On December 3, 2024, the United States Federal District Court of the Eastern District of Texas temporarily suspended enforcement of the Corporate Transparency Act (CTA) and the Beneficial Owner Information (BOI) reporting requirements. Learn more by reading about the temporary suspension. 

Farmers and other agricultural business owners who operate under a Limited Liability Company (LLC), Corporation, Limited Partnership, Limited Liability Partnership, Limited Liability Limited Partnership, or Business Trust should be aware of the upcoming reporting deadlines under the Corporate Transparency Act that went into effect in January of 2024.

What is the Corporate Transparency Act?

The Corporate Transparency Act imposes new reporting requirements for companies in the United States to gather ownership information. Companies are required to report information identifying their owners to the Financial Crimes Enforcement Network (FinCEN), a bureau of the United States Treasury. The goal of the act is to promote financial transparency and to prevent individuals from utilizing their businesses to conceal their identities to commit tax fraud, money laundering, financing for terrorism, and other illegal financial activities.

What information is required to be reported?

The act requires businesses to report specific information about “beneficial owners.” The act defines beneficial owners as individuals who own at least 25 percent of the company’s ownership interests, exercise substantial control, or are similarly in charge of the company’s operations (i.e. having authority to enter contracts on behalf of the company, holding majority voting rights or acting as general counsel.) For farm families and other small or midsize agricultural businesses, it is especially important to identify the individuals who manage, control, or have other influence over the farm’s operations and business decisions who may not otherwise be considered an owner of the farm. Those individuals will also be required to report.

Specifically, the Beneficial Ownership Information (BOI) report must include the following information about the business’s beneficial owners:

• Full legal name
• Date of birth
• Address
• Identification number, such as a driver’s license number including an image of the identifying document

The report must also include specific information about the entity itself, including the following:

• Legal name of the company and any trade names it operates under
• Business address
• Taxpayer Identification Number (TIN) or Employee Identification Number (EIN)

The reporting requirements also apply to founders of and applicants to form a corporation, LLC, or similar entity for businesses established after January 1, 2024. In addition, if a business is owned by a holding company or a parent company, those companies are also required to file a BOI.

When is the reporting deadline?

The deadlines for businesses to file their BOIs are the following:

• January 1, 2025, for businesses formed before January 1, 2024
• Within 90 days after formation for businesses formed during 2024
• Within 30 days of formation for businesses formed after January 1, 2025

After initial reporting, businesses are required to update their BOIs when there are significant changes in ownership, business structure, owner identity, or location. Failure to comply with the reporting requirements can result in penalties of civil penalties of up to $591 per day of non-compliance and fines of up to $10,000. Willful failure to report or falsifying information can be punishable by up to two years in prison.

How does a business file a BOI report?

Businesses can submit their BOIs online via FinCEN’s BOI e-filing system with a fillable form or by submitting the BOI form as a PDF. The FinCEN website provides step-by-step guides for reporting as well as a compliance guide for small businesses. The website also provides a list of entities that are exempt from BOI reporting. In addition to financial institutions, accounting firms, insurance companies, and legally inactive entities, nonbusiness trusts and tax-exempt entities under section 501(c) of the Internal Revenue Code are exempt from reporting requirements. There is no exception for agricultural businesses.

To Do List for Businesses Going Forward

As the deadlines for BOI reporting approach, it is crucial to make sure your agricultural business is compliant with the new reporting requirements. As a handy checklist, it is recommended to take the following steps:

1. Review the FinCEN step-by-step guide and determine what fits your business needs best.
2. Identify the individuals in your business that qualify as beneficial owners.
3. Gather the necessary information to be reported.
4. Prepare the appropriate forms or seek out a professional to assist in their preparation.

Do not hesitate to seek professional help, especially if your business has a complex or nontraditional ownership structure. An attorney who is well versed in business and corporate law can help you navigate the BOI reporting process and ensure that your business reports properly and stays in compliance with the Corporate Transparency Act.

This article is designed to provide accurate, authoritative information about the subject matter covered for educational purposes only. The author is not engaged in rendering legal, accounting, or other professional counsel. If legal advice or other expert assistance is required, please seek the services of competent professionals. The information in these materials does not, and is not intended to, constitute legal advice. Use of, and access to, this article or any included links or resources does not create an attorney-client relationship between the reader and the author.