On March 1, 2024, New York State Governor Kathy Hochul signed a revised version of the state’s LLC Transparency Act (NY LLCTA) into law. This law was modeled after the Federal Corporate Transparency Act (CTA). The CTA requires reporting companies to report the identities of their beneficial owners to the Financial Crimes Enforcement Network (FinCEN), a move aimed at curbing illicit financial activities and enhancing transparency. As the first state to enact a law like this, New York sets a precedent for other states considering similar legislation. Effective January 1, 2026, non-exempt LLCs in New York will face heightened reporting obligations. 

The enactment of the revised LLC Transparency Act is a significant development in corporate transparency. Governor Hochul’s signing of this law signals New York’s commitment to align state regulations with federal standards, reinforcing the state’s oversight of LLC ownership.

The LLCTA mandates that all LLCs formed in or registered to do business in New York make annual filings with the New York Department of State. Beginning January 1, 2026, all non-exempt LLCs formed or registered to do business in New York must report detailed personal information about their beneficial owners and applicants. Additionally, LLCs claiming exemptions must file annual attestations detailing the basis for their exemptions. 

To ensure compliance with these new requirements, companies must begin preparations promptly. Companies, with their attorneys, should be assessing whether they must file reports under the NY LLCTA, analyzing exemption eligibility, and identifying beneficial owners and applicants. Engaging legal counsel can help ensure thorough preparation and compliance with the new requirements.

The NY LLCTA adopted FinCEN’s definitions of beneficial owners and applicants. Beneficial owners are individuals who own or control at least 25% of the LLC or exercise substantial control over it. This includes senior officers, individuals with authority over senior officers or the board of directors, and those influencing major company decisions. Applicants are individuals who filed or directed the filing of papers with the Department of State to form the LLC or register it to do business in New York. Non-exempt LLCs must report the full legal name, date of birth, current home or business street address, and an identifying number from a government-issued document (e.g., driver’s license, passport) for both beneficial owners and applicants. The personal information reported will be confidential and accessible only with consent, court orders, or for law enforcement purposes. The NY LLCTA originally made reported BOI (business owners information) widely available to the public on a searchable database—however, the amendment to the NY LLCTA limited access, similar to the CTA’s access rules.

Entities claiming exemptions must submit annual attestations, unlike FinCEN’s BOI Rule, which does not require exempt entities to file any documentation. This difference necessitates careful attention to ensure compliance. The NY LLCTA requires information about applicants even if the LLC was formed before January 1, 2026. This could pose challenges for older LLCs due to potential difficulties retrieving historical data.

LLCs existing on or before January 1, 2026, must file their initial reports by December 31, 2026, while new LLCs formed after Jan 1, 2026, must file within 30 days of formation or registration. Annual updates are required to confirm or update beneficial ownership information, the principal executive office address, and exempt status. The NY LLCTA’s annual reporting requirement differs from FinCEN’s BOI  Rule, which mandates updates within 30 days of any changes. Businesses subject to both rules must be vigilant in maintaining compliance with each set of requirements.

Penalties for failing to comply with the NY LLCTA include automatic suspension of the LLC after 30 days’ notice, preventing it from conducting business in New York. The Attorney General may also impose late fees of $500 per day and potentially dissolve or annul the LLC’s authority to operate in New York if non-compliance persists for over two years. While criminal penalties do not apply, the law prohibits providing false information. 

Despite similarities to FinCEN’s BOI Rule, fundamental differences exist, necessitating careful compliance with all laws and updates. As other states consider similar laws, businesses must stay informed and proactive. Engaging experienced legal counsel, like Lengea Law, can provide critical guidance and support in navigating these complex regulatory landscapes. If you have questions about these new updates or want to ensure compliance for all aspects of your business, we’re here to help. At Lengea Law, we focus on healthcare law and have extensive experience guiding clients through all aspects of the company. If your practice needs advice on regulatory compliance, please contact us for a complimentary 15-minute consultation.

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This blog is for informational purposes only and does not constitute legal advice. Please consult a legal professional for advice specific to your situation.

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