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Corporate Transparency Act picture.
By: Jeffrey K. Lewis, Esq., Friday, January 24th, 2025

Originally, I reported that beneficial ownership information ("BOI") reporting requirements under the Corporate Transparency Act ("CTA") were back in effect after the SCOTUS decision in the Texas Top Cop Shop caseHowever, that was not the full story.

A recap of the Texas Top Cop Shop case
In the Texas Top Cop Shop case, a US District Court for the Eastern District of Texas issued a nationwide injunction against the enforcement of the CTA and its beneficial ownership BOI reporting requirements. However, the Government appealed that decision, and a motions panel of the Fifth Circuit Court stayed the injunction, essentially reinstating the reporting requirements of the CTA. Then, three days later, a merits panel of the Fifth Circuit reversed course and vacated the stay, effectively reinstating the nationwide injunction. The Government then applied to the Supreme Court of the United States (“SCOTUS”) for a stay of the nationwide injunction. SCOTUS did grant the Government’s application for a stay and has lifted the nationwide injunction against the CTA. However, the story does not end there. 

The CTA saga continues
Earlier this month, the saga that is the CTA took another turn when a US District Court for the Eastern District of Texas issued a nationwide stay on the CTA’s Reporting Requirements in a case separate from Texas Top Cop Shop. In Smith v. U.S. Department of Treasury, the court exercised its authority under 5 U.S.C. § 705 and stayed the effective date of the Reporting Rule of the CTA while the lawsuit remains pending. As a result, while there is no nationwide injunction preventing enforcement of the CTA, the Reporting Rule's implementation is still temporarily on hold thanks to the stay in the Smith case.

What is the difference between a stay and an injunction?
Stays and injunctions are similar in that both can effectively prevent certain actions before their legality is fully resolved. However, they achieve this outcome in distinct ways. An injunction is directed at a specific party, with the court ordering them to either take or refrain from taking specific actions. While a stay can be considered a "type of injunction," it operates differently. A stay does not directly target a party’s actions; instead, it temporarily suspends the authority that allows the action, without directly dictating anyone’s behavior.

While both an injunction and a stay effectively achieve the same goal, there are important distinctions between them. For instance, obtaining an injunction against a party is generally more challenging than securing a stay while a lawsuit is ongoing. This is because an injunction requires the court to actively direct a party's actions, whereas a stay simply preserves the status quo until the case is resolved.

Where are we now?
The Government has yet to appeal the issuance of the stay in the Smith case, but the window for filing an appeal has not yet closed. It will be interesting to see how the Fifth Circuit and/or SCOTUS handles the nationwide stay as opposed to the nationwide injunction. 

In summary, the latest chapter of the CTA saga confirms that businesses nationwide are not required to file BOI reports. However, businesses are still permitted to voluntarily submit their BOI reports to the US Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”)

Several lawsuits challenging the constitutionality of the CTA remain pending across the country, along with reintroduced legislation aiming to repeal the CTA entirely. It’s clear that the CTA story is far from over, and we will continue to keep you informed on the latest developments.

FinCEN's Beneficial Ownership Information website.
By: Jeffrey K. Lewis, Esq., Thursday, January 23rd, 2025

The Supreme Court of the United States (“SCOTUS”) has issued its decision concerning the nationwide injunction against the Corporate Transparency Act (“CTA”) and its beneficial ownership information (“BOI”) reporting requirements.

On Thursday, January 23, 2025, SCOTUS ruled to allow the Government to enforce the CTA, which requires millions of businesses to file BOI reports. The justices stayed, or lifted, the nationwide injunction that had been blocking the CTA's enforcement. This decision permits the government to proceed with implementing the CTA while its merits are reviewed by the U.S. Court of Appeals for the Fifth Circuit, which is scheduled to hold oral arguments on March 25.

What does this all mean? 
Although this decision lifted the injunction against the CTA, there is another lawsuit that has placed the CTA reporting requirements on hold. See our post on the Smith v. U.S. Department of the Treasury for more information. As of the time of this publication, the Financial Crimes Enforcement Network (“FinCEN”) of the U.S. Department of Treasury has updated their website to confirm that businesses are not currently under any obligation to file BOI reports. Business owners are encouraged to visit the FinCEN website regularly to stay informed about the latest reporting requirements and deadlines.

