Mary Sobba added a new topic this year to her annual tax talks, the Corporate Transparency Act, which requires farmers to report information about their owners or face a fine.

The University of Missouri Extension agriculture business specialist says the Corporate Transparency Act, passed by Congress in 2021, is designed to prevent money laundering, corrupt financial transactions and financial terrorism. It is not aimed at large companies, but rather farms or small agriculture businesses.

The CTA focuses on entities that have:

In essence, it is to weed out those who are hiding or benefiting through shell companies or other ownership structures.

“It requires millions of small businesses, including LLCs, corporations and limited partnerships to begin filing new reports to disclose their beneficial owners in 2024,” Sobba says.

The act requires the Financial Crimes Enforcement Network (FinCEN) to establish and maintain a national registry of what it deems “beneficial owners.”

Who is a 'beneficial owner'?

According to the law, a beneficial owner is an individual who either has substantial control over a company or owns 25% or more of the ownership interests of the company.

FinCEN notes that substantial control can be direct, including senior officers and any individual with the ability to appoint or remove a senior officer. It can also include important decision-makers who weigh in on issues surrounding the company’s business, finance or structure.

Such information should be reported with the Beneficial Ownership Information form.

Don’t delay filing

For businesses that already exist, the BOI filing can be completed now, Sobba says.

Companies created after Jan. 1, 2024, must file within 30 calendar days of receiving actual or public notice from the state’s secretary, she adds. All filings must be made by Jan. 1, 2025, to avoid potential civil and criminal penalties.

Sobba notes that while FinCEN is putting priority on education and outreach, the law states that failure to report can result in a $500-per-day fine, with a maximum fine of $10,000. “The statute also calls for possible imprisonment for up to two years,” she adds.

Beneficial ownership information reporting is not an annual requirement and can be submitted only once. However, any change in ownership information requires an update or correction to the BOI.

What goes into the BOI report?

Sobba says farms meeting the reporting criteria need to provide following information:

Each beneficial owner must provide the following information:

For more details on reporting, visit FinCEN’s Beneficial Ownership Information.

Those interested in learning more about CTA can attend a free webinar March 20, hosted by the National Agricultural Law Center. Kristine Tidgren, an attorney at the Iowa State University Center for Ag Law and Taxation, will lead the discussion.

For specific questions related to CTA, Sobba says farmers should contact their Secretary of State office.

Fraud alert on CTA

Just two months in, FinCEN is already seeing fraudulent attempts to solicit information from individuals and entities who are reporting under the Corporate Transparency Act.

According to its website, the fake correspondence may be titled “Important Compliance Notice” and asks the recipient to click on a URL or to scan a QR code.

“Those e-mails or letters are fraudulent,” it states. “FinCEN does not send unsolicited requests. Please do not respond to these fraudulent messages or click on any links or scan any QR codes within them.”