What Healthcare Entities Should Know About BOI Reporting: A Quick Overview

BOI reporting requirements span every industry - learn how healthcare entities may be affected.

Stephanie Glanville | September 17, 2024 | Read time: 8 minute(s) | BOI Reporting | No Comments

In the healthcare industry, staying compliant with regulations is as critical as providing quality care. One key requirement you need to be aware of is the Beneficial Ownership Information (BOI) report. This report helps ensure transparency and adherence to FinCEN guidelines, and it’s essential for healthcare entities like yours. Understanding and managing this reporting requirement can protect your organization from legal and financial repercussions.

In this blog, we’ll discuss what you need to know about BOIR, including the filing requirements, potential exemptions, and the consequences of non-compliance. Read on to ensure your healthcare entity is fully prepared.

BOI Reporting – What Does It Mean?

The BOI report is a comprehensive report that provides detailed information about the legal entity’s ownership structure and significantly highlights substantial control over a reporting company. The report contains the essential reporting requirements, such as the legal entity’s information, the beneficial owner’s information, and the company applicant’s information.

Healthcare Entities as Reporting Companies

Generally, when the legal entity satisfies the reporting company definition under the FinCEN, it must submit the BOI report. If your healthcare entity operates as an LLC, corporation, or LLP, you must file a BOI report. Ensuring compliance with the new regulations is essential to avoid penalties and contribute to the transparency of the healthcare sector.

Exemptions for Healthcare Entities

Generally, healthcare entities are not specifically exempt from BOI reporting requirements. However, certain large entities may qualify for an exemption if they meet specific criteria. For a healthcare organization to be exempt from filing the BOI report, it must satisfy all the following conditions:

Employment: The healthcare entity must employ more than 20 full-time employees in the United States. This means your organization has a significant workforce and is a large and established entity within the healthcare sector.

Physical Presence: The entity must have a physical office location within the United States. This criterion ensures that your organization operates from a defined, tangible location in the U.S., reinforcing its legitimacy and reducing the need for additional ownership transparency.

Financial Threshold: The healthcare entity must have filed a federal income tax or information return in the previous year with more than $5 million in gross receipts or sales.

However, if your healthcare entity does not meet all these criteria, you are required to file a BOI report.

Who are Beneficial Owners in Healthcare Entities?

A beneficial owner is any individual or an entity who, directly or indirectly, has substantial control over the healthcare entity or owns or controls at least 25% of its ownership interests. Sometimes, a healthcare entity that qualifies as a reporting company might not have individuals who meet the 25% ownership threshold.

However, FinCEN requires that at least one individual must exercise substantial control over the legal entity. This includes:

Key Medical Executives: Individuals holding key positions within the healthcare entity, such as Chief Medical Officer (CMO), Chief Nursing Officer (CNO), or other senior roles that are critical to the entity’s operations.
Authority over Medical Leadership: Individuals who have the authority to appoint or remove medical directors, department heads, or the majority of the healthcare entity’s board members. This level of control indicates substantial influence over the entity’s strategic direction.
Decision Makers in Clinical and Operational Areas: Individuals who play a significant role in making important decisions regarding clinical practices, healthcare policies, or the overall management of the entity. These decision-makers are integral to organizing the entity’s operations and services.
Other Forms of Control in Healthcare Operations: Individuals who have any other form of substantial control over the healthcare entity, whether through influence over clinical guidelines, financial management, or strategic partnerships.

Identifying these individuals as beneficial owners is essential for healthcare entities to comply with BOI reporting requirements, ensuring transparency and adherence to federal regulations.

Deadline and Penalties

Important deadline to submit the BOI report under the CTA:

Existing entities created or formed prior to January 1, 2024 – Submit the report by January 1, 2025
Entities created or formed on or after January 1, 2024 – Submit the report within 90 days
Entities created or formed on or after January 1, 2025 – Submit the report within 30 days.

In case of failure to submit the BOI report within the timeframe, you will be imposed by the potential penalties from FinCEN. The penalties may vary, which include:

Civil penalties range up to $591 per day for non-compliance.
Criminal penalties range from $10,000 or up to 2 years in prison.

Conclusion

Accurate and timely submission of your BOI Report is essential for healthcare entities to remain compliant and avoid unnecessary penalties. Understanding the specific requirements for beneficial ownership and exemptions can ensure a smooth reporting process. Leveraging reliable e-filing software is a smart move to make this process smoother and more secure.

TaxBandits simplifies BOI reporting with a range of solutions tailored to your needs. Our white-label option allows you to customize the platform to match your firm’s branding, helping you maintain a professional appearance.

Our BOIR API integration allows easy connection to your existing systems, automating data transfers and ensuring a seamless reporting experience. Our advanced staff and client management features help you stay organized and efficient, making collaboration and task management more accessible.

Choose TaxBandits to streamline your BOI reporting and enhance your entities’ efficiency and professionalism.