The push to repeal the CTA goes beyond the court system.
While multiple lawsuits have been filed challenging the constitutionality of the CTA, there has also been legislative activity aimed at repealing it. Representative Warren Davidson and Senator Tommy Tubervillehave reintroduced legislation in their respective chambers of Congress to repeal the CTA. These proposals were introduced in the previous congressional session but did not advance. With the new administration and a Republican majority in both chambers of Congress, it will be interesting to see how these efforts progress.

How do I file a BOI report?
Business owners can still voluntarily complete all BOI reporting by visiting the FinCEN website. There is no cost to file a BOI report. However, if a business engages a tax professional, attorney, or other third party to file a BOI report on its behalf, the business will be responsible for covering any professional fees associated with the preparation and submission of the report.

Reporting companies will need the following information: (1) the reporting company’s legal name, (2) tax identification number, (3) jurisdiction of formation, and (4) current U.S. address. For their beneficial owners, reporting companies will need the following information: (1) full legal name, (2) residential address, (3) a form of identification, which must be either a state issued driver’s license, a state/local/tribe-issued ID, a U.S. passport, or a foreign passport, and (4) an image of the identification used in number (3). See our law bulletin for more details on reporting requirements

Conclusion.
For now, businesses are not required to file BOI reports with FinCEN. However, should the Government appeal the decision in the Smith case, things could change. As always, we will try our best to keep you informed of the latest developments. 

Supreme Court of the United States building.
By: Jeffrey K. Lewis, Esq., Wednesday, January 08th, 2025

The Corporate Transparency Act ("CTA") has reached the Supreme Court of the United States (“SCOTUS”). On New Year’s Eve, the U.S. Department of Justice submitted an application to SCOTUS, seeking either a stay of the nationwide injunction or, at a minimum, a limitation of the injunction's scope to the plaintiffs specifically named in the Texas Top Cop Shop case.

How Did We Get Here? 
Although there have been multiple lawsuits filed to stop the implementation of the CTA, the nationwide injunction at issue stems from the Texas Top Cop Shop v. Garland case arising out of the Eastern District of Texas. Below is a timeline of events:  

What Happens Next?
SCOTUS may choose to disregard the application and decline to address the challenges to the CTA, leaving the injunction intact. Alternatively, SCOTUS could opt to overturn or narrow the injunction, reinstating the CTA's reporting requirements for numerous businesses across the country. As a result, reporting companies should be prepared to promptly submit the required beneficial ownership information (“BOI”) reports.

Filing BOI Reports
Although there is no current mandate for reporting companies to file BOI reports to the Financial Crimes Enforcement Network (“FinCEN”), voluntary submissions are still being accepted. There is no charge to file a BOI report with FinCEN. Reporting companies can simply visit https://boiefiling.fincen.gov to begin the process of filing their BOI report. 

Reporting companies will need the following information: (1) the reporting company’s legal name, (2) tax identification number, (3) jurisdiction of formation, and (4) current U.S. address. For their beneficial owners, reporting companies will need the following information: (1) full legal name, (2) residential address, (3) a form of identification, which must be either a state issued driver’s license, a state/local/tribe-issued ID, a U.S. passport, or a foreign passport, and (4) an image of the identification used in number (3). Note: companies formed after January 1, 2024, will also need their company applicant informationSee our law bulletin for more details on reporting requirements

As previously noted, filing a BOI report is free of charge, and a straightforward LLC with only a few beneficial owners can typically complete and submit the report with ease. However, a reporting company may opt to engage a professional, such as an attorney, accountant, or other third-party, to assist with the process for a fee. 

Conclusion
While there have been no significant updates to the CTA, it is essential to stay informed about potential changes on the horizon. The Government's application to SCOTUS could lead to a shift in direction in the near future. As always, we will keep you updated on the latest developments.

Corporate Transparency Act Image
By: Jeffrey K. Lewis, Esq., Friday, December 27th, 2024

The Court of Appeals for the Fifth Circuit has given us another holiday surprise! The nationwide injunction on the Corporate Transparency Act (“CTA”) and its beneficial ownership information (“BOI”) reporting requirements is once again in effect. 

