The CTA (Corporate Transparency Act) was passed in 2021 to ensure transparency in ownership and entity structures to prevent money laundering and tax deception, along with other illegal activities. Essentially, CTA ensures financial transparency as it makes it mandatory for business owners to repower BOI to FinCEN, thus helping the government with fighting against tax deception, terrorism aiding, and money laundering. Referring to the CTI, LLCs and corporations must comply with the BOI reporting. However, some larger business entities might be exempted from the specific criteria. Non-compliance can instigate criminal and civil penalties that include potential incarceration and heavy fines. You will want to check out the New law and tax called BOI to check whether you are required to comply or not so that you can avoid the legal consequences. In its essence, the CTA is a game-changer in the world of law as it improves transparency regarding business ownership. The CTA incorporates all individuals who own or control an entity to reveal the beneficial owners to the Secretary of State. Who Has to File a BOI Report? It is estimated that more than 32 million business entities will have to comply with the Corporate Transparency Act, with five million companies being added every year. While it is not always clear who must file for BOI, the first step for every business owner is to figure out whether they fall in the category of business entities that must file for BOI reporting or not. There are some tools available that can help businesses make an accurate assessment of what they need to do. Based on the current scenario, the two categories of business entities that must file for a BOI are the following: A foreign reporting company A domestic reporting company Who is exempted from the CTA? The CTA has excluded more than twenty entities from BOI reporting, including the following: Regulated Companies: these are the business entities that are already regulated and regularly report similar information to the federal authorities. Bigger Operating Companies: the larger operating companies whose ownership interests are completely owned or controlled directly or indirectly are excluded from the CTA. Inactive Businesses: Inactive and additional businesses are also excluded from complying with the CTA. Regarding the healthcare entities, the Secretary of Treasury has not yet issued any solid law related to the regulation of healthcare agencies. However, regarding for-profit healthcare organizations that are run and owned by investors, there is a likelihood that the healthcare entities of this category won’t be exempted from the law and will be made to report for BOI. The CTA is expected to affect the majority of for-profit healthcare entities, especially those that have less than twenty full-time employees, as these do not fall in the category of exemption. That said, for-profit healthcare companies should start preparing for reporting requirements. The best way would be to consult a lawyer to determine whether or not they are exempt under the CTA. The lawyer will also guide the company about when and what will need to be reported.
