Corporate Transparency Act: Will You Have to Report Who Owns Your Practice?

American College of Radiology® (ACR®) members may have to comply soon with a federal law about their practices ownership. The Corporate Transparency Act mandates that companies doing business in the United States disclose to the federal government information about the individuals who own or control them. Congress enacted this law to pursue companies that established shell companies to enable illegal activities such as money laundering and human and drug trafficking.

Covered companies include corporations, limited liability companies and similar entities. A reporting company must disclose its “beneficial owners” who, directly or indirectly, exercise substantial control over the company or own or control at least 25% equity in the entity. Specifically, a company must list information about a beneficial owner’s full legal name, address and date of birth; unique identifying number such as a passport or driver’s license; and the percentage of their ownership or decision-making control.

However, the act exempts nonprofit organizations and government entities. It also exempts entities that: employ more than 20 individuals; have filed a tax return in the previous year showing more than $5 million in gross receipts or sales; and maintains an operating presence at a physical location in the U.S. If larger radiology practices meet each of these conditions, they could qualify for this exemption.

A recent article published by MGO, Corporate Transparency Act Update: Deadlines, Enforcement Risks, and Steps to Prepare for Compliance, provides valuable background about the act.

The government planned to begin enforcing the act Jan. 1, against existing companies formed by that date. Several lawsuits, though, have challenged the constitutionality of the act and the U.S. Department of the Treasury’s implementation. A nationwide injunction by a federal trial court currently is in effect halting reporting requirements, but the government appealed that injunction.

The U.S. Supreme Court also is considering whether it should hear a challenge to the act in a separate case. An American Bankers Association article, U.S. Supreme Court issues stay of CTA nationwide injunction, provides an overview of that case.

Additionally, members of Congress introduced a bipartisan bill to extend the reporting deadline to Jan. 1, for most small businesses.

ACR members and their practices subject to the act’s beneficial owner reporting mandate could opt to file a voluntary report with the Treasury Department or await resolution of the pending court cases.

ACR strongly recommends practices covered by the Act consult with a qualified healthcare attorney in their jurisdiction. The College continues to closely monitor this evolving matter and will provide updates.

For more information or if you have questions, contact Tom Hoffman, ACR General Counsel and Executive Vice President, Governance and Member Services.