On December 23, 2024, we reported that the Court of Appeals for the Fifth Circuit had lifted a nationwide injunction on the CTA and its BOI reporting requirements. Consequently, all reporting obligations were reinstated for businesses nationwide. Following the Fifth Circuit’s decision to stay the injunction, the Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) extended the filing deadline for most reporting companies to January 13, 2025. We knew at the time that this would not be the last we would hear of the CTA and BOI reporting requirements, but what we did not know was how quickly another update would occur. 

On December 26th, just days after lifting the nationwide injunction, the Fifth Circuit issued another order vacating its stay, effectively reinstating the nationwide injunction and halting the BOI reporting requirements under the CTA once more. The court ruled that the order from the motions-panel granting the stay on the injunction be vacated “in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments. . .”

How did the Fifth Circuit manage to both lift and later reinstate the nationwide injunction? The explanation lies in the distinct panels of judges that handle motions and appeals. One panel, the "motions-panel," reviewed the Government's "emergency motion for a stay pending appeal," while a different panel, the "merits panel," is evaluating the case based on its merits. These two panels reached differing conclusions regarding the federal district court's issuance of the preliminary injunction. The following timeline summarizes the events that have brought us to the current situation: 

  • On December 3rd, a federal district court found the CTA likely to be unconstitutional and imposed a nationwide preliminary injunction on the CTA and its BOI reporting requirements.
  • The Government appealed the decision, and a motions-panel of the Fifth Circuit considered the Government's "emergency motion for a stay [of the preliminary injunction] pending appeal." On December 23rd, the panel sided with the Government, lifting the injunction based on the likelihood that the Government would succeed in proving the CTA's constitutionality. The panel did not address the merits of the case but solely ruled on whether the district court's injunction should remain in place.
  • The appeal is now before the merits panel of the Fifth Circuit which gave us our latest update and vacated the motions-panel’s order granting the Government’s motion to stay the district court’s preliminary injunction. Thus, the merits panel reinstated the December 3rd injunction. 

What now? 

The case is currently before the merits panel of Court of Appeals for the Fifth Circuit and has been expedited to the next available oral argument panel. We may receive another update on the status of BOI reporting and the CTA in just a few short days. While the Fifth Circuit continues to review the case, there are other federal courts considering challenges to the CTA. This case, and potentially other CTA cases, can still be brought before the Supreme Court of the United States for a final determination. 

However, as it stands, all BOI reporting requirements of the CTA have been suspended. While there is currently no obligation to meet the extended BOI reporting deadline, business owners can still voluntarily file their BOI reports with FinCEN. We will do our best to keep you up to date on any developments on BOI reporting and the CTA. 

FinCEN BOI Webpage
By: Jeffrey K. Lewis, Esq., Monday, December 23rd, 2024

In a recent blog post, we discussed a federal district court’s issuance of a nationwide injunction against the Corporate Transparency Act (“CTA”), temporarily halting the requirement for businesses to file “beneficial ownership information” (“BOI”) reports with the Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”). In that post, we promised to keep you updated on the legal status of the CTA and its BOI reporting requirements. Well, we are here to tell you that the saga continues . . . 

As of December 23, 2024, that nationwide injunction is no longer enforceable, and the BOI reporting requirements of the CTA have been reinstated. The Court of Appeals for the Fifth Circuit issued a temporary stay on the nationwide injunction. The Fifth Circuit found that the government made a strong showing that it is likely to succeed in proving that the CTA is constitutional. The court explained that Congress exercised its broad authority under the Commerce Clause to pass the CTA, aiming to regulate the anonymous ownership and operation of businesses that constitute an "economic class of activities" significantly affecting interstate commerce. Consequently, the court determined that the reporting requirement for such businesses is within the scope of the Commerce Clause.

The court further concluded that “a last-minute injunction of a statute proposed and passed by the people’s representatives inevitably causes irreparable harm.” Additionally, the court determined that the burden on businesses required to report is minimal. When weighed against the “public’s urgent interest in combatting financial crime and safeguarding national security,” the court found that a stay of the injunction was justified.

