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"Sowing Seeds for Success" is the theme of the 2025 Small Farm Conference hosted by OSU Extension on March 8, 2025. The conference will take place at the Shisler Center on OSU's Wooster campus.
Conference session topics are geared to beginning and small farm owners as well as farms looking to diversify their operations. Five different conference tracks will cover Horticulture and Crop Production, Business Management, Livestock, Natural Resources and Diversifying Your Enterprise. Topics will range from Growing in a Hoophouse, Integrated Disease Management Strategies for Apple and Peaches, High Tunnel Tour, Using Cover Crops for Soil Regeneration, Creating Habitat for Beneficial Insects on the Farm, Growing Microgreens, Money to Grow: Grants 101, Growing Your Farm With Agritourism, Navigating Licenses and Certificates for your Small Farm Market, How Can Value – Added Help Your Farm, Vaccination Programs for a Small Farm, and a Grassfed Beef Tour.
The conference will also provide an opportunity to talk with vendors. A conference trade show will feature new and innovative ideas and services for farming operations.
The cost of the conference includes lunch and is $100 and registration is due by February 28, 2025. Follow this link to register https://go.osu.edu/2025smallfarmconference or scan the QR code below.
Traditional communication methods are a thing of the past. With instant access to email, social media, text messages, websites, and video calls, digital communication is now the primary way individuals and organizations connect. In this digital age, emojis have become a key form of expression. Traditional contracts, once reliant on handwritten signatures, have now expanded to include electronic signatures under federal and state law. But can a simple thumbs-up emoji or smiley face be seen as legally binding consent in a contractual agreement? Recent legal trends suggest that in certain circumstances, the answer may be yes. Producers should be aware of the potential legal risks emojis pose when negotiating a contract through digital communications.
Legal Landscape of Electronic Signatures
- Federal E-Sign Act: The Electronic Signatures in Global and National Commerce Act (“E-Sign Act”), enacted in 2000, ensures that electronic records and signatures are legally valid, provided they meet certain requirements. The law explicitly states that electronic contracts and signatures cannot be denied enforceability solely because they are digital. Under the E-Sign Act, an electronic signature is broadly defined as any “electronic sound, symbol, or process” associated with a contract and executed with intent.
- Ohio’s UETA: Ohio has adopted the Uniform Electronic Transactions Act (“UETA”), which complements the E-Sign Act and provides additional guidance on electronic contracts within the state. UETA establishes that electronic signatures and records hold the same legal validity as their paper counterparts (with limited exceptions), as long as both parties have agreed to conduct transactions electronically. Like the E-Sign Act, UETA does not explicitly address emojis. However, given its broad definition of electronic signatures, emojis could qualify if used with the intent to agree to contract terms.
- Industry Standards: Additionally, certain industries may have standards that deal with digital communications. For example, within the grain trade, a responsive emoji texted to a purchaser might be deemed sufficient “confirmation” under the National Grain and Feed Association’s (“NGFA”) Grain Trade Rules. These rules require written confirmation, which can be sent via postal mail, courier, or electronic means. Since the rules do not expressly exclude emojis as a form of electronic communication, their validity remains an open question.
Judicial Treatment of Emojis and Digital Communications in Contract Law
While Ohio courts have yet to issue a definitive ruling on emojis as contractual acceptance, there is case law that addresses the issue of digital communications and the use of emojis to create a legally enforceable contract.
- International Case Law: Although not a binding legal precedent, a notable case outside the U.S. has gained international attention. In South West Terminal Ltd. v. Achter Land & Cattle Ltd., the court addressed whether a farmer’s thumbs-up emoji in response to a contract image constituted acceptance. The court ruled that a legally binding contract was formed and held the farmer liable for breach. (See our original post on the South West case here). In December, a Canadian appellate court upheld this decision, finding that Achter Land & Cattle intended to enter into a contract with South West Terminal and that both parties had communicated and agreed upon the essential terms.
- U.S. Case Law: While no U.S. case law directly addresses whether a contract can be formed by the use of emojis as the court does in the South West case, there are examples of U.S. courts interpreting digital communications and the use of emojis within other traditional legal frameworks.
- CX Digital Media, Inc. v. Smoking Everywhere, Inc.: The court held that an instant message exchange effectively modified a contract that contained a “no-oral modification clause.”
- In RE Bed Bath & Beyond Corporation Securities Litigation: The court ruled that a “full moon face” emoji contained within a tweet could plausibly mislead stockholders and could be a securities violation in some contexts.
- Lightstone Re LLC v. Zinntex LLC: The court determined that a factual dispute remained as to whether a thumbs-up emoji constituted a valid contract, preventing it from granting summary judgment on that basis (though summary judgment was granted for the plaintiff on other grounds). The court acknowledged that “even if such an electronic signature in the form of an emoji can create a valid contract, there still must be a meeting of the minds and an intent to be so bound.”
- Battle Axe Construction, LLC v. Hafner & Sons, Inc.: An Ohio court ruled that a series of emails met the requirements of Ohio’s Statute of Frauds, which requires certain contracts to be in writing.
