New York LLC Transparency Act Update

By Charlie Alovisetti, Daniel Molina

May 15, 2024

Enacted in 2021, the Corporate Transparency Act (CTA) took effect on January 1, 2024. With this act, Congress intended to combat illicit activity by requiring certain US businesses to disclose ownership information to FinCEN. Now, states are considering creating bills based on the CTA, with similar disclosure requirements. New York has become the first state to enact such a bill, the New York LLC Transparency Act (NYLTA).

Background on the New York LLC Transparency Act

New York Senate Bill 955B, called the New York LLC Transparency Act, was signed into law by Governor Hochul on December 22, 2023. The original bill language required the New York Department of State to maintain a public database of New York domestic and foreign LLCs and ownership information. In Approval Memo 91, the Governor expressed her concern about sensitive information that would have been publicly available under the original language, noting that “[t]he bill as drafted was overly broad and required changes to ensure it serves the core purpose of exposing unlawful activity while balancing personal privacy.” Because of this approval memo, the state legislature had to pass a chapter amendment to the original bill for the NYLTA law. (A chapter amendment is a bill the Legislature agrees to pass in exchange for the Governor signing another bill amending the same law.)

On March 1, 2024, the state legislature passed Senate Bill 8059, a chapter amendment to the NYLTA, and the governor signed it into law. The updated bill contained new filing deadlines, addressed privacy concerns, and included harsher penalties. This law affects New York businesses in all industries, so it is important to be aware of its requirements. Read on for summaries of key sections.

What Do Businesses Need to Know About the Law?

Only Applies to LLCs

The bill adopts specific definitions and exemptions from the federal Corporate Transparency Act. However, unlike the CTA—which also applies to corporations—the NYLTA only applies to LLCs (domestic and foreign qualified entities).

Timing & Deadlines

The NYLTA takes effect on January 1, 2026. In the meantime, the Secretary of State may promulgate regulations.

Within 30 days of filing an entity’s articles of organization or application for authority (for foreign LLCs), such entities must file the required disclosures or attestation of exemption.

Any LLC, domestic or foreign, that existed before the legislation's effective date must make the required filings by January 1, 2027.

Required Disclosures of Attestation of Exemption

If an LLC meets the requirements for exemption under the CTA, it does not need to file the necessary state disclosure but must still file an attestation of exemption.

Annual Statements

All LLCs must also file annual statements with the New York Department of State (DoS) confirming or updating (1) the street address of its principal executive office and (2) beneficial ownership disclosure information or status as an exempt company, if applicable.

Required Information

The disclosers must list the full legal name of the LLC's owners, the owners' date of birth, the LLC's current home or business street address, and a qualifying unique identifying number.

The secretary of state will maintain personal identifying information in a confidential, secured database. Such data will be accessible only by court order to government employees, law enforcement, or by request of the beneficial owner. (As noted above, more information was publicly available under the bill's original language.)

Fines

If an LLC fails to comply with the requirement for beneficial ownership disclosure, attestation of exemption, or annual statement for 30 days, the entity will show a "past due" status in the DoS’s records, and the attorney general may assess a fine of up to $500 for each day the company has been past due.

Suspension of Right to Do Business

Any reporting or exempt company that fails to file the applicable disclosure or attestation will be suspended and prohibited from conducting business in the state after a notice period. However, the DoS must give those companies 30 days advance notice of suspension.

False Information and Dissolution

The attorney general may also bring an action to dissolve or cancel any domestic entity that is delinquent or that has provided false information to the DoS. If a delinquent foreign LLC is doing business within the state, the attorney general may annul the foreign LLC’s authority to do business in the state. In either case, dissolved or annulled, the attorney general may also distribute the LLC’s in-state property to "those entitled to it according to their respective rights."

Compliance Going Forward

Any company that does business in New York should set a reminder to evaluate whether they will need to make any filings before January 1, 2026. Failure to follow the law will result in fines and the revocation of the ability to operate in New York. Like CTA filings, registered agent services assist companies with these filings and should also be able to help with the NYLTA.

Contact our Corporate Team if you have questions about the New York LLC Transparency Act.