Jan 8, 2025Contested filing requirement reinstated
After a court ruling reinstated a contested filing requirement, businesses owners face a Jan. 13 deadline to comply with the Corporate Transparency Act (CTA).
On Dec. 23, the U.S. Court of Appeals for the Fifth Circuit granted a stay of the Dec. 3 injunction that halted enforcement of the CTA, which many organizations, including the American Farm Bureau Federation (AFBF), say places an undue burden on small business owners.
Beneficial ownership information (BOI) must be filed on owners with at least a 25% stake in businesses with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).
The stay by the Court of Appeals restored the initial CTA filing deadline for companies formed before 2024. Following the stay, FinCEN issued an alert extending the reporting rule’s initial deadlines to Jan 13.
In a news release, the National Federation of Independent Business (NFIB) expressed disappointment in the decision.
“Because of this decision, small business owners must scramble to meet the reporting requirements of this egregious statute,” Beth Milito, executive director of NFIB’s Small Business Legal Center, said in the release. “The district court, in granting the preliminary injunction, rightly recognized that the BOI reporting requirements would have devastating consequences for small business owners. Make no mistake, NFIB is already working to quickly appeal this terrible decision and provide our Main Streets with a reprieve from this harmful mandate.”
According to NFIB, more than 32 million small businesses throughout the country are subject to the statute.
The CTA of 2021 was aimed at combating money laundering, according to U.S. Treasury Secretary Janet Yellen. But organizations including the AFBF worried the act could create confusion for growers.
Many farms are structured as either a c-corporation, s-corporation or limited liability company (LLC), which are required to register if they employ fewer than 20 employees or receive under $5 million in cash receipts — aspects which cover the vast majority of farms, according to an AFBF release.
Businesses that fail to file or update records could face criminal fines up to $10,000 and additional civil penalties of up to $591 per day. Failure to file may also lead to felony charges and up to two years in prison, according to the release.
“I think every small business in America is likely to be surprised,” Dustin Sherer, Farm Bureau director of government affairs, said in a September 2024 interview with Spudman sister publication Produce Processing. “(On) Jan. 1, 2025, you’re going to likely have tens of millions of businesses that are felons overnight as a result of this law.”
An AFBF analysis showed more than 230,000 farms were required to file, but government data indicated less than 11% of all eligible businesses nationwide had done so.
“Farmers and ranchers across the country have faced great uncertainty since the passage of the Corporate Transparency Act in early 2021 and as the Beneficial Ownership Information regulations have been written,” Zippy Duvall, AFBF president, said in a Dec. 4 release. “Questions are swirling about who is required to file and who will have access to the confidential data being collected.”
Lawsuits challenging the CTA were filed in six states. In March, a U.S. District Court ruled that the act was unconstitutional and unfairly burdened small businesses — a decision the Treasury Department appealed.
