The Federal Corporate Transparency Act (the “CTA”) has been rendered impotent but its State equivalent in New York, the New York LLC Transparency Law (the “NYLTL”) will become effective on January 1, 2026, with some important differences. Those with existing limited liability companies (”LLCs”), and those organized in the future, that are formed or authorized to do business in New York State must comply with the NYLTL regardless of the status of the CTA.

The CTA was enacted as part of the Anti-Money Laundering Act of 2020, to address concerns about money laundering, the financing of terrorism, tax fraud, human and drug trafficking, counterfeiting, piracy, securities fraud, financial fraud, and acts of foreign corruption. The CTA would require companies to provide governmental authorities with information about their beneficial owners and controlling persons.

Soon after its effectiveness on January 1, 2024, the CTA was attacked as unconstitutional in numerous federal courts. One court declared the CTA unconstitutional and permanently enjoined the United States Department of the Treasury (“Treasury”) and the Financial Crimes Enforcement Network (“FinCEN”) from enforcing the CTA against the plaintiffs in that case.

Treasury announced on March 2, 2025 that it will not enforce any penalties or fines for failure to file or update beneficial ownership information (“BOI”) and it will narrow the scope of the CTA to foreign reporting companies only. As so interpreted, the CTA excludes United States citizens, domestic companies, and their beneficial owners.

The NYLTL was based on the CTA, but has not been challenged and will be effective on January 1, 2026. The balance of this article will explore the differences between the two laws.

LLCs ONLY

Unlike the CTA, the NYLTL applies only to LLCs that are formed or authorized to do business in New York State. It does not apply to corporations or other entities, no matter where they are formed, or to LLCs formed in States other than New York unless they are authorized to do business in New York State. LLCs formed in New York (domestic LLCs) or authorized to do business in New York (foreign LLCs), unless exempt, must file a BOI with the New York Department of State (NYDOS).

DEFINITIONS

The NYLTL incorporates by reference the following four terms defined in the CTA, as amended, and any regulations promulgated thereunder: Beneficial Owner; Reporting Company; Exempt Company; and Applicant. Reporting Company in the NYLTL means limited liability companies formed or authorized to do business in New York State. All Reporting Companies must file with the New York Department of State (“NYDOS”) a beneficial ownership disclosure document in the form and manner directed by the NYDOS, identifying each Beneficial Owner of the Reporting Company and each Applicant with respect to that Reporting Company, by: (1) full legal name; (2) date of birth; (3) current home or business street address; and (4) a unique identifying number from: (if) an unexpired
passport; (ii) an unexpired state driver’s license; or (iii) an unexpired identification card or document issued by a state or local government agency or tribal authority for the purpose of identification of that individual.

Beneficial Owner means, with respect to an entity, an individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise (i) exercises substantial control over the entity; or (ii) owns or controls not less than 25 percent of the ownership interests of the entity. Applicant means any individual who (A) files an application to form an LLC under the laws of New York or (B) registers or files an application to register an LLC formed under the laws of a foreign State (a State other than New York) or country to do business in New York by filing a document with the NYDOS.

Exempt Company includes the 23 types of entities identified as exempt under the CTA, including companies subject to disclosure or regulation, such as public reporting  companies, investment companies, banks, broker–dealers, insurance companies, public accounting firms, tax-exempt entities, and governmental entities, and any entity that employs more than 20 persons on a full-time basis in the United States, has filed Federal income tax returns in the United States demonstrating more than $5.000.000 in gross receipts or income, and has an operating presence at a physical office within the United States.

All LLCs claiming an exemption under the NYLTL must electronically file, under penalty of perjury, an attestation of exemption on a form to be designated by the NYDOS, specifying the exemption claimed and the facts on which such exemption is based. The NYDOS has stated that it expects to issue guidance and regulations concerning exemption and filing procedures in or about late September 2025.

BOI DISCLOSURE REPORTING

All BOI disclosures, attestations of exemption, and filing fees shall be submitted electronically as prescribed by the NYDOS. The BOI disclosure or attestation
of exemption must be signed electronically. From and after January 1, 2026, within thirty days of the initial filing of articles of organization or an application for authority, (i) newly formed or authorized Reporting Companies must file a BOI disclosure with the NYDOS and (ii) newly formed or authorized Exempt Companies must file an attestation of exemption with the NYDOS. By December 31, 2026, (i) all previously formed or authorized Reporting Companies must file a BOI disclosure with the NYDOS and (ii) all previously formed or authorized Exempt Companies must file an attestation of exemption with the NYDOS.

Once the initial BOI disclosure has been filed, all Reporting Companies must electronically file with the NYDOS an annual statement that either confirms or updates: (1) their BOI disclosure information; (2) the street address of its principal executive office; (3) their status as an Exempt Company, if applicable; and (4) such other information as may be designated by the NYDOS.

Penalties

An LLC that fails to file its initial BOI, attestation of exemption, or annual statement when due will be shown in the NYDOS records as past due (if the failure to file exceeds 30 days) or delinquent (if the failure to file exceeds two years). The NYDOS may assess a fine of up to $500 per day for failure to file or update the report, and the LLC is deemed suspended and cannot conduct business in New York until such filing is made, a fine is paid, and the New York Attorney General verifies that any penalty has been paid. The New York Attorney General may also bring an action to dissolve or cancel any LLC that is delinquent in filing its BOI or attestation of exemption or otherwise violates the NYTA. Unlike the CTA, the NYTA does not impose a criminal penalty.

Confidentiality and access

The NYLTL provides that all information collected by the NYDOS will be maintained in a secure database and deemed confidential. The NYTA allows the NYDOS to share information respecting beneficial owners who are natural persons (1) pursuant to the written request of or by voluntary written consent of the beneficial owner; (2) by court order; (3) to officers or employees of another federal, state, or local government agency, where disclosure is necessary for the agency to perform its official duties or (4) for a valid law enforcement purpose. Any BOI disclosed shall not be further disclosed by any recipient except as authorized by law or as otherwise necessary to perform statutory duties. The NYTA does not require the NYDOS to notify the entity of the request or the disclosure, unless otherwise required by law. Conversely, the CTA requires FinCEN to notify the entity of the request or the disclosure unless otherwise prohibited by law.

Key compliance considerations

Enforcement of the CTA is uncertain at best, but the NYLTL significantly changes beneficial ownership reporting for LLCs in New York and imposes new compliance burdens and risks for LLCs that are formed or do business in New York. The consequences of not complain with the NYLTL include civil penalties and the possible disclosure of their beneficial ownership information to various authorities. LLCs should also monitor the implementation and enforcement of the NYLTL and CTA, as well as any future guidance or regulations that may clarify or modify the laws.