A new federal regulation on beneficial ownership reporting has sown confusion among business owners across the United States, with Montana's agricultural community feeling a particularly heavy impact.
The requirement, which mandates companies to disclose information about their "beneficial owners"—those who own or control the company—to the Financial Crimes Enforcement Network (FinCEN), was set to take effect on January 1, 2024. However, recent legal challenges have temporarily halted its implementation.
Impact on Montana Agriculture
Cynthia Johnson, President of the Montana Farm Bureau, highlighted the broad reach of this regulation, stating, “In Montana agriculture, you've got a lot of ag-related businesses. All of those small businesses are impacted too, because anyone who organizes in any way and files with the state of Montana is subject to those filing requirements.”
For many small business owners, the new rule presents logistical and financial challenges, requiring time and money to determine who qualifies as a beneficial owner and to complete the necessary forms.
Legal Challenges Create Uncertainty
Despite the original January 1 implementation date, a series of legal injunctions has left the rule in limbo.
“The beneficial ownership information reporting requirement for agriculture has been in flux,” Johnson explained. “We were prepared to file, and then an injunction was created in early December. That was overturned and then put back in place, overturned again. As of two days after Christmas, it's no longer a requirement. It’s basically on hold until all the legal arguments can be made.”
Consequences of Non-Compliance
If the rule eventually takes effect, non-compliance could result in significant penalties. Businesses that fail to file risk fines of up to $10,000 and additional criminal penalties, including jail time.
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Johnson emphasized the importance of being ready to comply, despite the current legal uncertainty. “I think that everybody should be prepared to file, even though the filing deadline is now non-existent,” she said.
Businesses Struggle with Uncertainty
The lack of clarity surrounding the regulation has left many Montana business owners frustrated.
“Most of the frustration comes from the unknown,” Johnson said. “Certainty is always best when you’re trying to conduct business, whether you're in agriculture or on Main Street. And that’s what we don’t have regarding this particular issue.”
The additional time and money required to comply only add to the burden. “You’ve got to spend time doing the reporting. You’ve probably got to spend money getting advice on what needs to be included, who qualifies, and who’s exempt. It’s going to be just a matter of gathering information and filling out the forms,” Johnson added.
Looking Ahead
For now, the future of the beneficial ownership reporting requirement remains uncertain. As the legal battles continue, Montana's agricultural producers and business owners are left in a holding pattern, preparing for a regulation that could reshape the way they operate.
For more information or to complete your filing, click here.