Following the Fifth Circuit's ruling, the Department of the Treasury issued an alert on the FinCEN website acknowledging that reporting companies may require additional time to comply with the CTA due to the period when the preliminary injunction was in place. As a result, the reporting deadlines have been extended as follows: 

  • Reporting companies established or registered before January 1, 2024, now have until January 13, 2025, to submit their initial BOI reports to FinCEN. (Previously, these companies were required to report by January 1, 2025).
  • Reporting companies formed or registered in the United States on or after September 4, 2024, and before December 3, 2024, have until January 13, 2025, to submit their initial BOI reports to FinCEN.
  • Reporting companies formed or registered in the United States between December 3, 2024, and December 23, 2024, have an additional 21 days beyond their original filing deadline to submit their initial BOI reports to FinCEN.
  • All reporting companies created or registered in the United States on or after January 1, 2025, have 30 days to file their initial BOI reports with FinCEN. 

So, what does it all mean? 

If your farm business is registered in Ohio, compliance with the CTA's reporting requirements is once again mandatory. While farm businesses now have a slight extension to meet the BOI reporting requirements, it is probably best practice not to delay too long. 

This situation is unfolding quickly. This case may still undergo further review by the Fifth Circuit or potentially reach the Supreme Court of the United States. Additionally, several other federal courts are currently evaluating challenges to the CTA. We will make every effort to keep you informed promptly as the situation develops.  

Web page for the Dept of Treasury Financial Crimes Enforcement Network
By: Peggy Kirk Hall, Thursday, December 05th, 2024

If you are one of those farm businesses putting off the requirement to file “beneficial ownership information” (BOI) to the federal government under the new Corporate Transparency Act (CTA), you just received an early Christmas present from a federal court in Texas.  The U.S. District Court for the Eastern District of Texas has issued a nationwide preliminary injunction against the CTA, concluding that the law “appears likely unconstitutional.”  The court halted enforcement of the CTA and its regulations (the Reporting Rule) and stayed the January 1, 2025 deadline for BOI reporting. 

What is the CTA?

The CTA is a new federal law that requires certain businesses to report the identities of those with “beneficial ownership interests” in the business to the federal Department of Treasury’s Financial Crimes Enforcement Network.  The CTA’s first reporting deadline was set to be January 1, 2025.

The parties who brought the lawsuit

Six Plaintiffs filed the lawsuit against the United States -- a private individual, three businesses, the Libertarian Party of Mississippi, and the National Federation of Independent Business.  The parties claimed that the CTA and its regulations are unconstitutional on several grounds:  first, for violating State’s rights under the Ninth and Tenth Amendments; second, for violating the First Amendment by compelling speech and burdening rights of association, and third, for violating the Fourth Amendment by forcing disclosure of private information.

The court’s analysis

Stating that whether the CTA and its rules are absolutely unconstitutional “is a question for another day,” the court instead focused its opinion on its duty to determine whether the Plaintiffs satisfied the proof necessary for being awarded the “extraordinary relief” of an injunction.  Doing so required the court to examine the elements a plaintiff must prove to receive an injunction.  The court’s opinion consumes 79-pages, but here’s a snapshot of the court’s analysis of the required elements:

  1. That the CTA and Reporting Rule substantially threaten the plaintiffs with irreparable harm.  The Plaintiffs presented two arguments that they would suffer irreparable harm by complying with the CTA reporting requirements.  First, Plaintiffs claimed they would have to expend resources, spend time and effort, and incur compliance costs and legal expenses. Second, they argued that their constitutional rights would also be irreparably harmed because the fear of noncompliance and criminal punishment would force them to reveal protected information. The court agreed that Plaintiffs would suffer irreparable harm in both the form of compliance costs and substantial threats to their constitutional rights.  In doing so, the court rejected the federal government’s argument that reporting costs would be minimal and “not a heavy lift.
  2. A substantial likelihood of success on the merits of any of their challenges.  The lengthiest part of the court’s decision is its analysis of whether the Plaintiffs are likely to be successful in their argument that the CTA is unconstitutional.  Plaintiffs raised several constitutional challenges, but the court addressed only the Tenth Amendment claim that Congress exceeded its authority by passing the CTA.  The government first argued that the Constitution’s Commerce Clause authorized the CTA, but the court determine that the CTA appears to be a “substantial expansion of commerce power” because it neither regulates economic activity nor non-economic activity among the states, but instead “regulates reporting companies simply because they are registered entities and compels disclosure of information for a law enforcement purpose.” Likewise, the court rejected the government’s second argument, that the Constitution’s Necessary and Proper clause authorized it to enact the CTA as a necessary and proper extension of its power to regulate commerce and foreign affairs and to lay and collect taxes.  The court found “no constitutional solace” in any of the government’s arguments, however.  The Plaintiffs had a substantial likelihood of of proving their claim that the CTA exceeds Congress’ authority and violates the Tenth Amendment, the court concluded.
  3. That the threatened harm outweighs any damage the injunction might have on the Government and that preliminary injunctive relief will not harm the public.  A final question the court deliberated is the “balancing of the equities,” or whether the threatened injury to Plaintiffs by not granting the injunction outweighs any potential harm to the government from issuing the injunction.  The court quickly concluded that because the Plaintiffs’ injuries are concrete and because it is in the best interest of the public to prevent a violation of a party’s constitutional right by allowing enforcement of the CTA, the balance of equities favors issuing an injunction.

