Wide-ranging Corporate Transparency Act flies under the radar for many business owners
By Mary Hightower
U of Arkansas System Division of Agriculture
Jan 29, 2024
Fast facts:
- Corporate Transparency Act registration requirements took effect Jan. 1, 2024
- There are time limits for registering
- Non-compliance can result in fines or criminal penalties
- March 20 webinar includes who needs to file
(440 words)
(Newsrooms: with art)
LITTLE ROCK — Many farms and small businesses that must comply with the Corporate Transparency Act seem to be unaware of its existence and its requirements, according to attorneys for the National Agricultural Law Center.
The Corporate Transparency Act was passed in 2021 with a goal of cracking down on shell companies and preventing money laundering, said Elizabeth Rumley, senior staff attorney at the National Agricultural Law Center. Reporting required by the law began Jan. 1, 2024, and is expected to affect more than 32 million businesses.
Center staff like Rumley and fellow senior staff attorney Rusty Rumley are trying to raise awareness of the law and the implications for non-compliance.
“Within the past couple of weeks, Rusty was at a conference speaking to a group of about 100 farmers in Louisiana, and I did the same to about 75 farmers in Minnesota,” Elizabeth Rumley said. “Not a single person in either group had heard of the Corporate Transparency Act.”
The Corporate Transparency Act covers a wide range of domestic and foreign business entities created or registered in the United States, including LLCs, limited partnerships, corporations, and some trusts. There is no exception for small businesses, and no exception for agriculture.
“Because of this act, many business entities will be required to file a report with the federal government disclosing information on individuals with a ‘beneficial ownership interest’ in the entity,” Elizabeth Rumley said. “Entities created before this year have until Jan. 1, 2025, to come into compliance with the new reporting requirements. Entities created or registered in 2024 have 90 days to complete the reporting process.
Under the law, a “beneficial owner” includes individuals who own or control at least 25 percent of the company’s ownership interests. It also includes individuals who directly or indirectly exercise substantial control over the company’s operations, such as senior officers, general counsel, or members of the board of directors.
Penalties for failure to report range from $500 to $10,000 for each day of non-compliance and can include not only civil but also — potentially— criminal charges.
The online portal for submitting CTA disclosures is live and can be found at the Financial Crimes Enforcement Network site.
The National Agricultural Law Center will host a webinar on March 20 at noon Eastern time, called Small Entities Must File: Navigating the Corporate Transparency Act’s New Reporting Requirements, presented by Kristine Tidgren, an adjunct assistant professor in the Agricultural Education & Studies Department at Iowa State University and the director for the Center for Agricultural Law and Taxation. Kristine’s work focuses on studying and interpreting laws impacting the agricultural industry. In particular, she focuses on agricultural taxation.
To learn more about the CTA and its reporting requirements, read “Small Entities Must File New Beneficial Ownership Information Reports in 2024” from NALC partner Center for Agricultural Law and Taxation at Iowa State University.
To learn about extension programs in Arkansas, contact your local Cooperative Extension Service agent or visit www.uaex.uada.edu. Follow us on X and Instagram at @AR_Extension. To learn more about Division of Agriculture research, visit the Arkansas Agricultural Experiment Station website: https://aaes.uada.edu. Follow on X at @ArkAgResearch. To learn more about the Division of Agriculture, visit https://uada.edu/. Follow us on X at @AgInArk.
About the Division of Agriculture
The University of Arkansas System Division of Agriculture’s mission is to strengthen agriculture, communities, and families by connecting trusted research to the adoption of best practices. Through the Agricultural Experiment Station and the Cooperative Extension Service, the Division of Agriculture conducts research and extension work within the nation’s historic land grant education system.
The Division of Agriculture is one of 20 entities within the University of Arkansas System. It has offices in all 75 counties in Arkansas and faculty on five system campuses.
The University of Arkansas System Division of Agriculture offers all its Extension and Research programs and services without regard to race, color, sex, gender identity, sexual orientation, national origin, religion, age, disability, marital or veteran status, genetic information, or any other legally protected status, and is an Affirmative Action/Equal Opportunity Employer.
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