- N. Side Bank & Trust Co. v. Trinity Aviation, L.L.C.: An Ohio court determined that a series of emails between the parties included the necessary elements to form a legally enforceable contract.
What does this all mean?
In summary, there is no clear answer (either in Ohio or nationwide) on whether an emoji can serve as an electronic signature and signify acceptance of a contract. However, as can be seen from the list of cases above, there is legal precedent establishing that digital communications can create a legally enforceable contract.
If the issue of whether an emoji qualifies as an electronic signature arises, Ohio courts will likely consider the broad definition of electronic signatures under federal and state law. They will also evaluate the context of the digital communication between the parties, assessing whether all elements of contract formation are present and whether a party intended to accept the contract by sending an emoji.
How should you manage your digital communications?
Although digital communications and contracting are legally recognized, using emojis as evidence of contract formation remains challenging. Emojis can be ambiguous and open to interpretation. For instance, the fire emoji might signal excitement in one context but destruction in another. One party may interpret it as confirmation of a contract, while the other may intend it as a rejection of negotiations. This type of ambiguity will continue to pose an ongoing issue if emojis are allowed to be used as electronic signatures.
To help minimize the risk of misinterpretation when negotiating contracts digitally, consider these best practices:
- Avoid emojis – While it may seem simple, refraining from using emojis helps prevent confusion over contract formation and reduces the risk of an emoji being interpreted as an electronic signature, lowering the chances of disputes or litigation.
- Clarify intent if emojis are used – If the other party includes emojis in negotiations, follow up to ensure their intent is clear and unambiguous. Additionally, consider finalizing digital negotiations with a formal written contract.
- Establish employer guidelines – Employers should implement internal policies outlining how employees engage in contractual discussions via text, email, or social media to ensure clarity and consistency.
Final Thoughts
As digital communication evolves, so too will legal interpretations regarding its use. The federal E-Sign Act and Ohio’s UETA provide a robust framework for recognizing electronic agreements, and courts may uphold emojis as valid expressions of contractual intent under the right circumstances. Nevertheless, the safest approach remains to use traditional contractual language alongside any digital expressions. When in doubt, always put it in writing—words continue to reign supreme in contract law.
Tags: contracts, electronic signature, digital communications, digital contracting, grain contracts, contract law, contract formation
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Drones, or more accurately named Unmanned Aerial Vehicles (UAVs), have helped provide new methods of pesticide applications and agronomic data collection to assist farmers with productivity and efficiency. Yet the possibility of unknown drones flying over a farm property can cause concerns. Recent conversations and sightings of drones in rural areas have producers raising questions such as “what can I do about suspicious drone activity” and “can I shoot down a drone over my property?” Federal and state laws provide answers to these questions. Here are several points farmers need to know about dealing with UAVs traveling over their properties.
1. Shooting a drone is a crime under federal and state laws. Federal law prohibits a person from intentionally harming UAVs and other aircraft. It is a federal felony to willfully “damage, destroy, disable, or wreck any aircraft,” and the federal government has prosecuted persons for doing so. The potential punishment can be severe: a fine of up to $250,000 and twenty years of imprisonment. Ohio law also establishes a crime for “endangering aircraft.” A person who knowingly discharges a firearm, air gun, or spring-operated gun at or toward any aircraft can be subject to misdemeanor or felony charges, fines, and imprisonment, depending upon the risk of harm resulting from the endangerment.
2. Shooting a drone can create safety risks and potential civil liability. The Federal Aviation Authority (FAA) and other aviation professionals warn against the unintended consequences of injuring an airborne drone. Once disabled, a UAV is no longer under the control of an operator and will eventually crash. Some compare an injured drone to a “missile” that can harm people, animals, and property upon impact. A recent case in Florida illustrates this danger, with a child suffering serious harm when a drone crashed and struck him. A person who intentionally harms a drone not only creates this safety risk, but also opens up the possibility of being liable for injuries caused by the drone or its debris. Additionally, the owner of the drone may seek compensation for the loss of the aircraft.
3. The recommended action is to report suspicious drone activity. If a UAV poses a danger, an observer should report it right away to local law enforcement or the county Emergency Management Agency, who can investigate the situation. It’s helpful to share location information and videos and photos of the aircraft. If a drone doesn’t pose an immediate danger but appears to be operated in violation of FAA rules, an observer can report the activity to the nearest FAA flight standards district office. There are FAA district offices in Cincinnati, Columbus, and Cleveland. Contact information is available on the FAA website.
4. Federal laws require registration and tracking technology for drones. A drone owner must register the aircraft with the FAA and provide the owner’s address, e-mail, and telephone information along with the model and serial number for the UAV. The FAA issues an information or “N-number” the owner must display on the vehicle, and the agency also provides an online tool for looking up an aircraft by its N-number. An additional FAA rule also requires a registered drone to have “Remote ID” technology. A Remote ID acts as a drone’s “digital license plate” by broadcasting a signal identifying the drone, its location, and the location of its control station. The registration and Remote ID requirements increase the likelihood that law enforcement or the FAA can ascertain who owns or is operating the aircraft.
