As we reported earlier, the federal Corporate Transparency Act (the “CTA”) now requires most small corporate entities to report ownership information to the Financial Crimes Enforcement Network of the U.S. Treasury Department. New York has adopted its own version of the legislation, the New York LLC CTA. Signed into law by Governor Kathy Hochul on March 1, 2024, the NY LLCTA—like the federal CTA—is intended to combat money-laundering and financers of terrorism.
Codified as part of the New York State Limited Liability Company Law, New York’s LLCTA incorporates by reference some elements of the federal CTA, such as definitions and exceptions. There are differences, however.
Who?
The NY LLCCTA requires limited liability companies (“LLCs”)—and only LLCs—formed or qualified to do business in New York State to file information about their owners with the Secretary of State.
The New York State law applies to the same sorts of “reporting companies,” and excludes the same sorts of “exempt companies,” as the federal act. However, the New York State law requires exempt LLCs to attest to their exempt status under penalty of perjury; the federal statute includes no such periodic requirement.
What?
LLCs must file with the Secretary of State the following information about each “beneficial owner” and “applicant”:
- full legal name;
- date of birth;
- current home or business street address; and
- passport identification number, or the identifying information from a state driver’s license, or other state ID.
When?
Each LLC formed or qualified to do business in New York prior to Jan. 1, 2026, has until Jan. 1, 2027, to comply. LLCs formed or qualified to do business in New York on or after January. 1, 2026, will have 30 days to comply initially with the new reporting requirements.
Unlike the federal program, the NY LLCTA requires LLCs to file annual updates with the New York Secretary of State, starting in 2026.
New York’s LLCTA provides that an LLC that fails to file its annual update will be deemed suspended, i.e., not in good standing. That would mean a default under most lending arrangements. A suspended LLC also may not be able to maintain litigation.
The penalty for failing to file the initial report or the subsequent annual report may be a fine of up to $500 a day.
Unlike the federal CTA, the New York statute does not establish criminal penalties for non-compliance.
Of CounselA transactional lawyer working closely with business clients, Noel Humphreys actively participates in the ins and outs of business organizations. He focuses his practice on business transactions, lending transactions ...