The Compliance Divas Podcast
Our podcast covers current topics such as infection prevention and control, OSHA and HIPAA compliance for dentistry. We discuss the latest regulatory information, answer frequently asked questions and give suggestions for dental practices to make compliance easy and sustainable. The Compliance Divas are a trusted source for consistent, accurate information based upon current guidelines, standards, science, and recommendations.
The Compliance Divas Podcast
#144 Dentistry and the Corporate Transparency Act
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The Corporate Transparency Act, which took effect on Jan. 1, 2024 is meant to fight financial crimes, such as tax fraud and money laundering through shell corporations. The Act requires businesses and beneficial owners of these businesses to file a report with the Financial Crimes Enforcement Network (FinCEN) by the end of 2024. The Divas will discuss how to file the report and other helpful information about this new requirement.
- Financial Crimes Enforcement Network (FinCEN): https://www.fincen.gov/boi
- FinCEN Small Business Resources: https://www.fincen.gov/boi/small-business-resources
- H.R. 2513 Corporate Transparency Act: https://www.congress.gov/116/bills/hr2513/BILLS-116hr2513rfs.pdf
- US Dept. of Treasury Fact Sheet Actions to Prevent and Disrupt Corruption: https://home.treasury.gov/news/press-releases/jy1974
Welcome. I'm Leslie Cannon. I'm Mary Gavoni.
SPEAKER_01I'm Linda Harvey. I'm Olivia Long, and together we are the Compliance Divas.
SPEAKER_03Welcome to the Compliance Divas Podcast. I'm Mary Gavoni and I will be the moderator for this episode on the Corporate Transparency Act. The Compliance Divas bring clarity and simplicity to the regulatory world by navigating through the regulatory world to keep you on course. You can subscribe to the podcast through any of your favorite podcast apps. You can subscribe on our website, thecompliancedivas.com. And any of the resources that we mentioned today on the podcast will be available in the show notes on your favorite podcast app or on the resources section of our website, thecompliancedivas.com. If you have questions, you can always submit them via email to Mary at thecompliancedivas.com. So in 2021, part of the National Defense Authorization Act included the Corporate Transparency Act, which was designed to help to eliminate the possibility of shell corporations that might be funding terrorist activities or committing tax fraud or money laundering. The requirements of the Corporate Transparency Act take effect January 1st of this year. So we wanted to bring this to everyone's attention. You may have received a notification from your accountant or from your attorney, but we just want to make sure that all of our practices know that this is a requirement that may need to be completed immediately or by the end of 2024. So we're going to start out with Linda, and she's going to talk to us about what it's really meant to do and why we all have to register as a business.
SPEAKER_00Mary, this new rule marks a milestone in the United States effort to combat corruption and strengthen our anti-money laundering and countering the financing of terrorism regimen. So it's been a work in progress, I would say. For example, back in 2016, the United the US Treasury was working in the residential section of our economy. And at that time, they advanced its efforts to prevent corrupt and other illegal actors from misusing anonymous, non-financial, which means cash only, non-financed, non-financed, not financial, purchases of residential real estate so that they could launder or hide the proceeds of crime. So when money things were being paid anonymously or being paid through non-financing, which is PayOcash, that can launder money with this because then they're trying to hide crime from extortion, bribery, or otherwise. So the Treasury also targeted instances of corruption linked to activities of transnational criminal organizations or terrorist groups. So it's not just what's happening in our country, but it's outside our country that impacts us as well. So Mary, I found that these actions actually go back two years ago when the U.S. Treasury issued a memorandum on the strategy of countering corruption. This 38-page memorandum actually discusses how the Treasury wanted to monetize and pardon me, modernize its fight against corruption and upholding bad actors accountable for their illegal activities. And since that time, the Treasury has used the word redoubled. So they redoubled their efforts. And I guess that means now they're doubling even more, making better, more strides to address the illicit finance and national securities threats posed by corruption. So among its many corrosive effects, this corruption siphons essential resources away from communities. It can weaken democracy and governments, it can erode our economic development, it puts law-abiding citizens like all of us in the dental profession and businesses at disadvantages. And then it exacerbates challenges like crime and mitigation or migration, pardon me. So since the release of the US strategy on countering corruption, the Treasury has designated more than 300 individuals and entities for these issues across more than 30 countries. So they're leveraging different agencies and groups to help with the sanctioning problems from illegal activities that span internationally. So we can easily see that as a result of all these actions, the Corporate Transparency Act, you know, came forth from those. So Mary, it's good that we're discussing this timely information now. So back to you.
SPEAKER_03Oh, great explanation, Linda. Um, and it some people may view this as just one more government, you know, reaching into our back pocket sort of thing. But there are so many of these um so-called shell corporations out there that are doing all these things anonymously, and they are putting us, all of us, at risk. So it is a good thing. And I don't think it's going to be terribly intrusive on any of the dental practices. So, Olivia, can you explain um whether or not um all dental practices must um fulfill this requirement for reporting their information? Are there any exemptions?