The extent of the injunction

The court’s final deliberation was whether the injunction should apply nationwide or only to the Plaintiffs, and whether it should also prevent enforcement of the CTA’s Reporting Rule and put the January 1, 2025 compliance deadline on hold.  Given that the CTA applies nationwide to nearly 33 million businesses, the court held that the extent of the potential constitutional violations Plaintiffs alleged would be best served through a nationwide injunction of the CTA and its Reporting Rule.  Combined with a stay of the compliance date, the nationwide injunction will maintain the status quo and protect the parties from irreparable harm pending further review of the Plaintiffs’ claims.

What does the case mean for farm businesses?

Businesses who haven’t yet filed their BOI information with the Department of Treasury’s Financial Crimes Enforcement Network are not currently required to do so, and the Department of Treasury cannot enforce the law or issue penalties against businesses who do not report.  Note that the court case did not address or include any remedies for businesses that have already filed BOI information.  But the lawsuit is not over and there will be further legal proceedings on both the constitutional challenges and the issuance of the injunction (UPDATE: The federal government filed an appeal of the court's decision on December 5, 2024).  For now, businesses might want to consult with their legal counsel and be prepared to file if the injunction is lifted. If that occurs, there is likely to be advance notice or an extension of time granted for filers to come into compliance.

Expect to hear more from us in the future on the legal status of the CTA and its BOI reporting requirements. 

Read the case, Texas Top Cop Shop v. Garland, here.

Person's hands typing on a computer keyboard

Written by Tyler Zimpfer, NALC Law Fellow with the OSU Agricultural & Resource Law Program

The Corporate Transparency Act (“CTA”), enacted in 2021, requires “reporting companies” to file documents with the federal government indicating beneficial ownership information (BOI) for the business. Earlier this year, the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) began accepting BOI filings from certain companies doing business in the United States. While reporting has begun, several legal disputes have sprung up around the country challenging the constitutionality and enforcement of the CTA. Despite the ongoing litigation, however, the initial filing deadline of January 1, 2025 remains in effect for businesses subject to the CTA.

Recent litigation challenging the CTA

On March 1, 2024, a U.S. District Court in Alabama ruled that the CTA exceeded Congress’ enumerated powers and therefore was unconstitutional. The court held that “the CTA exceeds the Constitution’s limits on the legislative branch and lacks a sufficient nexus to any enumerated powers to be necessary or proper means of achieving Congress’ policy goals.” Specifically, the court concluded that Congress exceeded its foreign affairs, taxing, and commerce powers. Interestingly, the court did not decide on the arguments that the CTA also violates the First, Fourth, and Fifth Amendments to the U.S. Constitution.

The court prevented enforcement of the CTA against only the specific plaintiffs in the case – the National Small Business Association (NSBA) and one of its individual members. While NSBA members currently avoid any reporting requirements, CTA compliance is still required for all other companies. Therefore, the injunction imposed by the court lacks a significant, practical impact for all other businesses for the time being.  

The United States has appealed the case, but most experts are not expecting a decision from the federal Court of Appeals for the Eleventh Circuit before the January1, 2025 deadline. When a decision is released, the losing party will likely appeal to the United States Supreme Court, dragging a final determination out even further.

