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.”
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