New reporting requirement creates uncertainty among Montana businesses and agricultural producers
A new federal regulation on beneficial ownership reporting has sown confusion among business owners across the United States, with Montana’s agricultural community facing particularly severe consequences.
The requirement, which requires companies to disclose information about their “beneficial owners” – those who own or control the company – to the Financial Crimes Enforcement Network (FinCEN), would come into effect on January 1, 2024. Recent legal challenges have temporarily halted its implementation.
Impact on Montana agriculture
Cynthia Johnson, president of the Montana Farm Bureau, emphasized the broad reach of this ordinance, saying, “Montana agriculture has many agriculture-related businesses. All of those small businesses are also affected because anyone who organizes in any way and files with the state of Montana is subject to these filing requirements.”
For many small business owners, the new rule poses 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 orders have left the rule in limbo.
“The reporting requirement for beneficial ownership information for agriculture is evolving,” Johnson explains. “We were prepared to file, but an order was issued in early December. That was destroyed and then put back in place, destroyed again. This is no longer a requirement since two days after Christmas. It is effectively suspended until all legal arguments can be made.”
Consequences of non-compliance
When the rule eventually goes into effect, noncompliance could result in significant fines. Companies that fail to do so face fines of up to $10,000 and additional criminal penalties, including jail time.
Johnson stressed the importance of being prepared to comply despite the current legal uncertainty. “I think everyone should be willing to file, even if there is no deadline anymore,” she said.
Companies struggle with uncertainty
The lack of clarity around regulations has left many Montana business owners frustrated.
“Most of the frustration comes from the unknown,” Johnson said. “Certainty is always the best thing when you’re in 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 adds to the burden. ‘You have to spend time on reporting. You’ll likely have to spend money to get guidance on what should be included, who is eligible, and who is exempt. It will just be 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 battle rages on, Montana agricultural producers and business owners are in something of a holding pattern as they prepare for regulations that could reshape the way they operate.
For more information or to complete your file, click here.