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Farms affected by new federal law that requires reporting of beneficial ownership
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Farms affected by new federal law that requires reporting of beneficial ownership

RICHMOND—Virginia farmers who operate as a corporation, LLC or limited partnership should be aware they now are required to report additional small business entities in which they have an ownership stake.

The Corporate Transparency Act is a federal law passed in 2021 under which new reporting requirements are being implemented in 2024. The law was created to curb illicit financial transactions and money laundering, and it requires most registered companies to complete Beneficial Ownership Information Reports. The U.S. Treasury’s Financial Crimes Enforcement Network will build a national registry of beneficial owners.

“It certainly creates more burdensome paperwork for farmers,” said Tony Banks, senior assistant director of agriculture, development and innovation for Virginia Farm Bureau Federation. “But thankfully there is no filing fee. We encourage our state’s farmers to get this done before the deadlines.”

Companies are now required to provide operational information, including details about each beneficial owner. A beneficial owner is anyone who owns at least 25% of the company or has “substantial control” over the business. The online registry will collect names, dates of birth, home addresses and photo IDs.

“Farms are among the businesses included in this law to report information about their beneficial owners,” explained Ben Rowe, VFBF director of national affairs. “Congress’ intent was to try to make it harder to illegally hide assets and to prevent financial crimes, particularly through the use of shell companies. However, because of the additional regulatory burden the law would place on farmers, the American Farm Bureau Federation opposed the bill.”

Entities registered before Jan. 1, 2024, have one year to file their first BOIR. Those created and registered after that must file their BOIR within 90 days of receiving notice from the Secretary of State. Entities created after Jan. 1, 2025, will have 30 days to upload reports.

The law’s 23 reporting exemptions generally apply to large businesses that already disclose that information. For example, banks and accounting firms are exempt. Most tax-exempt entities are not required to file reports. In March, the U.S. District Court for the Northern District of Alabama held the CTA unconstitutional. Some relief was granted, limited to the National Small Business Association—plaintiffs backed by AFBF.

The court’s decision could pave the way for further challenges to the CTA.

“It is advisable for agricultural enterprises to consult with their financial advisers to better understand how the CTA impacts their business,” Banks recommended.

Failure to report may result in civil and criminal penalties of up to $10,000 and up to two years’ imprisonment.

Visit the Financial Crimes Enforcement Network website portal at fincen.gov/boi to file reports and updates.

Media: Contact Banks at 804-290-1114, or Rowe at 804-290-1017.

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