Is your farm, ranch or business organized as a Limited Liability Corporation? If so, you may be required to file a report to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN), according to a recent news release from the American Horse Council.
Who has to report?
- A corporation, a limited liability company (LLC), or [business that] was otherwise created in the United States by filing a document with a secretary of state or any similar office under the law of a state or Indian tribe; or
- A foreign company and was registered to do business in any U.S. state or Indian tribe by such a filing.
If your company was created or registered prior to January 1, 2024, you will have until January 1, 2025, to report. (There are different reporting timelines if your company was not created or registered prior to 2024. See the website for guidance.)
Companies required to report need to do so through FinCEN’s Website: www.fincen.gov/boi
Resources for more information include:
FinCEN’s Small Entity Compliance Guide
Iowa State University Center for Agricultural Law & Taxation
Background
These reporting requirements stem from the Corporate Transparency Act (CTA), part of the Anti-Money Laundering Act of 2020. In 2021, Congress enacted the Corporate Transparency Act.
This law creates a “beneficial ownership” information reporting requirement as part of the U.S. government’s efforts to make it harder for bad actors to hide or benefit from their ill-gotten gains through shell companies or other opaque ownership structures.
While this legislation has been around for a few years, FinCEN, a bureau within the U.S. Treasury Department, recently issued a final rule establishing the “beneficial ownership” information reporting requirements, which took effect on January 1, 2024.
‘Beneficial ownership’
The reporting requirement is to record “beneficial ownership.” A “beneficial owner” is someone who:
- directly or indirectly exercises “substantial control” over a company, or
- directly or indirectly owns or controls 25% or more of a company’s ownership interests.
A person can be a “beneficial owner” when they have significant influence over the activities and decisions of the entity, even if they don’t own a substantial portion of the company’s stock or hold a formal title such as, but not limited to, CEO or President.
“Beneficial owners” could be found beyond the normal scope of ownership potentially extending to certain family members. These rules are complex and should be examined thoroughly to ensure compliance.
Information collected include the following items:
- The business’s legal name and any trade names or “doing business as” (DBA) names
- The current street address of its principal place of business in the U.S.
- Its jurisdiction of formation or registration
- Its taxpayer identification number
- The name, date of birth and address of all “beneficial owners” of the company
- A unique identifying number from an acceptable identification document, such as a driver’s license issued by a U.S. state or passport
The company must also submit an image of the identification document to FinCEN.
For more information and to learn about the American Horse Council, click here: www.horsecouncil.org
