A recent series of court rulings have halted enforcement of the Corporate Transparency Act, enacted in 2021 with certain regulations affecting physician practices set to go into effect Jan. 1, according to a Jan. 13 article from the American Medical Association.
Here are 10 other things to know about the law:
1. On Dec. 3, a federal district court in Texas granted a nationwide preliminary injunction to stay enforcement of the statute and any regulations implementing these beneficial ownership information-reporting requirements. The order also stayed all deadlines to comply with the law's reporting requirements.
2. The Justice Department then filed an appeal of the order on Dec. 5 on behalf of the Treasury Department.
3. On Dec. 23, a motions panel of the 5th Circuit Court of Appeals lifted the stay. Shortly thereafter, a merits panel from the same appeals court reached a different conclusion, overruling the first panel, and reinforcing a stay on the law's implementation.
4. "In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information with [the Treasury Department]and are not subject to liability if they fail to do so while the order remains in force," said the agency in a Jan. 2 news release.
5. On Dec. 31, the Department of Justice asked the Supreme Court to stay the injunction. Justice Samuale Alito, who is assigned to matters pertaining to the 5th Circuit,asked the respondent-plaintiffs to file their motion to the department's stay request by Jan. 10.
6. The law is intended to combat the use of shell companies to launder money by requiring small businesses that might otherwise fly under the radar to disclose their beneficial owners.
7. Beneficial owners are defined as anyone who owns or controls at latest 25% of the economic interest in the company. This also includes individuals who may exercise substantial control over the company, even if they do not hold ownership interest.
8. While private physician practices do not typically veer close to the underlying criminal issues that inspired the law, they do invest in related business and doing so could bring them under scrutiny of the law, according to the AMA post. This is largely due to Medicare involvement with these practices.
9. The AMA article cites an example in which a physician practice that accepts Medicare and invests in management service operations may be subject to this law if it is held up in court.
10. While MSOs are legitimate entities, the lawyers who spoke with AMA for the article noted that there is a history of "bad actors" being introduced to practices and Medicare relationships.