Iowa Farm Bureau Federation
07/15/2024 | News release | Distributed by Public on 07/15/2024 08:40
Farmers may need to file ownership reports
Government says reporting requirements for small entities are unchanged for most farmers and small entities despite ongoing litigation.
The Financial Crimes Enforcement Network (FinCEN) says businesses subject to new reporting requirements under the Corporate Transparency Act (CTA) are still required to comply with the law while the federal government appeals a ruling by a federal district court in Alabama.
Most small entities, including many types of farm entities and small businesses, are now required to file a beneficial ownership information (BOI) report with FinCEN, which is an agency of the U.S. Treasury Department. The CTA requirement is part of the Anti-Money Laundering Act of 2020 and is designed to prevent money laundering, corrupt financial transactions and financial terrorism.
Limited partnerships, corporations and LLCs, whether single-member or multiple-member, are among the entities that must report ownership, subject to limited exceptions. General partnerships and sole proprietorships generally don't have to file beneficial ownership reports.
Applicable farm entities and small businesses have until Jan. 1, 2025, to file initial reports electronically. Entities first formed in 2024 or thereafter have 90 days from creation to file the necessary report, and businesses will have 30 days to report changes in ownership from previously filed reports.
FinCEN will maintain the national registry of beneficial owners of entities and is authorized to share the collected information with government agencies and financial institutions, subject to protocols and safeguards.
Ongoing lawsuit
On March 1, a federal district court in the northern district of Alabama ruled that the CTA exceeds the Constitution's limits on Congress's power and stopped the Treasury Department and FinCEN from enforcing the CTA against the plaintiffs in the case.
The Justice Department, on behalf of the Treasury Department, filed a Notice of Appeal March 11. FINCen said the government isn't enforcing the ownership reporting requirements against the plaintiffs in the case while the litigation is ongoing but "other than the particular individuals and entities subject to the court's injunction …, reporting companies are still required to comply with the law and file beneficial ownership reports as provided in FinCEN's regulations."
The agency also issued a warning about fraudulent attempts to solicit information from entities subject to reporting requirements. FinCEN emphasized there is no fee to file ownership information directly with the agency and warned against clicking links or opening attachments in unsolicited mailings.
Applicable entities can visit www.fincen.gov/boi for more information and to file required reports online. A reporting entity is required to provide information such as its name, address and taxpayer identification number. For each beneficial owner reported, the entity will be asked to provide the individual's name, birthdate, address and identifying number.
A beneficial owner is identified as someone who directly or indirectly exercises "substantial control" over the entity, or directly or indirectly owns or controls 25% or more of the "ownership interests" of the entity. Failure to file complete or updated information can result in financial penalties of up to $10,000 and possible imprisonment up to two years.