DECEMBER 24, 2024:
On Monday (Dec. 23, 2024), the 5th U.S. Circuit Court of Appeals lifted a federal district court’s earlier order, which had previously halted the Jan. 1, 2025, deadline for small businesses to file their Beneficial Ownership Information (BOI) with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) per the Corporate Transparency Act (CTA) passed by Congress and signed by President Biden in 2021.
The Continuing Resolution passed by Congress and signed into law last week, which continues funding the government and extends the 2018 farm bill, did not include amendments to provide any exception to the FinCEN requirement for farmers.
In light of the Fifth Circuit’s decision, FinCEN announced it will delay enforcement of the Corporate Transparency Act until January 13, 2025—just three weeks from now. This delay does not allow enough time for millions of small businesses to comply with the law, and it is deeply concerning that FinCEN will proceed with enforcing this law when it has failed to give adequate notice and instructions to law abiding family business owners.
The CTA requires that the owners and part-owners of an estimated 32.6 million small businesses — including an estimated 230,000 farms — must register personal information with FinCEN, such as a photo ID and home address.
American Farm Bureau Federation says that this appeals court ruling now “puts tens of thousands of farms back on the legal deadline to register their businesses with the federal government. Farmers who operate corporations and limited liability companies are once again required to file Beneficial Ownership Information or face stiff fines or jail time.”
Analysis from AFBF economists shows that of the more than 230,000 farms likely required to file, less than 11% had done so as of October 2024. Read more from AFBF here. Farmers are encouraged to contact an accountant or attorney if they are unsure whether they are required to file their business’s BOI with FinCEN.
National Cattlemen’s Beef Association— “The Corporate Transparency Act requires millions of family farmers and ranchers to file complex paperwork and disclose beneficial ownership information with the federal government under penalty of severe fines and jailtime,” said NCBA Executive Director of Government Affairs Kent Bacus. “FinCEN should do the right thing and provide a realistic delay to the Corporate Transparency Act until Congress has an opportunity to provide a permanent fix that protects family farmers and ranchers.”
The U.S. Chamber of Commerce has a summary CTA information and requirements that is available here.
DECEMBER 5, 2024:
A Texas federal court halted the implementation of the Corporate Transparency Act’s beneficial ownership reporting requirements that included America’s farmers, ranchers, and agribusinesses. The court held the CTA as likely unconstitutional, so it issued a preliminary injunction barring the government from enforcing the Act and its reporting requirements against anyone.
Before the ruling, small businesses that met certain criteria would have had to file reports with the Treasury Department by January 1, 2025, or risk fines and criminal penalties. The preliminary relief will remain in effect until the conclusion of legal proceedings, at which point the court may enter a permanent injunction. In the meantime, the government is expected to appeal the preliminary injunction.
The U.S. Chamber of Commerce says unless and until an appellate court overrules or narrows the injunction, no businesses are obligated to comply with the reporting requirements. Congress enacted the CTA on January 1, 2021.
AUGUST 27, 2024:
R-CALF USA has joined as a plaintiff in a joint lawsuit against the U.S. Department of the Treasury and others, challenging the constitutionality of the Corporate Transparency Act (CTA). The groups are seeking to prohibit enforcement of the CTA and an additional declaration of the CTA’s unconstitutional status in a Utah District Court.
Effective January 1, 2024, the CTA requires all state or tribal registered entities, including those with under 20 employees, such as limited liability companies (LLCs), to report private, sensitive information on “beneficiary owners” to the federal government, which will be stored in a database.
In the suit, the plaintiffs note that the CTA’s reporting obligations mainly apply to small business owners while many large corporations are exempt from reporting. The groups also outlined the harsh penalties for noncompliance, financial and legal burdens on small business owners, the federal overreach into states’ rights and regulations of business ownership and formation, and several constitutional violations.
R-CALF USA CEO Bill Bullard said that his group is seeking an injunction on behalf of its members for protection from what they consider an unconstitutional imposition on private information.
“This law was intended to identify those who already don’t follow the law when it comes to money laundering, terrorism funding, and other illicit financial activities,” said Bullard. “Rather than put money or time into law enforcement or detective work to find these alleged criminals, the government chose instead to place a significant burden on law-abiding small business owners.”
“The CTA is an egregious overuse of federal power that seeks to invade personal and private data of small business owners and their associates across America,” said R-CALF USA Property Rights Committee Chair Shad Sullivan. “Another blow to hard-working Americans who are the backbone of small communities across this nation.”
“An initial victory in what could be a protracted case would be the immediate granting of an injunction to prevent the federal government from enforcing the CTA against R-CALF USA members while the case makes its way through court,” Bullard said.
Comments