5. New laws for UAVs will soon be effective in Ohio. While the federal government has sole authority to regulate UAVs, states can also enact drone laws as long as they don’t conflict with the federal regulations. The Ohio legislature recently did so, enacting a bill last December with requirements and prohibitions on private use of drones. The new law, which is not effective until April 9, 2025, will prohibit a person from operating a UAV “in a manner that knowingly endangers any person or property or purposely disregards the rights or safety of others.” The penalty for a violation includes a fine of up to $500 and imprisonment of up to six months. The new law offers another reason to report suspicious drones, and its penalties could help reduce potentially harmful drone activity.
It can be unnerving and threatening to see an unknown drone flying over one’s property, but shooting at the drone is not a viable solution to the concern. An injured UAV can harm people and property. A shooter could not only be liable for that harm but could also face criminal felony and misdemeanor charges for endangering or harming aircraft, along with hefty fines and imprisonment penalties. The preferred solution for dealing with drone activity is to report it to local law enforcement or the FAA. Taking action quickly could result in identification of the owner and an explanation of the drone’s activities. If that activity is suspicious or endangering, federal and state laws can penalize the offender and eliminate the drone activity.
This article marks the beginning of a new series, Principles of Government, where we explore key legal concepts shaping public discourse. Our goal is to provide a clear, unbiased, and nonpolitical explanation of these issues, allowing readers to form their own opinions on the social, political, and economic impacts. As new developments arise, we will continue expanding this series to keep you informed.
Tariffs have been a widely discussed issue recently, particularly as President Trump considers implementing new or increased tariffs on imported goods. More broadly, tariffs have played a central role in U.S. trade policy for centuries, shaping economic growth, international relations, and domestic industries. While they are often used to protect American businesses from foreign competition, tariffs can also lead to higher prices for consumers and retaliatory measures from other countries.
Agriculture, in particular, has long been sensitive to tariffs. Farmers and agribusinesses rely on imported equipment, fertilizers, and other inputs, meaning tariffs can raise production costs. At the same time, American agricultural products exported abroad can be subject to retaliatory tariffs, making them more expensive and less competitive in foreign markets. Understanding how tariffs work, who pays them, and the legal authority behind their implementation is crucial for assessing their broader economic and political impact. In this article, we will break down the fundamentals of tariffs, their role in U.S. trade policy, and the source of authority to impose tariffs.
What Is a Tariff?
A tariff is a tax or duty imposed by a government on imported goods. Tariffs serve several purposes, including generating revenue for the government, protecting domestic industries from foreign competition, and sometimes serving as a tool in international trade negotiations. When a country imposes tariffs, it raises the cost of imported goods, making domestically produced alternatives more competitive. Tariffs are typically applied as a percentage of the value of the imported goods but can be a fixed amount per unit of goods.
Who Pays the Tax on a U.S. Tariff?
When the U.S. imposes a tariff on imported goods, the tax is paid by the importer of record, typically a U.S. company or individual bringing the goods into the country. The foreign exporter does not pay the tariff directly. Instead, the importer must pay the tariff before the goods clear customs. To offset this cost, the importer may either pass it on to consumers through higher prices or absorb it, reducing their profit margin.
Where Does the Tax Go?
The tariff revenue collected by U.S. Customs and Border Protection is deposited into the U.S. Treasury's general fund. This money is not earmarked for a specific program but becomes part of the government’s overall revenue, which can be used for federal spending, such as infrastructure, defense, or social programs.
Example
U.S. Flour Co. purchases wheat from Canada Wheat Co. for $1 million. The U.S. government imposes a 25% tariff on all Canadian wheat imports. As a result, U.S. Flour Co. must pay an additional $250,000 in tariff duties to U.S. Customs and Border Protection before the wheat can clear customs. This increases the total cost of the imported wheat to $1.25 million, which U.S. Flour Co. may either absorb or pass on to consumers through higher prices.
What is the Purpose of Tariffs?
The U.S. imposes tariffs for several key reasons, each serving different economic, political, and strategic objectives. These include:
1. Protecting Domestic Industries
Tariffs make imported goods more expensive, helping domestic producers compete with foreign competitors. This protection is particularly useful in industries where lower-cost imports might otherwise drive U.S. companies out of business.
2. Generating Government Revenue
Historically, tariffs were a primary source of federal revenue before the income tax was established. While less significant today, tariff revenues still contribute to the U.S. Treasury’s general fund and help finance government operations.
3. Addressing Trade Imbalances
By making imports more expensive, tariffs can reduce reliance on foreign goods and encourage domestic production. This can help address trade deficits by limiting the amount of money flowing out of the U.S. to pay for imports.
4. Retaliating Against Unfair Trade Practices
Tariffs are often used as a tool to respond to unfair trade practices, such as subsidies, dumping (selling goods below market value), or intellectual property theft by foreign nations.
5. Protecting National Security
Certain tariffs are imposed to safeguard industries critical to national security, such as steel, aluminum, and semiconductor manufacturing.
