Nursing Homes and the Corporate Transparency Act: Staying Compliant

In the healthcare industry, nursing homes hold an important role in providing care to the elderly and disabled. These establishments, often part of larger chains or corporate structures, navigate a complex regulatory environment. The introduction of the Corporate Transparency Act (CTA) has added another layer to this complexity, especially in terms of ownership and operational transparency.

The CTA was made to unmask the owners of shell companies to prevent illicit activities affecting businesses across the spectrum, including the healthcare sector. This article delves into the implications of the CTA for nursing homes, focusing on the nuanced relationship between operating and holding companies within this industry.

The Corporate Transparency Act: Why?

The CTA was enacted with the intention of combating money laundering, financing of terrorism, and other illicit activities facilitated through anonymous shell companies.

It mandates that certain U.S. businesses report their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). Essentially, it aims to peel back the layers of corporate anonymity to reveal the individuals who own or control these entities.

Operating vs. Holding Companies

Nursing homes, by their operational nature, present a unique case under the CTA. Typically, a nursing home is run by an operating company responsible for day-to-day activities, employing staff from nurses to administrative personnel. This entity handles all aspects of patient care and facility management.

Parallel to the operating company is the holding company, often part of the same corporate family but with a distinct role. The holding company owns the property and possibly other assets but does not engage in any operational activities or employ staff.

This creates a scenario where the operating company, with substantial revenue and a significant number of employees, might meet the criteria of a “large” business under the CTA. In contrast, the holding company, despite potentially holding considerable assets, would not, due to its lack of employees and direct business operations.

Implications of the CTA for Nursing Homes

The nuanced structure of nursing homes under the CTA raises several implications:

Compliance Requirements

For operating companies classified as large entities, the compliance requirements with the CTA can be substantial. They need to disclose beneficial ownership information, a process that can be both time-consuming and complex, especially if you have many entities. Here at Platinum Filings, we recommend using our BOI Manager to easily manage any updates in any of your entities that may require you to file again in just a few clicks.

Exemptions and Grey Areas

While the CTA casts a wide net, there are exemptions that may apply to certain entities within the nursing home industry. For instance, if a holding company is deemed too small based on the CTA’s criteria, it might not have to report ownership information. It’s essential to review FinCEN’s list of exemptions for clarity.

The Path Forward

For nursing homes, navigating the Corporate Transparency Act requires a careful examination of their corporate structures and an understanding of how different entities within these structures are affected.

It also demands a proactive approach to compliance, with an eye to both fulfilling legal obligations and maintaining operational efficiency. As the healthcare sector continues to evolve, staying ahead of regulatory changes will be key to ensuring that nursing homes can focus on their primary mission: providing quality care to those in need.

Still have questions?

Contact us for further assistance.