CSG Law: New York LLC Transparency Act Becomes Law: The Empire State’s Take on the Federal Corporate Transparency Act

Starting next year, New York plans to pull back the curtain on limited liability companies (LLCs) by ending anonymous ownership.

On December 23, 2023, New York Governor Kathy Hochul signed the New York LLC Transparency Act (the “NY Act”), and, as of January 1, 2025 (the “Effective Date”), LLCs in New York must report beneficial ownership information to New York’s Department of State. The NY Act’s reporting requirements are similar to those under the federal Corporate Transparency Act (the “CTA”), as outlined by the US Department of the Treasury’s Financial Crimes Enforcement Network (“FinCen”).

Similarities between NY Act and the CTA

Reporting companies in New York may satisfy the NY Act by submitting a copy of the same report filed with FinCen under the CTA. That report must include each beneficial owner’s full legal name, date of birth, and current business street address, along with a unique identifying number from any acceptable identification document (i.e. driver’s license, passport, etc.).  Reports are required unless an LLC meets an exemption specified under the CTA.

Differences between NY Act and the CTA

Unlike the CTA, the NY Act requires only LLCs to report beneficial ownership information. Corporations, limited partnerships and other entities formed or qualified to do business in the State of New York are not subject to the NY Act.  Additionally, exempt companies, notwithstanding the exemption, must file an exemption statement with the New York Department of State.  There is no similar affirmative filing obligation related to claiming an exemption under the CTA.  An exemption statement must be filed: (i) by January 1, 2025, if formed or qualified to do business in New York on or before the Effective Date, (ii) with the articles or organization, if a domestic LLC is formed after the Effective Date, or (iii) with the application for authority to do business in New York, if a foreign LLC is qualified in New York after the Effective Date. Moreover, any changes to the beneficial ownership of an LLC, post-filing, must be reported to the Department of State within 90 days of such change.  The CTA provides for a 30-day period to report the change.

Finally, although under the CTA FinCen maintains a non-public database accessible only in certain circumstances by authorized entities, under the NY Act, the full legal name and current business address of LLC beneficial owners will be made publicly available. Beneficial owners may apply for a waiver to exclude their name, address or both from the public database but it is unclear at this time whether and under what circumstances such waivers will be granted.

Penalties under NY Act

Reporting LLCs failing to file the initial beneficial ownership report under the NY Act for more than two years will be deemed delinquent by the Department of State, which will remove the delinquency only upon that LLC’s proper filing of the report and payment of a $250 fee.  Until such time as the report is duly filed and the $250 fee is paid, the LLC may be deemed by the State of New York to not be in good standing.

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