6. Strengthening Foreign Policy and Diplomacy
Tariffs can be used as a foreign policy tool to pressure other countries into trade negotiations or compliance with international agreements. They can also serve as leverage in broader geopolitical strategies.
What is the Legal Authority to Impose Tariffs?
The power to impose tariffs in the United States originates from the U.S. Constitution. Specifically, Article I, Section 8, Clause 1 grants Congress the authority "to lay and collect Taxes, Duties, Imposts and Excises." Additionally, Clause 3 of the same section, known as the Commerce Clause, gives Congress the power to "regulate Commerce with foreign Nations."
While Congress has the constitutional authority to impose tariffs, it has delegated much of this power to the executive branch through legislation. Several key laws provide the legal foundation for U.S. tariff policy:
- The Tariff Act of 1930 (Smoot-Hawley Tariff Act) – This law, originally designed to protect American industries during the Great Depression, set high tariff rates on many imported goods. Although many of its tariffs have been reduced over time, the law remains a foundation for U.S. trade policy.
- Section 232 of the Trade Expansion Act of 1962 – This law allows the President to impose tariffs on imports that threaten national security.
- The Trade Act of 1974 – This legislation provides the President with the ability to negotiate trade agreements and adjust tariffs, particularly in cases involving unfair trade practices by foreign nations.
So, while the authority to impose tariffs is exclusive to Congress in the Constitution, Congress has ceded at least some of its power to the President.
Conclusion
Tariffs play a significant role in U.S. trade policy, serving as tools for economic protection, revenue generation, and international diplomacy. While they can shield domestic industries and address unfair trade practices, they also have broader consequences, such as higher consumer prices and potential trade disputes. Understanding the legal framework behind tariffs helps clarify how and why they are implemented.
As we continue our Principles of Government series, we will explore more fundamental legal concepts that shape national and global policy, providing you with the knowledge to assess their impacts for yourself.
Tags: tariffs, principles of government
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The new presidential administration has raised the possibility of enacting tariffs, leading many to ask us how tariffs work and how they will affect agriculture. The tariff power is one of those topics that might have us reaching back to the last civics or government class we took and raising some questions. For example, what is the source of tariff authority, when can the government levy a tariff, and how does the tariff process play out?
A desire to answer such questions led us to develop a new blog series on the "Principles of Government." In this series, we endeavor to review and enhance our knowledge of our government and how it works. We'll begin the series this week with an explanation of the tariff power, then we'll tackle other topics like executive orders, administrative agency authority, and the Constitution. But first, we offer an answer from our OSU colleagues on the important question of how potential tariffs could affect agriculture. Thank you to our guest expert authors for the following article, which helps us understand how tariffs against Canada and Mexico could impact agriculture.
Authors:
Ian Sheldon, Professor and Andersons Chair of Agricultural Marketing, Trade, and Policy, Dept. of Agricultural, Environmental, and Development Economics, Ohio State University
Chris Zoller, Interim Assistant Director Agriculture & Natural Resources (ANR), Ohio State University Extension
First Trade Policy Announcement(s) by the New Administration
Both before and after the 2024 presidential election, the trade policy community has been speculating about and discussing the likely economic impact of tariffs an incoming administration might implement once in office. With the inauguration of President Trump on January 20, we now have the first view of what could be in store for US trade policy. Specifically, while new tariffs have not been imposed immediately, the President indicated the possibility that 25 percent tariffs would be applied to imports from Canada and Mexico as of February 1 (Reuters, January 20, 2025). Surprisingly, the much talked of hike in tariffs to 60 percent on all imports from China, and a 10 percent tariff on imports from the rest-of-the-world, have yet to be announced, the President instead ordering the Office of the US Trade Representative (USTR) to investigate unfair trading practices globally, and whether China complied with the US-China Phase 1 Trade Agreement signed in 2020 (Bloomberg, January 20, 2025).
Potential Impact of Tariffs on US Agricultural Sector
With the integrated agricultural market that has evolved under the North American Free Trade Agreement (NAFTA), and its renegotiated successor the US-Mexico-Canada-Agreement (USMCA), it should come as no surprise that Mexico and Canada are the top-two US agricultural export markets at $29.9 and $29.2 billion respectively (USDA/FAS, Outlook for US Agricultural Trade, November 2024). Given the importance of these two markets to US farmers, and also in light of the declining US share of China’s imports of feed grains and soybeans (Glauber, IFPRI, December 2024), a trade war between USMCA members has the potential to have a serious impact on future US farm incomes. However, any analysis of the impact of such tariffs is an exercise in economic forecasting, and will also depend on the extent to which Mexico and Canada choose to retaliate, although Canada has already indicated it will respond in kind (Associated Press, January 20, 2026).
Agricultural economists at North Dakota State University have recently analyzed various US tariff scenarios (Steinbach et al., farmdoc, and Food Policy, 2024), which they have updated to include the impact of 25 percent tariffs against Canada and Mexico (Steinbach et al., CAPTS, 2024). Their analysis focuses on the potential export market losses in 2025 for 11 agricultural commodities, using baseline export projections for 2025 from the World Agricultural Board’s (WAOB) demand and supply estimates (WAOB, 2024). The sensitivity of US agricultural exports to the imposition of foreign tariffs is based on published estimates from the 2018/19 trade wear (Grant et al., Applied Economic Perspectives and Policy, 2021).
