UPDATE: The Fifth Circuit Court of Appeals has reversed its own decision and reinstated a nationwide injunction that allows businesses not to file a BOI with the Treasury Department's Financial Crimes Enforcement Network (FinCEN).

What is the BOI requirement?

Passed in 2021, the Corporate Transparency Act (CTA) requires business ownership interests to file a report with Treasury. The Beneficial Ownership Information (BOI) requirement applies to any small business that files documents to incorporate with their state business authority- such as their secretary of state office. This includes corporations, limited partnerships and limited liability companies. Registered businesses must register any beneficial owner of the company with the Treasury's Financial Crimes Enforcement Network (FinCEN).

According to 2022 Ag Census data, the American Farm Bureau Federation (AFBF) noted there are about 230,000 farm operations that reported operating as a partnership under state law, a family held corporation, or a non-family held corporation. These 230,000 or so farms make up about 13% of all farm operations, but they have about 33% of farm acres, AFBF stated.

The BOI requirement applies to any small business that files documents to incorporate with their state business authority- such as their secretary of state office. This includes corporations, limited partnerships and limited liability companies. Registered businesses must register any beneficial owner of the company with FinCEN via https://www.fincen.gov/boi . Businesses already file registrations with state agencies to operate, leading many to believe their information is recorded with the correct agencies, but FinCEN does not receive ownership information from these agencies.

FinCEN has prepared the following Frequently Asked Questions (FAQs) in response to inquiries received relating to the Beneficial Ownership Information Reporting Rule and Beneficial Ownership Information Access and Safeguards Rule available at https://www.fincen.gov/boi-faqs .

Who is impacted?

Limited partnerships, corporations and LLCs, whether single member or multiple member, are among the entities that must report ownership, which encompasses many farm entities.

General partnerships and sole proprietorships generally don’t have to file beneficial ownership reports.

Beneficial owners include anyone with a significant stake in the company, whether or not they have direct legal ties to the business. This may include holding at least 25% of a company's shares, having a similar level of control over the company's equity or holding significant influence over the company's decisions and operations (i.e., the authority to exercise substantial managerial control over the reporting company). Should a business partake in illegal activities, each such stakeholder is accountable for the crimes of the business.

Filings must include all personal information like addresses, birthdays and identification numbers for each owner. While this report does not have to be renewed after the initial filing, changes of address, new driver's licenses or changes of name all require updated filings. Since having control over a business' operations qualifies as beneficial ownership, a restructuring of job duties, even if the person does not have a legal ownership stake in the company, could also trigger requirements to file updates, AFBF stated.

Companies created or registered before January 1, 2024, have until January 1, 2025, to report their BOI. Companies created in the calendar year 2024 have 90 days to file a BOI after creation or registration. Starting January 1, 2025, companies will have 30 days to file.

The BOI is free to file.

A Series of Federal Appeal Court Rulings Relating to the Filing of a BOI

December 23, 2024 Ruling

A federal appeals court overturned a lower court's decision and reinstated rules requiring businesses, including farms, to file BOI reports as required under the CTA.

A three-judge panel in the U.S. Fifth Circuit Court of Appeals rejected an injunction from early December by a federal judge in Texas that blocked rules for the Treasury rule. The panel, divided on parts of the ruling, also ordered an expedited hearing for oral arguments on the lawsuit.

The ruling reinstates January 1, 2025, for enforcement of BOI requirements to begin. FinCEN stated that reporting companies "are once again required to file beneficial ownership information with FinCEN." With that, FinCEN delayed the reporting requirements for two weeks.

Reporting companies that were created or registered before January 1, 2024, have until January 13, 2025, to file their initial beneficial ownership information reports with FinCEN. These companies would otherwise have been required to report by January 1, 2025.

Reporting companies created or registered in the U.S. on or after September 4, 2024, have until January 13, 2025, to file their initial beneficial ownership information reports with FinCEN. Reporting companies created or registered in the U.S. on or after December 3, 2024, and on or before December 23, 2024, have an additional 21 days from their original filing deadline to file their initial beneficial ownership information reports with FinCEN.

December 26, 2024 Ruling

On December 26, 2024, The Fifth Circuit Court of Appeals reversed its own decision and reinstated a nationwide injunction that allows businesses to not file BOI reports with the Treasury Department's Financial Crimes Enforcement Network (FinCEN).

The Fifth Circuit on Thursday issued a new order to expedite a hearing on a case out of Texas tied to BOI, and in doing so, the Fifth Circuit vacated its own ruling from December 23, 2024.

Essentially, the court vacated the federal government's motion to stay a preliminary injunction against enforcing the CTA. Under the latest reversal by the appeals court, a nationwide injunction out of a Texas federal court in early December will continue to block the Treasury Department from enforcing the act.

Farmers are encouraged to contact an accountant or attorney if they are unsure whether they are required to file their business’s ownership information with FinCEN.

Timeline of Events

January 1, 2024: The Corporate Transparency Act (CTA) goes into effect. Under the CTA, certain business entities, including LLCs, are required to file beneficial ownership information (BOI) reports with FinCEN. For entities created before January 1, 2024, the deadline is January 1, 2025. For entities created after January 1, 2024, the entity has 30 days after its creation to file the BOI report. The BOI reporting requirement extends to dissolved entities under certain circumstances.

December 3, 2024: The District Court for the Eastern Division of Texas grants a nationwide preliminary injunction against FinCEN’s enforcement of BOI reporting requirements. Texas Top Cop Shop, Inc., et al. v. Garland, et al., Case No 4:24-cv-478 (E.D. Tex.).

December 23, 2024: FinCEN’s appeal to stay the preliminary injunction is granted by the Fifth Circuit Court of Appeals, thereby reinstating the BOI reporting requirements. FinCEN extends the filing deadline to January 13, 2025.

December 26, 2024: The Fifth Circuit Court of Appeals reinstates the nationwide injunction, thereby preventing enforcement of BOI reporting requirements across the nation. Tex. Top Cop Shop, Inc. v. Garland, 2024 U.S. App. LEXIS 32702 (5th Cir., Dec. 26, 2024).

(Timeline and case listing courtesy of the North Carolina State Extension Service.)

References

American Farm Bureau, DTN Progressive Farmer, Iowa State University, North Carolina State University, Texas A&M University, U.S. Department of Treasury.