Uncertainty for Farmers, Small Business Owners Over the Future of the Corporate Transparency Act

Up to two years in prison and a fine of $10,000 would have been what you were facing if you own a farm or small business and didn’t comply with the Corporate Transparency Act by Jan. 1, 2025. But, you’re off the hook—at least, for now!

“The rollout of this has been a flop on behalf of the Treasury Department,” says Kent Bacus, Executive Director of Government Affairs for the National Cattlemen’s Beef Association (NCBA).

A few weeks ago, the U.S. District Court for the Eastern District of Texas granted a nationwide preliminary injunction in Texas Top Cop Shop, Inc. v. Garland, and said that the Corporate Transparency Act was likely unconstitutional, so it has temporarily stopped the government from enforcing it.

The act requires farmers and small businesses from filing what’s called a “benefit ownership information report” in an effort to crack down on businesses that may have been created for the purpose of money laundering or funding terrorist activities.

The report would require many farmers and small business owners to give confidential information to the U.S. Treasury Department’s Financial Crimes Enforcement Network—or FinCEN, for short. The deadline for filling that report was supposed to be Jan. 1, 2025.

“We’re not out of the woods just yet because if the court determines that the preliminary injunction should be lifted, then FinCEN could go ahead and start enforcing this right away. So, it’s important that people continue to pay close attention to this,” says Bacus.

That’s why he offers this advice for farmers and small business owners.

“For your personal operation, this is the time to talk to your advisors, to your tax preparers, to your attorneys, and find out that, if this moves forward, is this something that you will need to comply with?” says Bacus.

If the law is allowed to go into effect, it would impact more than 32 million small businesses—including millions of farmers and ag producers.

“It is ultimately going to take an act of Congress to go back and amend this, to make it right, and not create a criminal class out of so many small businesses,” he says.

Before the ruling, small businesses that met certain criteria would have had to file reports with the Treasury Department by January 1, 2025, or risk fines and criminal penalties.

The preliminary relief will remain in effect until the conclusion of legal proceedings, at which point the court may enter a permanent injunction. In the meantime, the government is expected to appeal the preliminary injunction.

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