In the following table, three scenarios are reported for five commodities: soybeans, corn, dairy products, beef and beef products, and pork and pork products, along with total projected losses for the US agricultural sector. Scenario 1 assumes 25 percent US tariffs on Canadian imports are met with 25 percent Canadian tariffs on US imports; Scenario 2 assumes 25 percent US tariffs on Mexican imports are met with 25 percent Mexican tariffs on US imports; and Scenario 3 combines Scenarios 1 and 3 with tit-for-tat additional US/Chinese tariffs of 10 percent. The latter scenario is included here given President Trump has also signaled he will introduce an additional 10 percent tariff on imports from China as of February 1 (Guardian, January 22, 2025).
Source: Steinbach et al., 2024
While the total forecast losses to the agricultural sector are quite similar for Canada and Mexico, there is clear variation across key commodities, and forecast losses for the listed commodities are also higher for US/Mexican tariffs as compared to US/Canadian tariffs. Importantly, these forecast losses increase if additional 10 percent tariffs are levied on Chinese imports, and subsequently matched by China.
While not reported in the table, if the United States were also to levy 60 percent tariffs on all Chinese imports, and 10 percent tariffs on all imports from the rest of the world, with tit-for-tat retaliation, the total value of US agricultural exports for 2025 are forecast to decline 34.4 percent, i.e., a loss of $60.6 billion. In this scenario, US soybeans would be the most vulnerable, followed by wheat and corn. At the state level, Ohio agriculture is forecast to lose -$705 million in export value in 2025 if the most extreme scenario plays out, with a loss of -$359 million for soybean exports.
Although these expected losses are obviously subject to forecast error, at a time when commodity prices have been falling, additional uncertainty about export markets due to changing US trade policy will likely exacerbate any financial stress faced by US farmers. It will also place additional pressure on the federal government to consider ways of reducing sectoral stress through further ad hoc payments to farmers similar to the Market Facilitation Program (MFP) applied during the 2018/19 trade war.
Financial planning is always a critical component of operating a farm business, and the potential negative impacts of tariffs reinforce the need to analyze costs, evaluate alternatives, and develop plans. For assistance, please contact your Extension Educator and enroll in the OSU Extension Farm Business Analysis and Benchmarking Program (https://farmprofitability.osu.edu/). Enrolling in this program will provide you an in-depth analysis of your farm business and allow you to plan for future success.
In our next post on the Ohio Ag Law Blog, we'll explain the tariff power when we kick off our new Principles of Government series.
Tags: tariffs, principles of government, canada, mexico, agricultural economics
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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 case. However, 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.
Tags: CTA, BOI, corporate transparency act, beneficial ownership information, beneficial owners, stay, SCOTUS, Fifth Circuit
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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.
Tags: Supreme Court of the United States, SCOTUS, BOI, CTA, corporate transparency act, beneficial ownership information, BOI Reporting, FinCEN, injunction, stay, legislation, Business, Business Owners, beneficial owners
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By: David L. Marrison, Field Specialist, Farm Management, Barry Ward, Director of the OSU Income Tax Schools, and Jeff Lewis, Attorney and Program Coordinator- OSU Extension.
It is tax season! The Internal Revenue Service (IRS) expects over 140 million individual tax returns to be filed by the April 15, 2025 deadline. With tax returns set to be accepted by the IRS starting January 27, it's crucial for individuals and businesses to stay on top of important tax reporting deadlines.
One of the key requirements during this time is the proper reporting of income through 1099 forms. These forms, which report various types of non-wage income, need to be furnished to taxpayers by January 31. Additionally, copies also need to be sent to the IRS by the January 31st deadline (with a few exceptions) to avoid penalties and ensure timely processing of tax returns.
This article will provide an overview of 1099 forms, highlighting the specifics of the 1099-NEC, 1099-MISC, and 1099-K forms. Additionally, we will share reporting deadlines, penalties for non-reporting, and provide resource links from the IRS.
What is a 1099 Information Return?
A 1099 form is an information return used by businesses, financial institutions, and other organizations to report various types of income paid to individuals who are not employees. These forms are typically issued to independent contractors, freelancers, and vendors to report payments made for services rendered, interest earned, dividends, and other income types.
These returns help ensure that individuals and entities report income correctly on their tax returns. There are over 20 different 1099 forms. The major forms which farm families may receive include:
- 1099-NEC Non-employee compensation
- 1099-MISC Miscellaneous income
- 1099-K Income from third party vendors
- 1099-G Unemployment compensation or other government programs
- 1099-INT Interest income
- 1099-DIV Investment dividends and distributions
- 1099-PATR Taxable distributions from cooperatives
- 1099-S Proceeds from real estate transactions
1099-NEC
One of the most common 1099 forms used is the 1099-NEC, which reports payments to non-employees. The form is required to be issued when compensation totaling more than $600 (per year) is paid to a nonemployee for certain services performed for your business. If the following four conditions are met, you must generally report payment for nonemployee compensation on Form 1099-NEC:
- You made the payment to someone who is not your employee.
