New law requires businesses to report
On Jan. 1, a new law went into effect which will require some farmers and ranchers to file reports about their businesses to the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
The law, entitled the Congressional Transparency Act (CTA), was enacted in 2021 to “stop tax fraud, money laundering and financial terrorism by capturing more ownership information from U.S. businesses and companies operating within U.S. borders.”
Reporting companies
According to FinCEN, the law will require certain companies doing business in the U.S. to report information about the individuals who ultimately own or control them.
Those required to comply include both domestic and foreign entities.
Domestic reporting companies include corporations, LLPs or any other similar entity created by filing documents with the secretary of state or a similar office under state law.
“If you’re just a farmer who farms in your own name and you haven’t set up any sort of entity like an LLC, you won’t have to do this reporting,” explains Iowa State Ag Law Expert Kristine Tidgren in an article published by the Billings Chamber of Commerce.
“But, if you’re a limited partnership and you had to go to the secretary of state’s office to get limited liability protection, you’ll be subject to this law,” she continues.
Existing reporting companies created or registered to do business in the U.S. before Jan. 1 must file by Jan. 1, 2025.
Reporting companies created or registered to do business in the U.S. in the year 2024 have 90 calendar days to file after receiving actual or public notes that their company’s creation or registration is effective.
Beneficial ownership
FinCEN notes beneficial ownership information under CTA is not an annual requirement and will only need to be filed once, unless the filer needs to update or correct information.
“A beneficial owner of a reporting company is an individual who directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, exercises control over the entity or owns or controls at least 25 percent equity interests of the entity,” explains Natasha Allen, Saige Gallop and Robin Zhang in a Jan. 8 article published by Foley and Lardner, LLP.
“Substantial control encompasses individuals who serve as a senior officer of the reporting company; have appointment or removal authority over the senior officers and board of directors; can direct, determine or have substantial influence over important decisions with the company and have any other type of substantial control over the company,” Allen, Gallop and Zhang continue.
There is no maximum number of beneficial owners who must be reported, and each beneficial owner in a reporting company will need to file four pieces of information.
This includes their full name, date of birth, address and their identifying number and issuer from either a non-expired U.S. driver’s license, a non-expired U.S. passport or a non-expired identification document issued by a state, local government or Tribe.
Hannah Bugas is the managing editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.
