Many business owners are unaware that the IRS requires them to complete a Beneficial Owner Information Report (BOIR), and even fewer fully understand what it entails.
BOIR is part of the Corporate Transparency Act (CTA), enacted to combat money laundering, tax evasion, and other illicit financial activities. 1 Administered by the Financial Crimes Enforcement Network (FinCEN), the BOIR
Administered by the Financial Crimes Enforcement Network (FinCEN), the BOIR requirement was established as part of the Corporate Transparency Act and took effect on January 1, 2024. 2 It mandates businesses, including dental practices, to report specific information about their beneficial owners to report detailed ownership and control information. The primary goal is to increase transparency by identifying individuals who directly or indirectly control a company.
For dental practice owners, the BOIR introduces new compliance requirements that may not have been part of standard practice management. Understanding these requirements is critical to avoid penalties and maintain a smooth year-end close.
Dental practices with revenue under $5 million are required to complete and submit their BOIR by December 31, 2024. Failure to comply can result in steep civil penalties exceeding $500 per day, criminal penalties with fines up to$10,000 and/or imprisonment for up to two years for willful violations. 3 It may also expose the practice to investigations or additional enforcement actions.
The BOIR filing requirement applies broadly to businesses, including dental practices structured as corporations, limited liability companies (LLCs), or other entities created by filing documents with a state or tribal authority.
Exemptions include publicly traded companies, banks and financial institutions regulated by federal agencies, large operating companies with over $5 million in revenue and more than twenty full-time employees, and certain nonprofit organizations. 4
Most small-to-medium-sized dental practices fall within the scope of these reporting requirements, making compliance essential.
Business owners view this requirement as an invasion of privacy. In May 2024, Texas businesses filed a lawsuit challenging the BOIR mandate, claiming it violates privacy rights and places undue burdens on small business owners, including dental practitioners.
The Federal Court in Texas responded by issuing a nationwide preliminary injunction, temporarily halting enforcement of the CTA/BOIR. However, the IRS and FinCEN have maintained their stance, insisting that businesses prepare to comply unless the injunction becomes permanent, or Congress amends the law. The lawsuit’s outcome remains uncertain. 5
As anticipated, on December 5, 2024, the Defendants appealed the preliminary injunction to the U.S. Court of Appeals for the Fifth Circuit, which hears appeals from the Eastern District of Texas. It is expected that the Defendants will request the Fifth Circuit to stay the injunction while the appeal is pending.
Meanwhile, on December 7, 2024, FinCEN issued an “Alert” on its BOI landing page indicating that the current legal situation surrounding the Beneficial Owner Information Report (BOIR) means that businesses are temporarily not required to file their reports with FinCEN, thanks to a preliminary injunction issued by a federal court. This injunction, which remains in effect unless modified by the Fifth Circuit or rescinded by the court, protects reporting companies from facing penalties for failing to submit their BOIR until the court order is lifted. 6
Businesses still have the option to voluntarily submit their reports during this period. Those who choose to opt out of filing the BOIR must remain vigilant regarding the pending legal developments. Since the situation is still evolving, it is essential to closely monitor any updates on the legislation, as you will be responsible for ensuring compliance. Keep a watchful eye on changes in the law, as they will determine whether and when you will need to file the report. Staying informed is crucial to avoid potential penalties or missing deadlines.
For dental practice owners, the BOIR requirement represents a significant administrative burden. With the close of the business year being a critical time for financial reviews and tax preparations, adding another compliance task can feel overwhelming.
Given the complexity and high stakes involved, dental practice owners must take initiative-taking steps to ensure compliance with the Corporate Transparency Act (CTA). First, it is crucial to assess whether your practice qualifies as a reporting entity under the CTA; consulting with your CPA or legal advisor can provide clarity on this matter. Next, start gathering the required information for all beneficial owners and company applicants well in advance to avoid last-minute complications. Additionally, stay informed on legal developments regarding the ongoing court case and potential changes to the BOIR requirement.
Dental practice owners must act decisively to understand their obligations under the BOIR requirement, especially at the close of the business year. Consulting with financial and legal professionals is essential to ensure compliance and avoid costly penalties.
If you choose to complete the form now, you can easily submit your information electronically through FinCEN’s secure e-filing system at https://boiefiling.fincen.gov. This platform, available since January 1, 2024, allows businesses to electronically report the required details. 7
Completing the BOIR form online generally takes 30 to 60 minutes, depending on the complexity of the business structure and the availability of the necessary information. 8 Dental practice owners required to file must provide detailed information on all beneficial owners and company applicants, including their full legal name, date of birth, residential address, and a unique identifying number from a passport, driver’s license, or another government-issued document. Your data will be stored in a secure, non-public database accessible only to authorized government agencies.
By staying informed and prepared, dental practices can navigate these new regulations with confidence, ensuring uninterrupted operations and peace of mind.
Cited Information:
- https://www.uschamber.com/co/start/strategy/small-business-corporate-transparency-act
- https://fincen.gov/boi
- https://www.elkhalillaw.com/blog/the-cta-and-boir-reporting-requirements
- https://www.elkhalillaw.com/blog/the-cta-and-boir-reporting-requirements
- https://www.fmglaw.com/professional-liability/eastern-district-court-of-texas-issues-a-nationwide-injunction-ban-over-the-enforcement-of-corporate-transparency-act/
- https://www.winston.com/en/insights-news/federal-judge-in-texas-blocks-enforcement-of-the-corporate-transparency-act-nationwide
- https://boiefiling.fincen.gov
- https://www.elkhalillaw.com/blog/the-cta-and-boir-reporting-requirements