- You made the payment for services for your trade or business (including government agencies and nonprofit organizations).
- You made the payment to an individual, partnership, estate, or in some cases, a corporation.
- You made payments to the payee of at least $600 during the year.
Examples of “nonemployee compensation” could include hiring a neighboring farmer to harvest, spray, or plant your crops or independent contractors such as crop consultants, mechanics, accountants, and veterinarians. Payment for parts or materials used to perform the service (if the supplying of the parts or materials was incidental to providing the service) is included in the amount reported as nonemployee compensation.
Reporting is needed for payments made to unincorporated businesses (ie. sole proprietorship or a LLC that has elected to be taxed as a sole proprietor or partnership) for compensation of $600 or greater. Generally, payments to a corporation, or a LLC which has elected to be taxed as a corporation, do not require a 1099-NEC to be issued. Two exceptions which should be noted are for payments of $600 or greater to an attorney or veterinarian, regardless of business entity (corporation or unincorporated), need to be reported on the Form 1099-NEC.
If you are required to file a Form 1099-NEC, you must furnish a statement to the recipient and to the IRS by January 31 of each year or the next business day, if the due date is on a weekend or holiday. For the tax reporting year of 2024, the form is due January 31, 2025.
A form 1099-NEC can be issued even if the payment is below the $600 threshold or is to a party that you are in doubt as to whether you are required to issue this informational return. There are no prohibitions or penalties for doing this.
Previously, business owners would file Form 1099-MISC to report non-employee compensation. As a historical note, the Form 1099-NEC was re-introduced in 2020. It was previously used by the IRS until 1982 when the IRS added box 7 to Form 1099-MISC and discontinued the 1099-NEC form. Now, this compensation is listed in Box 1 on the 1099-NEC.
A reminder that greater scrutiny has been given to the improper classification of an employee as an independent contractor. It is your duty to make sure that you have classified properly. For tax purposes, the IRS provides guidance on making this determination through behavior control, financial control, and the relationship of the parties. Details can be found in IRS publication 1779 located at: https://www.irs.gov/pub/irs-pdf/p1779.pdf
Form 1099-MISC
The Form 1099-MISC is used to report a variety of income payments made to others and are made during your trade or business (not personal). These include, but are not limited to:
- At least $10 in royalties (box 2)
- At least $600 in:
- Rents (box 1)
- Prizes and awards (box 3)
- Medical and health care payments (box 6)
- Crop Insurance proceeds (box 9)
Reporting is needed for payments made to unincorporated businesses (ie. sole proprietorship or a LLC that has elected to be taxed as a sole proprietor or partnership) for compensation for each reporting thresholds ($600 or greater for rents or $10 for royalties). Generally, payments to a corporation, or a LLC which has elected to be taxed as a corporation, do not require a 1099-MISC to be issued. However, there are exceptions as noted previously.
One question, we receive from farmers is “do I need to issue a 1099 to the landowners which I rent ground from?” As a farmer, if you made the payment for services for your trade or business (ie. your farm business), then you will need to issue a 1099-MISC to landowners who receive $600 or more in land rental payments (in aggregate).
The reporting deadlines for the 1099-MISC forms are a little different than the 1099-NEC. The 1099-MISC must be to the recipient by January 31 (similar to 1099-NEC) but are not due to the IRS until February 28 for paper copies or March 31 for e-filed returns.
1099-K
The 1099-K form may be a new form to some of our farm managers. Form 1099-K tracks income made from selling goods or providing services via payment apps and online marketplaces. Examples include (but are not limited to) PayPal, Venmo, Square, and Ebay. Payment card companies, payment apps, and online marketplaces are required to fill out Form 1099-K and send it to the taxpayer and to the IRS by January 31. You will receive a 1099-K if:
- If you take direct payment by credit or bank card for selling goods or providing services. If customers pay directly by credit, debit or gift card, you will receive a Form 1099-K from the payment processor or payment settlement entity, no matter how many payments received or how much they were for.
- A payment app or online marketplace is required to send you a Form 1099-K if the payments received for goods or services total over $5,000 (2024 limits). However, they can send you a Form 1099-K with lower amounts.
Please note the reporting thresholds will change going forward. Third-party payment network transactions previously only needed to be reported for payees with more than 200 transactions and $20,000 in aggregated payments. The American Rescue Plan Act of 2021 repealed this threshold and requires reporting for aggregate payments of $600 or more, regardless of the number of transactions.
The IRS is taking a phased in approach to the implementation of the American Rescue Plan Act of 2021 and guidance was provided on November 26, 2024 (https://www.irs.gov/pub/irs-drop/n-24-85.pdf). The phased-in reporting thresholds are:
- $5,000 in 2024
- More than $2,500 in 2025
- More than $600 in calendar year 2026 and thereafter.
