On December 3, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction suspending enforcement of the Corporate Transparency Act (CTA) and its Beneficial Ownership Information (BOI) Reporting Rule.
This preliminary injunction provides relief for all businesses who have yet to file. However, small businesses should continue preparing by gathering the necessary information for BOI filing. While the penalty for failure to file is currently waived. This decision was appealed by the federal government and enforcement could be reinstated before January 1, 2025, making the injunction null and void.
Additional information is detailed below should the injunction be overturned. This guide is informational however and does not serve as official advice. Please consult with your accountant or attorney should you have questions.
Farmers: Are You Ready for the Corporate Transparency Act?
Farmers across the country are approaching a January 1, 2025, deadline to file Beneficial Ownership Information (BOI) with the U.S. Treasury Department under the Corporate Transparency Act (CTA). This requirement applies to certain types of farm businesses, but many farmers are still unsure whether they need to file. In this guide, we'll break down what the CTA means for you and help you understand your next steps.
What is the Corporate Transparency Act (CTA)?
The CTA was passed in 2021 to fight money laundering and organized crime. It requires many small businesses, including some farms, to report their "beneficial owners" to the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN). A "beneficial owner" is anyone who has significant control over the business or owns at least 25% of it. The goal is to ensure transparency about who truly owns or controls businesses in the U.S.
Does the CTA Apply to Your Farm?
Here's how to figure out if your farm needs to comply:
- If your farm is a sole proprietorship (you haven't filed paperwork to create a corporation, partnership, or LLC), you are likely exempt from this requirement. Most farms fall into this category, so you probably don't need to worry about filing BOI.
- If your farm is a corporation, LLC, or partnership (you've filed incorporating or organizing documents with the state), you will likely need to file your BOI. This includes S-corporations, C-corporations, and LLCs.
The rule applies if:
- Your farm has fewer than 20 employees, and
- Your farm's revenue is under $5 million per year.
Most farms that are incorporated or organized as LLCs or partnerships will fall under this requirement. In fact, over 230,000 farming operations are considered state-registered businesses, and they need to comply with the CTA.
What Information Do You Need to File?
If your farm is required to file under the CTA, you'll need to provide the following information for every beneficial owner of the business:
- Full name
- Address
- Date of birth
- Identification number (such as a driver's license or passport)
You'll also need to update this information whenever there are significant changes--such as if a beneficial owner's address changes or if you bring on new leadership.
What Happens If You Don't File?
If you're required to file and fail to do so, the penalties are severe. You could face:
- Fines up to $10,000
- Civil penalties of $591 per day
- In some cases, felony charges and up to two years in prison
The deadline for filing is January 1, 2025, and with only a few months left, it's important to act now.
What Should You Do Next?
1. Determine if your farm is required to file: If your farm is a sole proprietorship, you're likely exempt. If it's a corporation, LLC, or partnership, you probably need to file.
2. Consult a professional: Talk to an attorney or accountant to confirm whether your farm needs to file. They can help ensure you're meeting the CTA's requirements and file the necessary paperwork.
3. File your BOI with FinCEN: If you're required to file, make sure you gather the required information and submit it to FinCEN before the January 1, 2025, deadline.
For more details and to file your BOI, visit the Treasury Department's BOI filing page.