New Reporting Requirements Under the Corporate Transparency Act: What Dental Practices Need to Know
The Corporate Transparency Act (CTA), enacted in 2021, introduces new reporting requirements for small businesses, including many dental practices. These requirements are aimed at combating money laundering by increasing transparency around business ownership. As of January 1, 2024, businesses that meet certain criteria must file beneficial ownership information reports with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). Failure to comply by January 1, 2025, could result in significant penalties.
Who Needs to File?
Dental practices must file under the Corporate Transparency Act if they meet the following criteria:
• Employ fewer than 20 people, or
• Generate less than $5 million in gross annual receipts.
What Needs to Be Reported?
Businesses that meet these criteria must report the following information:
1. Business Information
• Legal name and trade names.
• Current address.
• Jurisdiction of formation.
• Tax Identification Number (TIN).
2. Beneficial Ownership Information
• Full legal name.
• Date of birth.
• Residential address.
• Identification number (e.g., driver’s license, passport, or state ID) along with a copy of the form of ID used.
Who Qualifies as a Beneficial Owner?
A “beneficial owner” is defined as an individual who:
• Owns or controls at least 25% of the business, or
• Exercises substantial control over the business.
“Substantial control” may include senior officers of a business or individuals with significant influence over key decisions. Due to the complexity of determining beneficial ownership, the AAE encourages members to consult legal counsel for guidance.
Why Is This Important?
Failure to file a report on time could result in severe consequences, including:
• Civil Penalties: Fines of up to $500 per day until the violation is corrected.
• Criminal Penalties: Fines of up to $10,000 and/or imprisonment for up to two years.
Key Takeaways for AAE Members
• Determine if your practice qualifies under the CTA reporting requirements based on staff size and revenue.
• Collect and prepare the necessary information about your practice and its beneficial owners.
• Consult legal counsel for clarity on beneficial ownership and filing obligations.
• File your report by January 1, 2025, to avoid penalties.
The AAE encourages members to take these requirements seriously and begin preparing early to ensure a smooth compliance process. For further guidance, please consult a trusted legal advisor or relevant resources to ensure compliance with these new requirements.