Corporate Transparency Act Halted by Federal Court: What It Means for Your Practice
Earlier this month, a federal district court in Texas issued a temporary injunction halting the implementation of the Corporate Transparency Act (CTA), which was set to take effect on January 1, 2025. This pivotal decision marks a significant and temporary victory for small businesses across the nation, including dental practices. The CTA has been a point of contention due to its stringent reporting requirements, which impose new administrative burdens on businesses with fewer than 20 employees or annual revenues under $5 million file a Business Ownership Interest (BOI) report with a national registry intended to combat financial crimes.
How this Law Impacts Dental Practices
The American Association of Endodontists (AAE) and hundreds of other business organizations have been at the forefront of efforts to delay or repeal the CTA, arguing that it places an undue burden on small business owners. For dental practice owners, the law’s requirements mean diverting valuable time away from patient care to comply with cumbersome paperwork. The penalties for non-compliance are severe, including fines of up to $500 per day (up to $10,000 total) and potential prison sentences of up to two years. The law was enacted in a misguided attempt to combat illicit financial crimes.
Federal Court Intervention and Implications
The court’s decision to halt the January 1 filing deadline has provided temporary relief for small business owners. However, the federal government has already appealed the ruling, with a Federal Appeals Court expected to review the case as soon as possible. The outcome of this legal battle will have implications for dental practices and other small businesses nationwide.
For now, the AAE advises dental practices to consult legal counsel to determine if it is in their best interest to file ahead of the January 1 deadline. As of December 16, the Treasury Department on their reporting website stated, “reporting companies are not currently required to file a BOIR and are not subject to liability if they fail to do so while the applicable order remains in force.” Practices with sensitive or confidential ownership structures should carefully weigh whether to delay submitting their BOI report until a clearer mandate emerges. For those opting to proceed with compliance, BOI reports can still be filed at https://boiefiling.fincen.gov/.
AAE Advocacy in Action
The AAE has been a vocal opponent of the CTA, ramping up its advocacy efforts in response to the law’s potential impact on dental practices. Earlier this year, the U.S. House of Representatives passed legislation to delay the implementation of the CTA, but the measure stalled in the Senate. Recognizing the urgent need for action, the AAE launched a robust campaign aimed at not only delaying the law but also pushing for its immediate repeal.
In June, AAE President Dr. Natasha M. Flake sent a formal letter to the House Financial Services Committee, urging lawmakers to repeal the CTA considering the heavy administrative burden the CTA imposes on small businesses. The AAE also initiated a grassroots campaign, empowering AAE members to directly contact their federal lawmakers to ask for the CTA’s repeal.
What’s Next?
As the legal battle over the CTA continues, the AAE will continue to provide updates on developments on the implementation of the CTA. The AAE remains committed to protecting the interests of its members and endodontic practices nationwide, actively lobbying for the repeal of the CTA while providing resources to help members navigate compliance challenges.