Six other lawsuits have been filed in other federal district courts around the country, each expecting to last longer than the upcoming filing deadline. Long story short, the legal saga of challenges to the CTA is likely to continue for the foreseeable future.

Click here to read the recent U.S. District Court opinion from Alabama.

What the CTA requires

Several key terms of the CTA explain which companies the law affects and what a company must report by January 1, 2025:  

  • “Reporting companies” subject to the CTA includes any domestic or foreign corporation, limited liability company, or any other entity that is formed or registered to do business in a U.S. state by filing a document with the secretary of state or other similar office. Several exceptions exist for those industries already subject to government oversight.
  • A “reporting company” must disclose certain information about the company and its “beneficial owners.” The reporting information includes the full legal name and the IRS taxpayer identification number of the company.  BOI includes full legal name, address, and either an image of a U.S. passport, driver’s license, or other identification document issued by a state, local government, or tribe of each "beneficial owner."
  • A “beneficial owner” is any individual who, directly or indirectly, exercises substantial control over the reporting company or owns or controls at least 25% of the ownership interests of a reporting company. There is no limit to how many beneficial owners a company may have.

To read specifics about the mechanics and submission guidelines of the CTA, please see our law bulletin, The Corporate Transparency Act:  Reporting Requirements, published earlier this year.

What does the CTA mean for farming entities in Ohio?

Many farming entities should be uniquely aware of the new BOI reporting obligations of the CTA. The CTA does not have specific industry exemptions for agriculture but takes a broad sweep at any entity that may be formed as a shell company. However, notable exceptions to the mandates of the CTA that affect farming entities include sole proprietorships and  general partnerships, which are exempt from CTA because they are not required  to register with Ohio’s Secretary of State.

Farming entities classified as "reporting companies," such as most farm limited liability companies (LLCs), are required to report relatively straightforward ownership information. However, gathering the necessary details, like driver's licenses or other forms of identification, can be time-consuming.  A scenario to take note of arises when an individual, despite owning only a small percentage of the company, is responsible for making many of the key short- and long-term decisions. This often occurs when management is passed to the next generation, while the older generation retains the majority of ownership. Under the Corporate Transparency Act (CTA), an individual who exercises significant management control must submit beneficial ownership information to FinCEN, even if their ownership stake is relatively small.

Additionally, any BOI updates such as a son or daughter being legally included in ownership of the farm’s assets or a beneficial owner's change of address must be reported within 30 days of the change. Forgetting to timely update the government may result in significant penalties for the company or a beneficial owner.

Moving forward

Farming entities that qualify as reporting companies should still expect to file information with FinCEN by January 1, 2025 as required by the CTA. Less than 10% of qualifying entities have filed with FinCEN so far, suggesting a delay in reporting or uncertainty regarding the District Court’s ruling in Alabama. Depending on current pending litigation, the CTA’s mandates may be adjusted or eliminated. Bills introduced in the U.S. House of Representatives and the U.S. Senate have also been proposed to modify or repeal the CTA, but no significant action has occurred on the proposals.

As litigation and legislation proceed, updates on the cases and bills will be forthcoming. In the meantime, farming entities should work with their attorneys, accountants, and other professionals knowledgeable of the new CTA obligations to meet the initial and future reporting requirements of the CTA.

Picture of utility vehicle.
By: Jeffrey K. Lewis, Esq., Thursday, March 28th, 2024

Spring has officially sprung, and so have a few interesting legal updates. In this edition of the Ag Law Harvest we cover aggravated vehicular assault in a farm utility vehicle, "Made in the USA" labels, the Corporate Transparency Act's legal woes, USDA's Dairy Margin Program, and the U.S House Committee on Agriculture's Agricultural Labor Working Group's final report. 

