The deadline for many companies across the country to file with the federal government is fast approaching.
The Corporate Transparency Act (CTA) requires millions of small and medium-sized businesses to disclose beneficial ownership details through beneficial ownership information (BOI) reports. The report was submitted through the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
The purpose of the CTA is to reduce financial crimes such as money laundering by providing ownership information for companies operating within or having access to the US market. The CTA is not new; it was enacted in 2021 as part of the National Defense Authorization Act. That reporting requirement went into effect on January 1, 2024.
Reporting companies must include information that identifies the “beneficiary owners” of the business, such as names, dates of birth, addresses, and copies of certain identification documents such as driver’s licenses and passports.
In addition, companies formed or registered after January 1, 2024 must also include personally identifiable information about the individuals responsible for filing. All reporting is done online.
Click here to submit your report.
Elizabeth Lumley, senior staff attorney at the National Agricultural Law Center (NALC), said the CTA is an important topic for all business owners, not just farmers.
“CTA is an attempt to catalog a national business database that tracks ownership of American businesses,” Lumley said. “This is one of the biggest topics we have discussed with our stakeholders this year, and its scope extends far beyond agriculture. We have just over two months left to report.”
Lumley noted that failure to comply could have serious consequences, including fines and imprisonment.
“Although there are certain entities that are exempt from filing, the default assumption for small business owners is to file by December 31st or find themselves exempt,” she said. said.
spread the word
As the nation’s leading source of farm and food law research and information, NALC has made disseminating CTA information ahead of the December application deadline a key part of its 2024 mission. Part of that approach is the creation of a CTA fact sheet, which is available online on the NALC website. This fact sheet was written by former NALC researchers Caitlin Robb and Rumley.
“Our goal with the fact sheet is to condense everything known about the CTA into a referenceable resource, including its history, what it does, who it affects, how to apply, example situations, and more. That was the case,” Lumley said. “Through our 2024 speaking events and stakeholder engagement, we realized that many people have limited or no knowledge of CTA.”
Earlier this year, NALC also hosted a webinar explaining the details of the CTA. Kristin Tigren, director of the Center for Agricultural Law and Taxation at Iowa State University (CALT), presents a webinar that can be viewed online. Additionally, CALT has a web page dedicated to information about CTA.
“We know there are a lot of questions regarding the CTA,” Lumley said. “These resources should answer many questions and point people in the right direction.”
legal challenge
A number of legal challenges to the CTA are pending. Recently, an Oregon federal court declined to issue a preliminary injunction in a lawsuit in which plaintiffs challenged the constitutionality of the CTA.
In March, a federal district court in Alabama ruled that the CTA was unconstitutional and granted the plaintiffs a summary judgment as a matter of law. This judgment halted enforcement of the CTA with respect to some specific parties.
On September 27, the Eleventh Circuit Court of Appeals heard oral arguments in the appeal of this decision. This process is unlikely to change companies’ filing deadlines.
Lumley said those who still need to file should plan accordingly, as the filing deadline is quickly approaching.
“We’re nearing the end of the year,” Lumley said. “It is important to learn more about whether filing requirements apply to your business and develop a plan to meet those obligations to avoid potential consequences.”
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