The Corporate Transparency Act: New Reporting Requirements for Previously and Newly Formed Business Entities

• February 14, 2024

• Ashley Atwood , Gray Reed
• Jeffrey Bourdon , Gray Reed
• Allie Lefkowitz , Gray Reed
• Olivia Mizell , Gray Reed

The Corporate Transparency Act (CTA), effective as of January 1, 2024, is one of the newest laws to combat fraud and abuse by the financial crimes enforcement arm of the U.S. Department of Treasury (FinCEN). In short, CTA requires companies, persons with 25% or more of any class or category or profit interest or ownership in a business, and those with substantial control over entities to submit personal information to a FinCEN database. The disclosed information will be available for federal and state agencies charged with enforcement and oversight objectives for the purpose of greater transparency regarding ownership of enterprises. Failure to comply with CTA may result in civil penalties (up to $500 for each day the violation continues) and criminal penalties (of up to two years imprisonment and a fine of up to $10,000). For persons involved in entities providing health care, CTA will likely result in increased enforcement actions against persons who violate state or federal health care laws, especially regarding improper ownership arrangements and self-dealing. As such, entities should prepare for initial reports and ongoing compliance.

ARTICLE TAGS

• Physician Organizations Practice Group
• Fraud and Compliance
• Governance