Stay Informed

A recent U.S. Court of Appeals ruling has provided farmers and other small businesses with a reprieve from Treasury Department reporting requirements under the Corporate Transparency Act (CTA).

The ruling addresses one of the act’s provisions, which would have required the filing of Beneficial Ownership Information (BOI) for every small business subject to the CTA, including some farms. This requirement was originally slated to go into effect Jan. 1, 2025.

In what the American Farm Bureau Federation described as a “ping pong of court orders,” a federal court halted the BOI reporting requirement in December. But late in the month, the U.S. Court of Appeals for the Fifth Circuit reinstated the Jan. 1 deadline, only to reverse itself days later.

“The court reversed that order until arguments can be heard, delaying the reporting requirement indefinitely,” AFBF said.

The CTA was passed in 2021 to combat money laundering and organized crime funding. The act requires that registered businesses register any “beneficial owner” of the company with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). This is known as the “BOI filing requirement,” and it applies to any small business that files an incorporating document with their state business authority to conduct business in the United States, including corporations, limited partnerships or limited liability companies (LLCs). The FinCEN classification of a “small entity” is a business having fewer than 20 employees and under $5 million in cash receipts.

The vast majority of farms and ranches operate as sole proprietorships and are likely exempt from filing their BOI, AFBF explained, but 230,792 farming operations are state-registered businesses, either as corporations or partnerships, according to the 2022 Census of Agriculture. These 12% of all farm operations operate 33% of farm acres.

“Farm Bureau appreciates the court’s recognition that a last-minute reinstatement of reporting requirements caused an unwelcome scramble for small businesses, including more than 230,000 farmers,” said AFBF President Zippy Duvall. “The latest court decision to postpone the filing requirement is the right thing to do, but the legal back and forth created a stressful holiday season for many farm families. Lack of guidance and poor public outreach from the government have left many farmers in the dark about whether they’re expected to file.”

Many feed and supply stores, crop marketers like grain elevators and the greater rural business community are also likely required to file their BOI and subject to penalties if they do not. The regulatory burdens and potential enforcement crackdowns could have ripple effects throughout the entire food, fiber and fuel supply chains.

Under the BOI requirement, businesses that fail to file or do not update records when needed could face criminal fines up to $10,000 and additional civil penalties of up to $591 per day. Failure to file could also lead to felony charges and up to two years in prison, AFBF said.

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Farm Bureau encourages all farmers, ranchers and business owners who would fall under the filing requirements to continue to gather the necessary information and be prepared to file, if required to do so in the future. Detailed information is available at fincen.gov/boi.