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With the crop in the bins and snow on the ground in many places, many have turned their focus to year-end tax and bookwork preparations. This year could add one new item to that to-do list for many farmers and small businesses. In this week's edition of Rural Matters, we'll cover the FIEN filing requirements, who's covered and who's exempted, and what you need to know to ensure you're compliant.

The new Financial Institution Enterprise Number (FIEN) filing requirements, were part of the Corporate Transparency Act (CTA), enacted in 2020 as part of the Anti-Money Laundering Act, aimed to enhance transparency and combat illicit activities like money laundering and tax evasion. The CTA requires certain entities to report their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). The goal is to create a centralized database that can be accessed by law enforcement and regulatory agencies to track and prevent financial crimes.

Who Needs to File

The FIEN filing requirements apply to a wide range of entities, including corporations, limited liability companies (LLCs), and other similar entities created or registered to do business in the United States. Sole proprietorships and general partnerships are generally exempt unless they meet specific criteria. There are some exemptions, including certain regulated entities, inactive entities, and large operating companies that meet specific criteria, but most of these will not encompass farm businesses. As a general rule of thumb, if you file paperwork with the Iowa Secretary of State for a legal entity, then you are likely covered within the FIEN requirements to file this new report. We encourage farmers and business owners to consult with their tax preparer or attorney that helped develop the business entity for further clarification.

What is Reported

The BOI report must include details about the company and each beneficial owner, such as names, dates of birth, physical home addresses, and tax/identification numbers. An image of the identification document, such as a driver's license, must also be uploaded. In general, beneficial owners are individuals who directly or indirectly (1) exercise “substantial control” over the reporting company, OR (2) own or control 25% or more of the “ownership interests” of the reporting company. There is further guidance from FinCEN on how to determine qualifications for "beneficial owner," and it's always prudent to confirm this with your tax or legal professional.

Deadlines for Filing Reports

For entities created or registered with the state before January 1, 2024, the initial report must be filed by January 1, 2025. Entities created or registered on or after January 1, 2024, must file their initial report within 30 days of their creation or registration. Additionally, any changes in beneficial ownership must be reported within 30 days of the change.

Importance of Compliance

Failure to comply with the FIEN filing requirements can result in severe penalties, including fines of up to $500 per day, with a maximum of $10,000, and potential imprisonment for up to two years. This makes it crucial for farmers and small businesses to spend time understanding these new rules and meeting the reporting deadlines.

Finding Additional Information

• Farmers and agricultural businesses can find more information and resources to help with compliance through several channels:

• FinCEN Website: The Financial Crimes Enforcement Network (FinCEN) provides comprehensive guidance, FAQs, and filing instructions on their website.

• Agricultural Law and Taxation Centers: Institutions like the Center for Agricultural Law and Taxation at Iowa State University offer resources and workshops to help farmers understand and comply with the new requirements.

• Professional Advisors: Consulting with legal and financial advisors who specialize in agricultural law can provide tailored advice and assistance in meeting the FIEN filing requirements.