Driver of Farm Utility Vehicle Cannot be Found Guilty of Aggravated Vehicular Assault. 
The Supreme Court of Ohio ruled that a driver of a farm utility vehicle involved in a crash cannot be convicted of a felony for injuring passengers because the vehicle does not meet the definition of a “motor vehicle” under Ohio’s criminal code. Joshua Fork of Sandusky County crashed his Polaris utility vehicle while driving under the influence at a party in 2020. Two of Fork’s passengers sustained serious injuries as a result of the accident. Fork was convicted of operating a vehicle under the influence (OVI), and two counts of aggravated vehicular assault. Fork did not contest his OVI conviction but did appeal his aggravated vehicular assault conviction to the Sixth District Court of Appeals. The case eventually made its way to the Supreme Court of Ohio. 

In its decision, the Court found that Ohio law has two definitions of “motor vehicle.” One definition applies strictly to traffic laws and the other applies more broadly to Ohio’s “penal laws.” The Court held that the definition of “motor vehicle” that applies to penal laws, such as aggravated vehicular assault, exempts utility vehicles. The Court concluded that because of the utility vehicle exemption and the fact that the utility vehicle’s principal purpose is for farm activities, Fork cannot be found guilty of vehicular aggravated assault. To read more on the Supreme Court’s decision, visit: https://www.courtnewsohio.gov/cases/2024/SCO/0321/230356.asp

USDA Announces Final Rule on “Made in the USA” Labels. 
The U.S. Department of Agriculture (“USDA”) announced the finalization of a rule to align the voluntary “Product of USA” label claim with consumer understanding of what the claim means. The USDA's final "Product of USA" rule permits the voluntary use of the "Product of USA" or "Made in the USA" label claim on meat, poultry, and egg products. However, these labels can only be used if the products are derived from animals that were born, raised, slaughtered, and processed in the United States. The rule aims to prevent misleading U.S. origin labeling, ensuring that consumers receive truthful information about the origins of their food.

Under the final rule, the "Product of USA" or "Made in the USA" label claim will remain voluntary for meat, poultry, and egg products. It will also be eligible for generic label approval, meaning it won't require pre-approval by the USDA's Food Safety and Inspection Service (“FSIS”) before use, but establishments must maintain documentation supporting the claim. Additionally, the rule permits other voluntary U.S. origin claims on these products, provided they include a description on the package of the preparation and processing steps that occurred in the United States upon which the claim is made. 

Corporate Transparency Act Loses First Federal Court Battle. 
As we have previously reported (here), the Corporate Transparency Act (“CTA”) requires certain business entities to file Beneficial Ownership Information (“BOI”) with the Financial Crimes Enforcement Network (“FinCEN”) or face civil and criminal penalties. However, an interesting twist in the CTA saga has occurred. A federal court in Alabama issued an opinion ruling the CTA unconstitutional, concluding that the CTA exceeds the U.S. Constitution’s limits on Congress’s power, and issued an injunction against the U.S. Government from enforcing the CTA against the named plaintiffs in the case.  Therefore, the named plaintiff, Isaac Winkles, and companies for which he is a beneficial owner or applicant, the National Small Business Association, and the approximately 65,000 members of the National Small Business Association are currently not required to report beneficial ownership information to FinCEN. Everyone else must still comply with the CTA and the BOI reporting requirements. 

FinCEN released a statement acknowledging the court’s ruling but emphasized that only the named plaintiffs are excused from reporting beneficial ownership information to FinCEN at this time. On March 11, 2024, the U.S. Government filed a notice of appeal of the lower court’s ruling, hoping to reverse the injunction and the court’s decision. We will continue to monitor the situation and keep you informed of any updates to the CTA and BOI reporting requirements.

USDA Announces 2024 Dairy Margin Coverage Program. 
The U.S. Department of Agriculture (“USDA”) announced that starting February 28, 2024, dairy producers in the United States can enroll in the 2024 Dairy Margin Coverage (“DMC”) program. Enrollment for the 2024 DMC coverage ends on April 29, 2024. 

The USDA's Farm Service Agency (FSA) has made revisions to the DMC regulations to allow eligible dairy operations to make a one-time adjustment to their established production history. This adjustment involves combining previously established supplemental production history with DMC production history for dairy operations that participated in Supplemental Dairy Margin Coverage in previous coverage years. DMC has also been authorized through the calendar year 2024 as per the 2018 Farm Bill extension passed by Congress.

