliance. Train staff members on any operational changes needed for adherence.

5. Stay Informed:

Keep abreast of any updates or changes to the CTA. Regulatory landscapes can evolve, and staying informed ensures continued compliance.

Navigating the BOI Filing Process

The BOI filing process may seem daunting, but with careful preparation and adherence to the guidelines, clinicians can successfully navigate this requirement. Here’s a step-by-step guide:

Identify Beneficial Owners: Determine who qualifies as a beneficial owner according to the CTA’s definition. This includes individuals who directly or indirectly own or control more than 10% of the voting interests or financial interests of the practice.
Gather Required Information: Collect the necessary information for each beneficial owner, including their full name, date of birth, address, Social Security number, and a unique identifier (such as a passport number or driver’s license number).
Obtain a FinCEN ID: Get a FinCEN ID starting in January 1, 2024 to help streamline the filing process.
Complete & Submit the BOI Form: Fill out the BOI form accurately and completely through FinCEN, providing all the required information for each beneficial owner.

Important Considerations

While the CTA’s implementation is still in its early stages, there are a few key considerations for clinicians to keep in mind:

Deadlines: If your company was created before January 1, 2024, it must file its initial BOI report by January 1, 2025. If your company was created on or after January 1, 2024, it has 30 days to file its initial BOI report. Current businesses may file early in 2024 to get it done and out of the way.
Exemptions: Certain types of business entities may be exempt from the CTA’s reporting requirements. Actually there are 23 exemptions. These include entities that are publicly traded, registered as investment companies, or subject to certain regulatory oversight.
1. Reporting company exemptions
  1. Securities reporting issuer
  2. Governmental authority
  3. Bank
  4. Credit union
  5. Depository institution holding company
  6. Money services business
  7. Broker or dealer in securities
  8. Securities exchange or clearing agency
  9. Other Exchange Act registered entity
  10. Investment company or investment adviser
  11. Venture capital fund adviser
  12. Insurance company
  13. State-licensed insurance producer
  14. Commodity Exchange Act registered entity
  15. Accounting firm
  16. Public utility
  17. Financial market utility
  18. Pooled investment vehicle
  19. Tax-exempt entity
  20. Entity assisting a tax-exempt entity
  21. Large operating company (20 FT employees, $5,000,000 in gross annual revenue)
  22. Subsidiary of certain exempt entities
  23. Inactive entity

Penalties: Failure to comply with the CTA’s reporting requirements can result in significant civil penalties, up to $10,000 per day, per violation.

Conclusion: Navigating the Transparency Era

The Corporation Transparency Act ushers in a new era of transparency and accountability for private practice clinicians and other business entities. By understanding its implications and taking proactive steps toward compliance, clinicians can navigate these changes seamlessly, ensuring the continued success and integrity of their practices.

Next Steps: Share Your Insights on Sana Network

Share your insights and experiences with the Corporation Transparency Act on Sana Network. Engage in discussions, learn from fellow clinicians, and contribute to a community dedicated to navigating the evolving landscape of healthcare regulations.

Written by AI & Reviewed/Edited by Clinical Psychologist: Yoendry Torres, Psy.D.

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