A federal court has ordered a nationwide preliminary injunction halting enforcement of a law requiring the filing of private business ownership information with the federal government.

The Corporate Transparency Act (CTA) requires certain entities, including many farming operations and other small businesses, to report information about ownership to the Financial Crimes Enforcement Network (FinCEN). The CTA was originally passed to combat money laundering and organized crime funding, through numerous actions, including Beneficial Ownership Information (BOI) filing to FinCEN.

The filing requirement is expected to impact nearly 800,000 Illinois businesses, including over 5,000 farming operations in Illinois.

This will allow Congress and the Treasury Department time to adjust the implementation of this law to remove the unfortunate impact on honest citizens and their businesses. The added time will give these decision-making authorities time to fix the negative impacts on an estimated 5,000 Illinois farms and address the original intent of the law to combat money laundering and organized crime funding.

This also helps prevent thousands of innocent people being impacted by the potential civil penalties and criminal penalties for simply not complying because of the confusion caused by the requirements.

The preliminary injunction was ordered by the U.S. District Court in the Eastern District of Texas. The court’s decision was based on its assessment that the CTA and the Reporting Rule likely violate constitutional protections and are likely “outside of Congress’s power.”

All companies subject to the CTA’s reporting requirements are now exempt from filing beneficial ownership reports until further notice. However, FinCEN is likely to appeal the decision, which could change requirements. Those that meet FinCEN’s requirements are encouraged to continue to monitor developments and seek guidance from trusted advisers to determine compliance.

Prior to the injunction, those who didn’t report BOI to FinCEN by the Jan. 1, 2025, deadline or who failed to update information in the future could face civil ($591 per day of violation) and criminal penalties (up to two years imprisonment and a fine of up to $10,000).

The law has been clouded with uncertainty from farmers since it was passed, specifically concerning who is required to file and who will have access to the confidential data.

According to the legislation, any small business that files an incorporating document with their state business authority, including corporations, limited partnerships or limited liability companies (LLCs) are required to report. Specifically, “small entities” are any company with less than 20 employees and under $5 million in cash receipts.

Trade deficit

As the U.S. closes out fiscal year 2024 and looks toward 2025, farmers and ranchers are facing another year with an agricultural trade deficit.

The recent USDA Trade Outlook has U.S. ag trade running in the red for 2024 and 2025 and the updated forecast doesn’t give us much better news.

Last week's USDA trade outlook confirmed once again, that both fiscal years 2024 and 2025 are going to be record trade deficits in agricultural products. The fiscal year ‘24 deficit ended up being $31.8 billion. And fiscal year ’25, which started on October 1, is now forecasted at $45.5 billion. Mexico and Canada are leading the charge as the top destinations for US export markets.

Currently there are multiple factors driving the negative forecast. Fiscal year 2025, the USDA currently projects the third year in a row of declining exports by value, which combined with continuously climbing imports, exasperates the ag trade deficit. Declining exports by value are mostly still on sliding commodity prices with volumes of bulk commodities projected to stay steady year over year. Of course, any projections made now are still educated guesses, as we'll have to wait and see how the next administration's trade agenda shakes out.

A new report from the Department of Commerce shows the larger U.S. economy at a deficit as well.

The October trade data was published, and overall, the U.S. economy has a smaller trade deficit than forecasted in October, mostly on falling imports. Now, while overall exports fell in October, agricultural exports have had a year-to-date peak, which is pretty typical this time of year with large after-harvest exports.

“As history has repeatedly proven, one trade tariff begets another, then another - until you've got a full-blown trade war. No one ever wins, and consumers always get screwed.” -Mark McKinnon

Ron Kern is the manager of the Ogle County Farm Bureau.