FSA Administrator Zach Ducheneaux encourages producers to enroll in the 2024 DMC program, citing its importance as a risk management tool. The program has proven effective, with over $1.2 billion in Dairy Margin Coverage payments issued to producers in 2023. Ducheneaux highlights the program's affordability, noting that it offers a sense of security and peace of mind to producers.

DMC is a voluntary risk management program that provides protection to dairy producers when the margin between the all-milk price and the average feed price falls below a certain dollar amount selected by the producer. In 2023, DMC payments were triggered in 11 months, including two months where the margin fell below the catastrophic level of $4.00 per hundredweight, marking a significant development for the program.

House Committee Releases Final Report Recommending Changes to H-2A Program. 
On March 7, 2024, the U.S. House Committee on Agriculture’s Agricultural Labor Working Group (“ALWG”) released its final report containing policy recommendations for U.S. agricultural labor. The report includes significant reforms to the H-2A program, many of which, as announced by the ALWG, received unanimous support from the bipartisan working group. The recommended policies encompass creating a single H-2A applicant portal, implementing H-2A wage reforms, establishing a federal heat standard for H-2A workers, and granting year-round industries such as livestock, poultry, dairy, peanuts, sugar beets, sugarcane, and forestry access to the H-2A program.

By: Robert Moore, Thursday, January 11th, 2024

Legal Groundwork

On January 1, 2024, The Corporate Transparency Act (CTA) took effect with the primary purpose of combatting money laundering, illicit financial transactions, and financial terrorism. The CTA established the Financial Crimes Enforcement Network (FinCEN) in the U.S. Department of Treasury to oversee a national registry of information on owners of entities that are exempt from conventional disclosure regulations. The CTA requires many businesses formed or operating in the United States to report information about their “beneficial owners” to FinCEN. This new law will affect many farms and small businesses.

Any entity that is required to be registered with the Ohio Secretary of State will be considered a Reporting Company and subject to the CTA.  Generally, this means LLCs, corporations and limited partnerships, common entities for farms, are all subject to the CTA.  There are some types of businesses that are exempt from the CTA, such as banks and accounting firms, but farms are not exempt.

The CTA primarily targets small businesses. Therefore, an exemption is provided for large operating companies.  Companies that meet the following conditions are exempt from the CTA reporting requirements:

  1. employs more than 20 fulltime employees in the United States
  2. has an operating presence at a physical office within the United States; and
  3. Filed a Federal income tax or information return in the United States for the previous year demonstrating more than $5M in gross receipts or sales.

Every Reporting Company must provide FinCEN with information for each and every beneficial owner of the business.  A beneficial owner is any owner that exercises substantial control or owns at least 25 percent of the business.  The information required for each beneficial owner is as follows:

  • Full legal name.
  • Date of birth.
  • Complete current address.
  • Unique identifying number and issuing jurisdiction from one of the following, along with its image:
    • U.S. passport.
    • State driver’s license.
    • Identification document issues by a state, local government or tribe.

Each Reporting Company must submit an initial filing but also must update the filing if there is any change to the required information about the business or beneficial owners.  For example, if a beneficial owner has a change of address or obtains a new driver’s license, the Reporting Company must update the report with FinCEN.  Both the initial report and updates are filed though the FinCEN website portal at www.fincen.gov/boi

So, what does this all mean for farm businesses?  The CTA and beneficial owner reporting requirements may seem like an intrusion of privacy. It is, in fact, an intrusion of privacy, but Congress has determined that the intrusion is necessary to protect against money laundering, illicit financial transactions, and financial terrorism. Right or wrong, the CTA is now law and farm businesses must follow it to avoid penalties.

The process of reporting should not be overly difficult using the FinCEN online portal. But the reporting will take time, especially for entities with many owners. While the entity should already have each owner’s name, address, and ownership percentage, collecting an image of each owner’s identification document could be time consuming. All businesses required to report under the CTA should develop a plan to file the initial report, monitor reportable changes, and file updated reports. Attorneys, accountants, lenders, and other professionals working with farms should also help remind their clients of the need for the initial reporting and future, updated reports. The CTA reporting is a significant change in business entity management and it may take the entire business team to ensure compliance.

For more information and a detailed discussion of the CTA, see The Corporate Transparency Act: Reporting Requirements law bulletin available at farmoffice.osu.edu.

 

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