SPEAKER_01Sure. Well, first we have to determine if the dental office is what they call a beneficial owner. And that means they have a financial interest or control over this company. So that would include all your LLCs, your PLLCs, your S corps, your C corps. But what's interesting is it does not include a sole proprietor. So if they're not registered with the Secretary of State, it looks like it does not qualify them as a reporting company. Now, with that said, Mary, there are exemptions to this, such as your publicly traded companies, your insurance businesses, banking businesses, your nonprofits of 501c3s. And there's actually a list of 23 exemptions that are available that I don't see many falling into those categories. Uh, but another one that they may qualify for an exemption would be a large entity exemption, but you have to meet all three of the following. The first one is that you have to operate from a physical commercial street address in the United States, have 21 or more full-time U.S. employees, and generate more than 5 million annually in U.S. gross receipts. So those would be some of the exemptions that they could look at. But it looks like this will affect a lot of the dental offices in requiring that they do report as a beneficial owner. And I would say, Mary, in in looking at my clients, you know, I do run into some sole proprietors, but majority of the clients that I serve are either corporations or professional limited liabilities uh companies. So that they will definitely need to get to reporting.
SPEAKER_03I agree with that, Olivia. Um, in many of these um dental practices take advantage of incorporating for some of the tax and other um liability benefits that they get from that. And one of the things that we want to make our listeners aware of is the fact that they should make sure that they contact their accountant and their attorney for the practice if they have any questions at all about whether they meet one of the exemptions or when to file and what to do. But Leslie's going to give us kind of the cliff notes version of the reporting requirements and the deadlines.
SPEAKER_02Well, yes, Mary, it looks like all reporting companies must provide their legal name and trademarks as well as their current U.S. address, which could either be the address of its main business site, or of course, Industry just doesn't apply, foreign-based companies unless it does apply, and their U.S. operational location. They also need to provide their taxpayer ID number and specify the jurisdiction where they were formed or registered. And for the deadline, that's pretty easy. It's this year, 2024. So we need to make sure that that by the end of this year, December 31st, January 1 of 2025, that the required businesses that need to report make sure that they do report.
SPEAKER_03And if a practice is brand new, they just open the practice in 2024 or beyond, they have, I believe, 90 days to file this report upon incorporating or forming that business. So thank you, Leslie, for sharing that information with us. There are many people who may be skeptical about just who gets to have all this information, and it will be law enforcement agencies, um, the US Treasury Service in cases of um tax fraud and so forth, but it's not going to be available to the general public that if somebody wants to just go in and search for information about a specific company, you can't do that. That will not be available. But there is a warning from the federal government that says there have already been scam alerts or already uh scam um attempted scams, I guess is what I'm trying to say, on gathering this information, people reaching out and saying that they are from some entity that needs this information under the Corporate Transparency Act. So before you fill out any forms or do any reporting, make sure that you are reporting it to the right entities and not giving information away to somebody who may use it for criminal activity. And that that goes with anything. That if you get an email or a text from someone that says they need to verify your information, don't reply to those emails, don't reply to those texts. Make sure that you research that first before you find out that you are giving out way more information that than you need to. So as we wind up this brief podcast about the Corinth Corporate Transparency Act, do any of the divas have any additions? Linda.
SPEAKER_00Mary, I just wanted to share three key definitions or abbreviations with our listeners because we just got used to all the HIPAA abbreviations and so forth in the past few years, right? And all the other things. And then the no um surprises act abbreviations. So the beneficial ownership information, that abbreviation is BOI. So if you see that anywhere, that's all it refers to. That's the name of the information and the report that's going to be filed. Then the name of the law, as you mentioned in the very beginning, Mary, the Corporate Transparency Act of CTA. For those of us that do any marketing, we think of it as the call to action, but it's in this case, it's the Corporate Transaction Act. And then the third one is the enforcement agency under the Bureau of Treasury, and that is the Financial Crimes Enforcement Network. The Financial Crimes Enforcement Network, you will see that abbreviated as FENCEN, capital F-I-N, Capital C-E-N, FENCEN. So when you see it start seeing these terms, these are new new terms to us, but it's not terms at all the entire dental team will need to know, but just the owners of the practices will need to be informed of those. So hopefully it'll be easy and said and done. I'm glad that we can bring this information. And as you mentioned, Mary, there's some great resources in our show notes. So I hope that they take advantage of those.
SPEAKER_03Thank you for keeping us on track with those definitions. Olivia, do you have something that you wanted to add as well?
SPEAKER_01I just wanted to mention that it does make a lot of sense for the federal government to create this law that will benefit us in the long term. I was thinking back over the years that I've been practicing law, how many LLCs and PLLCs that I've set up over the years. And in cases where there were more than one owner, like for example, I'm thinking of one that had either four, actually six owners. Well, when we applied for the FEIN number, I only had to use one person's name to get that information. The identity of ownership was actually in their personal documents, their personal operating agreement. And so we can see the value of the federal law now requiring to disclose personal information and photographs of persons who have ownership or control over these companies to prevent fraud and money laundering. So I think it's actually a good thing.
SPEAKER_03I agree. I think it is a very good thing. And most of us in doing business with other businesses appreciate transparency. And so, in a legal sense, of course, that's even more important. So we hope that our listeners will find this podcast information helpful. Again, make sure that you contact your accountant andor your attorney or or both to make sure that you're on track. If you have questions, you can look through the resources that we have in the show notes and on our website, the compliancedevas.com. And if you would, after you complete listening to this podcast, scroll down to the bottom of your podcast app and please give us a rating or a review. We would greatly appreciate that. So we can continue to help you navigate the regulatory world and keep you on course. Thanks for listening.