What Farms Need to Know About BOI

OMAHA (DTN) -- The American Farm Bureau Federation is warning farmers and other rural businesses about the approaching Jan. 1, 2025, deadline to provide business ownership information to the U.S. Treasury Department.

AFBF estimates more than 230,000 farmers are affected by the Beneficial Ownership Information (BOI) provisions of the Corporate Transparency Act (CTA).

Passed in 2021, the CTA requires business ownership interests to file a report with Treasury. The law was created through a provision in the National Defense Authorization Act to reduce financial crimes such as tax fraud and money laundering. It was also passed coming out of the pandemic when there was a great deal of fraud -- more than $200 billion -- tied to problems such as Small Business Administration (SBA) disaster loans.

AFBF, in its Market Intel report, notes 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 the Treasury's Financial Crimes Enforcement Network (FinCEN).

Looking at 2022 Ag Census data, 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.

AFBF noted that 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 Jan. 1, 2024, have until Jan. 1, 2025, to report their BOI. Companies created in calendar-year 2024 have 90 days to file a BOI after creation or registration. Starting Jan. 1, 2025, companies will have 30 days to file.

The BOI is free to file. AFBF recommends farmers and other business owners consult with attorneys or accountants to see if they are required to file. "This adds another financial burden for farmers already facing significant cash flow problems during a tough year. However, professional advice may be helpful if you run into problems attempting to file."

So far, out of 30 million companies nationally that are required to file with FinCEN, only about 11% of all eligible corporations nationally have filed the proper reports so far, AFBF stated.

Companies that fail to file by the deadline face a potential $10,000 fine, up to two years imprisonment and civil penalties of $591 a day.

The Corporate Transparency Act also is being challenged in federal court. There is an expected ruling in the Eleventh Circuit Court of Appeals over a case out of Alabama.

-- FinCEN Beneficial Ownership Information (BOI) reporting website: https://www.fincen.gov/…

-- AFBF Market Intel report on BOI: https://www.fb.org/…

-- Also see "Mom and Pop Businesses Will Have to Meet New Federal Reporting Rules" here: https://www.dtnpf.com/….

Chris Clayton can be reached at Chris.Clayton@dtn.com

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