Answer: I believe you are referring to the Corporate Transparency Act. Pursuant to the CTA, entities in existence as of Jan. 1, 2024, have until Dec. 31, 2024, to report their “beneficial ownership” to the Financial Crimes Enforcement Network (FinCEN). Entities formed during 2024 have 90 days to make the report. Entities formed after Jan. 1, 2025, will have 30 days to make the report (the best practice will be to do so as part of the formation of the entity). Note that Congress’ stated goal of requiring reporting of beneficial ownership is to strengthen its anti-money-laundering efforts.

The CTA contains 23 exceptions to the reporting requirements. Most of these exceptions will not apply to dental practices. Two exceptions that might apply are those for:

1. Tax exempt entities (i.e., your practice is tax-exempt pursuant to Section 501(c) of the Internal Revenue Code).
2. Large operating companies (i.e., your practice has more than 20 full-time employees and more than $5 million in gross receipts).

The beneficial owners of your practice are those individuals who, directly or indirectly, own 25% or more of its outstanding ownership interests, and those individuals who exercise “substantial control.” Substantial control includes those who can appoint or remove officers and directors, those who are “important decision makers,” and those who possess other forms of “substantial control” over your practice.

If your practice is owned by dentists (which Michigan law requires) but has agreements with a DSO, a private equity firm or others, those agreements must be examined with the CTA beneficial ownership provisions in mind – a determination must be made as to whether the individuals owning/controlling the DSO, private equity firm, etc., are beneficial owners.

Once you have identified the beneficial owners you will need to report the following information for each of them:

1. Full legal name
2. Date of birth
3. Complete current address
4. A unique identifying number and issuing jurisdiction from the image of one of the following:

• U.S. passport
• Driver’s license
• Identification document issued by a state, local government, etc. or a foreign passport if the individual does not have any other document.

To make the required filing of your beneficial owner’s information you must do so electronically at boiefiling.fincen.gov(goes to new website). Alternatively, your attorney or accountant may be able to make the filing on your behalf.

Please note: It is important that you file on time. The CTA includes civil and criminal penalties for failing to do so. The civil penalties include fine of up to $500 per day. Criminal penalties include imprisonment and-or fines up to 10,000. these civil and criminal penalties also may be imposed on beneficial owners who refuse to provide the required information and therefore cause a required filing not to be made.

Court challenges filed: You did not ask about litigation seeding to invalidate the CTA. It is important to know that there are lawsuits pending in Alabama, Michigan, Maine, and Texas seeking to do so as of this writing. The Alabama case earlier this year resulted in a ruling that the CTA was unconstitutional. That ruling is on appeal. FinCEN has stated that it will not enformce the CTA against the plaintiffs in the Alabanma case while the appeal is pending. Thsoe plaintiffs include only the members of the Nationa Small Business Association and pribate parties. It is unlikely that any of these cases will be finally resolved by the end of 2024. Therefore, the best practice is to prepare to comply with the CTA and make the required filing.

This article originally appeared in the August 2024 edition of the Journal of the Michigan Dental Association.