Whether or not you receive a Form 1099-K, you must still report any income on your tax return. If you accept payments on different platforms, you could get more than one Form 1099-K. Personal payments from family and friends should not be reported on Form 1099-K because they are not payments for goods or services.
Additional Note:
Starting in tax year 2023, if you have 10 or more information returns, you must file them electronically. Electronic copies can be submitted through the IRIS Taxpayer Portal at http://irs.gov/iris or through a third-party software provider.
Penalties
If you fail to file a correct information return by the due date (to the IRS and/or taxpayer) and cannot show reasonable cause, you may be subject to a penalty. Penalties are changed for each information return which is failed to be filed to the IRS on time and to each payee (a penalty for each). These penalties can range from $60 to $660 depending on the number of days which the filing is late. Additional penalties can also be assessed for intentional disregard. Interest is also charged. More details can obtained at: https://www.irs.gov/payments/information-return-penalties
IRS Resources:
The following resources are available from the IRS with regards to the informational returns discussed in this article.
Publication 1220: https://www.irs.gov/pub/irs-pdf/p1220.pdf
1099-NEC: https://www.irs.gov/forms-pubs/about-form-1099-nec
1099-MISC: https://www.irs.gov/forms-pubs/about-form-1099-misc
1099-K: https://www.irs.gov/businesses/understanding-your-form-1099-k
1099 Penalties: https://www.irs.gov/payments/information-return-penalties
Disclaimer:
The information provided in this article is for educational purposes. This article was designed to provide accurate tax education information. Farm managers are encouraged to seek the assistance of qualified tax professionals with the completion of their taxes.
A couple of years ago, we published a series of posts addressing Long-Term Care (LTC) issues affecting farm families. Although there haven't been major legal changes in LTC, the costs have risen steadily, and eligibility requirements have adjusted to account for these higher expenses. We thought it would be a good time to do an update on LTC costs.
The table below illustrates the changes in LTC service costs between 2021 and 2023. In Ohio, home health care experienced the most significant percentage increase, now surpassing $75,000 per year, while nursing home costs have risen above $100,000 annually. It's likely that LTC costs will continue to climb in the foreseeable future.
*2023 Genworth Cost of Care Survey
Another important number is the Medicaid asset exemption limit. This is the amount of wealth that a person or married couple may own and be eligible for Medicaid. For Ohio, this exemption amount increased slightly as provided in the table below:
As these numbers indicate, to be eligible for Medicaid, an unmarried person can own almost no assets, and a married couple may own only a modest amount of assets. For anyone not eligible for Medicaid, LTC costs must be paid out-of-pocket until enough assets have been spent down to qualify for Medicaid. Due to the low Medicaid exemption amount, very few farmers will initially qualify for Medicaid without aggressive prior planning or spending down almost all their assets.
How can farming operations address the potential threat of Long-Term Care (LTC) costs? Unfortunately, for most farmers, there are no simple solutions. Covering LTC expenses out-of-pocket can strain the farm's finances, while qualifying for Medicaid may not be feasible for many producers. However, there are several strategies that can help mitigate LTC risks:
- LTC Insurance: Long-Term Care insurance policies can cover some or all nursing home costs. Although these policies can be expensive, and not everyone may qualify, it's worth exploring whether a LTC policy is a viable option.
- Gifting: Assets that are gifted more than five years before needing LTC services are exempt from being used to cover LTC costs. However, gifting means losing control over the asset and missing out on a stepped-up tax basis at death.
- Irrevocable Trusts: Transferring assets to an irrevocable trust can protect them from LTC costs after the five-year lookback period. While this approach offers more control over the assets than outright gifting, irrevocable trusts can be costly and require ongoing trustee management.
- Self-Insure: Some individuals choose to build up savings or other assets to cover LTC expenses. This strategy avoids complex planning and legal fees but ties up capital that could otherwise be used to expand the business.
- Wait and See: Some farm families prefer to wait and assess whether LTC costs will become a reality. They may then gift assets to protect them while retaining enough resources to manage through the five-year lookback period. This approach offers flexibility but risks five years of LTC costs.
Before choosing a strategy, it's crucial to assess the actual risk of LTC costs to the farming operation. Some may have sufficient retirement income to cover LTC expenses, negating the need for extensive planning. For others, LTC costs could threaten the farm and its land, necessitating aggressive planning. Consulting with an attorney or advisor experienced in LTC planning can help determine the best course of action for you and your farm.
Tags: long-term care, Medicaid
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December 31 saw the end of the 135th Ohio General Assembly. The assembly's Lame Duck session following the November election brought with it the passage of several bills that may have an effect on agriculture and natural resources throughout the state. Any bills the legislature did not approve before the end of the session "died" and are no longer under consideration. Here's a summary of bills the lawmakers passed, which are all now signed by Governor DeWine:
S.B. 156—Scenic Rivers. Senate Bill 156 passed ahead of the Lame Duck session and became effective on October 24, 2024. S.B. 156 transferred the authority to administer the Wild, Scenic, and Recreational River Program from the Ohio Department of Natural Resources’ (ODNR) Division of Parks and Watercraft to the Division of Natural Areas and Preserves (DNAP). Further, the bill narrowed DNAP’s scope of authority from river areas (including land around Wild, Scenic, or Recreational Rivers) to just the watercourses of rivers. At the same time, the bill expanded the types of watercourses that can be designated as wild, scenic, or recreational rivers to include headwaters of those rivers.
