The U.S. Fifth Circuit Court of Appeals ruled Monday that the federal government can enforce the Corporate Transparency Act while legal challenges make their way through the courts. The law is intended to combat criminals who anonymously use businesses to mask criminal activity.

Critics contend the federal government is overstepping its authority. They say the law also raises privacy concerns and argue the federal government has done a poor job explaining which businesses are subject to its requirements.

The Court’s ruling overturns a Dec. 3 Texas federal court decision that put the law’s reporting requirements on hold. Circuit Judges Carl Stewart, Stephen Higginson and Catharina Haynes heard the case. They agreed that a nationwide injunction stopping the law was not warranted given the federal government stood a good chance of winning the case. Haynes, a President George W. Bush appointee, stated she would have kept in place a partial injunction applying only to the case plaintiffs. Stewart and Higginson, who were appointed by Presidents Clinton and Obama, did not agree with that position.

“When balancing this harm against the public’s urgent interest in combatting financial crime and protecting our country’s national security, equity favors a stay,” the court concluded in its Dec. 23 decision. “As the government explains, and the district court recognizes, a last-minute nationwide preliminary injunction would undermine our ability to push other countries to reform their anti-money.”

What this means for farmers

The decision is not the Christmas gift farmers wanted. More than 230,000 farms may now be required to file beneficial ownership information with the Treasury Department. Failure to adhere to the law could result in thousands of dollars in fines and up to two years in jail.

According to an October analysis by the American Farm Bureau Federation, less than 11% of businesses impacted by the law had filed as of October. AFBF President Zippy Duvall says many farmers aren’t aware of the filing requirements due to a lack of guidance and poor public outreach.

“Farmers were given a reprieve from the filing deadline, but now, just two days before the holidays, when many families take a much-needed break from work responsibilities, the courts have reinstated the requirement,” Duvall says. “Unfortunately, thousands of farmers may unknowingly miss the deadline, putting their businesses at risk. We urge the government to grant an extension so more family businesses can comply with the rule.”

Late Monday, the Treasury Department’s Financial Crimes Enforcement Network issued a short extension. The original Jan. 1 deadline for farms and other businesses to submit their beneficial ownership information has been extended to Jan. 13. This applies to all companies created or registered prior to Jan. 1, 2024.

Companies created after Sept. 4, 2024, that had December filing deadlines now have until Jan. 13 to submit their information. Those created after Dec. 3 will get a 21-day extension to their original deadline. Newly created companies will have 30 days to file their initial ownership information reports in FinCEN.

Companies qualifying for disaster relief may be eligible for additional deadline extensions.

Corporate Transparency Act coverage from Farm Progress

Federal judge halts Corporate Transparency Act: On Dec. 5, policy editor Joshua Baethge reported a Texas federal court judge issued a nationwide injection, nullifying the Corporate Transparency Act. Judge Amos L. Mazzant agreed with plaintiffs who argued the CTA fell outside of Congress’s authority to regulate interstate and international commerce.

Important facts farmers need to know about Corporate Transparency Act: On Nov. 6, Nebraska Farmer contributors Jay Parsons, John Hewlett and Jeff Tranel outlined how the law impacts agriculture and how farmers can file a BOI report. The experts warned anyone who willfully violates the reporting requirements may be subject to penalties, including daily fines around $500.

Corporate Transparency Act hits farms, ag businesses: On March 6, Missouri Ruralist editor Mindy Ward outlined how the law is aimed at farms and small agriculture businesses, who is considered a beneficial owner and the information required in a report. Ward also warned that FinCEN was already seeing fraudulent attempts to solicit information from entities reporting under the CTA.