H.B. 364—Regards non-commercial seed sharing; noxious weed removal. The main goal of House Bill 364 is to help conserve pollinator species and support native plant habitats. To do this, the bill exempts from the laws governing seeds any "noncommercial seed sharing" that supports a number of activities. These activities include:
- Conservation of pollinators and threatened or endangered species;
- Planting and creation of native plant habitats;
- Propagation of native plants for their specific conservation;
- Operation of a seed library, provided that the seed library ensures that any seeds exchanged among the seed library’s members or the general public are open-pollinated, public domain varieties.
A “seed library” is defined as a non-profit, governmental, or cooperative organization or association to which both of the following apply:
- It is established for the purpose of facilitating the donation, exchange, preservation, and dissemination of seeds among the seed library's members or the general public.
- The use, exchange, transfer, or possession of seeds acquired by or from the non-profit, governmental, or cooperative organization or association are obtained free of charge.
Finally, the bill makes changes to the weed removal provisions in R.C. 4959.11, which requires managers of toll roads, railroads and electric railways to manage weeds along their roads and rights of way. The bill changes the specific requirement to destroy "Russian thistle, Canadian thistle, common thistle, wild lettuce, wild mustard, wild parsnip, ragweed, milkweed, ironweed and all other noxious weeds" to one that requires destruction of "noxious weeds" as defined in the law that applies to weed removal along county and township roadways. Several of the weeds removed from R.C. 4949.11 are not on Ohio's noxious weeds list and, especially in the case of milkweed, are beneficial plants for monarch butterflies and other pollinators.
S.B. 54—Establish the New African Immigrants Grant and Gift Fund. At first glance, the title of Senate Bill 54 doesn’t indicate that it has anything to do with agriculture or natural resources law. However, S.B. 54 became the “Christmas Tree” bill of the Lame Duck session, meaning that amendments not having anything to do with the original purpose of the bill were added on to it.
S.B. 54 contains two such amendments that relate to agriculture and natural resources. The first, originally found in House Bill 683, transfers $10 million from the Ohio Controlling Board Emergency Purposes/Contingencies Fund to ODA to disburse to Soil and Water Conservation Districts for drought relief to farmers affected by the 2024 drought.
The second addition to S.B. 54 is the creation of the Ohio River Commission. The Commission will be housed within the Department of Development, and its purpose will be to “develop and promote economic development, marine cargo terminal operations, and travel and tourism on the Ohio river and its tributaries.” Of note are several of the powers and duties given to the Ohio River Commission, including:
- Receive, promote, support, and consider recommendations, from public or private planning organizations, and develop a master plan for Ohio River infrastructure and transportation projects;
- Coordinate with port authorities, private port operators, metropolitan planning organizations, regional transportation planning organizations, local development districts, Ohio River service entities, utility service providers, and agricultural, tourism, and recreational interests, regarding Ohio River infrastructure and transportation;
- In conjunction with applicable state agencies, coordinate with state agencies, local governments and communities, other states, and the federal government regarding Ohio River issues;
- Evaluate policies, programs, programs of research, and priorities to offset the continued decline in coal production and consumption within the Ohio River Basin and promote prosperity in Ohio’s Appalachian region; and
- Administer development funds and seek, support, and assist the Ohio River industry in the utilization of available grants, loans, and other finance mechanisms in support of Ohio River projects.
H.B. 503—Prohibit activities re: garbage-fed swine, feral swine, wild boar. House Bill 503 is meant to address the dangers of feral swine; namely the destruction of property and the transmission of diseases like African Swine Fever to Ohio’s commercial pig population.
The bill makes it illegal to knowingly:
- Import, transport, or possess live wild boar or feral swine;
- Release wild boar or feral swine into the wild or expanding the range of a wild boar or feral swine by introducing it to a new location; and
- Purposely feed a wild boar or feral swine.
In addition, if a person knows or has reason to know that wild boar or feral swine are present on public or private property, the law requires them to report it to Ohio Department of Natural Resources’ Division of Wildlife. If wild boar or feral swine is present on a person’s property, they may immediately eradicate the swine without a hunting license, as long as they notify the Division of Wildlife and follow the Division’s instructions.
H.B. 503 also includes language that makes it illegal to feed garbage or treated garbage to swine, or to bring swine into Ohio that has been fed garbage or treated garbage. For the first violation, the Ohio Department of Agriculture can collect a penalty of up to $500 and can charge up to $1000 for subsequent violations.
With the 136th General Assembly now underway, be sure to follow the Ohio Ag Law Blog for updates on legislation we'll see in this new two-year legislative session.
Thank you to Ellen Essman, J.D. with OSU CFAES Government Affairs, for authoring this post.