New York Emerges as Epicenter of Corporate Transparency
New York State’s LLC Transparency Act (“Act”) initially became law in December of 2023, before Governor Hochul signed a slightly revised version of the Act on March 1, 2024.[1] The Act is scheduled to take effect on January 1, 2026. Once in effect, the Act will require limited liability companies formed or authorized to do business in New York to disclose certain specified information about their beneficial owners to the New York Department of State.[2] The provisions of the Act, including the information that must be disclosed and the penalties for not doing so, are discussed in detail in our prior article “New York State Revises Its BOI Reporting Law. Thank You New York!”[3]
Although the Act will become effective in just a couple of months, there is a great deal of uncertainty surrounding the Act at the moment. That is because, as things currently stand, definitions in the Act indicating what companies have to make the required disclosures to the Department of State (“reporting companies”) and what companies will be exempt from reporting (“exempt companies”) are tied to the federal Corporate Transparency Act (“CTA”) on which the Act is based.[4] The problem is that since first the CTA and then the Act became law, federal regulators have exempted from the scope of the CTA all entities, including closely held corporations and limited liability companies, created in the United States. This means that limited liability companies formed in New York or formed in another U.S. jurisdiction but authorized to do business in New York (unlike the CTA, the Act only applies to limited liability companies, and not corporations) do not have to report their beneficial ownership information to federal regulators, but, come January 1, 2026, they will still be required to disclose such information to, or file an attestation of exemption with, the New York Department of State. In June of this year, New York’s Legislature passed a bill trying to deal with this problem, but it has not yet become law, which is why there remains confusion as to what may be required in New York once the Act takes effect.
Here are the particulars in more detail. Four important terms used in the Act are defined by reference to corresponding definitions set forth in the CTA or, importantly, its implementing regulations.[5] Relevant here, the Act currently defines a “reporting company” — that is, a company that has to disclose specified beneficial ownership information to the Department of State — to “have the same meaning as defined in 31 U.S.C. § 5336(a)(11), as amended, and any regulations promulgated thereunder, but shall only include limited liability companies formed or authorized to do business in New York state.”[6] And the Act currently defines an “exempt company” to “mean a limited liability company or foreign limited liability company not otherwise defined as a reporting company that meets a condition for exemption enumerated in 31 U.S.C. § 5336(a)(11)(B).”[7] As suggested by this definition of “exempt company,” the CTA, unlike the Act, does not actually define “exempt companies” separately, but instead enumerates more than 20 exemptions from what is included in the definition of a “reporting company” under the CTA.[8]
The last exemption from the definition of what is a “reporting company” under the CTA is for “any entity or class of entities that the Secretary of the Treasury, with the written concurrence of the Attorney General and the Secretary of Homeland Security, has, by regulation, determined should be exempt from the [beneficial ownership information reporting] requirements” of the CTA.”[9] The relevant federal regulator, the Financial Crimes Enforcement Network (“FinCEN”) of the U.S. Department of the Treasury, adopted an interim final rule which took effect on March 26, 2025.[10] In the interim final rule, FinCEN changed the definition of “reporting company” to include only “[a] corporation, limited liability company, or other entity” that is “[f]ormed under the law of a foreign country,” and “registered to do business in any [U.S.] State or tribal jurisdiction.”[11] In other words, it is only foreign companies registered to do business in the United States which are now required to file their beneficial ownership information with FinCEN under the CTA and its implementing regulations.
Because the Act defines “reporting company” by reference to the CTA “and any regulations promulgated thereunder,”[12] this change made by FinCEN’s interim final rule means that, as things currently stand, limited liability companies formed in New York or in another U.S. jurisdiction and registered to do business in New York are not “reporting companies” required to disclose their beneficial ownership information to the Department of State, contrary to the entire purpose of the Act. However, a limited liability company formed or registered in New York may still qualify as an “exempt company” under the Act, that is, a company “not otherwise defined as a reporting company that meets a condition for exemption enumerated in” the CTA.[13] In that event, such a company would still have to go to the trouble of filing an “attestation of exemption” with the Department of State.[14]
The New York Legislature tried to deal with these issues through Senate Bill S8432, which, according to the sponsor memo, “incorporates statutory definitions from federal law in order to inoculate the LLC Transparency Act from shifting federal guidelines or attempts to repeal the CTA and to provide certainty and reduce confusion as a result of changes in federal regulation.”[15] To that end, S8432 proposes to amend the Act by, among other things, revising the definitions of “reporting company” and “exempt company.” “Reporting company” would no longer be defined by reference to the definition in the CTA (31 U.S.C. § 5336(a)(11)) but would instead incorporate most of the actual definition of “reporting company” set forth in the CTA, except for the final exemption for entities determined to be exempt by FinCEN, which in the Act would now cover entities determined to be exempt by the Department of State.[16] And “exempt company” would no longer be defined by reference to 31 U.S.C. § 5336(a)(11)(B) but would rather mean a company not otherwise defined as a “reporting company” that is owned by certain specified classes of individuals, such as a minor child.[17]
S8432 passed the New York Senate on June 13, 2025, and the Assembly on June 17, 2025.[18] The bill was not, however, signed into law before the Legislature recessed in June but remains active and awaits further action when the Legislature reconvenes beginning on January 7, 2026. That, of course, is after the Act takes effect on January 1, 2026, which is why there is so much uncertainty surrounding the status of the Act. As things currently stand, it appears that, beginning on January 1, newly formed or registered limited liability companies would have to file an attestation of exemption within 30 days of formation or registration in New York, and all previously formed or registered companies would have to file an attestation of exemption by January 1, 2027, even though that is not what the Legislature had in mind when it passed the Act.[19]
[1] The Act is codified at N.Y. L.L.C. Law §§ 1106, 1107, and 1108.
[2] See N.Y. L.L.C. Law § 1107.
[3] See eMinutes, New York State Revises Its BOI Reporting Law. Thank You New York! (Apr. 8, 2024). We also have more specific articles on the penalties for violating the Act, handling exemptions from the Act’s disclosure requirements, and submitting identification sufficient to satisfy the Act’s requirements. See eMinutes, Submission of Identification to Satisfy New York State’s BOI Reporting Law (Jan. 31, 2025); eMinutes, New York State’s BOI Reporting Law Has Some Real Teeth (Jan. 30, 2025); eMinutes, Handling Exemptions Under New York’s BOI Reporting Law (Jan. 29, 2025).
[4] The CTA is codified at 31 U.S.C. § 5336.
[5] See N.Y. L.L.C. Law § 1106.
[8] See 31 U.S.C. § 5336(a)(11).
[9] See id. § 5336(a)(11)(xxiv).
[10] See FinCEN, Beneficial Ownership Information Reporting Requirement Revision and Deadline Extension, 90 Fed. Reg. 13,688 (Mar. 26, 2025). FinCEN indicated that it acted “with the written
concurrence of the Attorney General and the Secretary of Homeland Security.” Id. at 13,691.
[11] 31 C.F.R. § 1010.380(c)(1)(ii) (emphasis added).
[12] N.Y. L.L.C. Law § 1106(b).
[14] See id. § 1107(b); eMinutes, Handling Exemptions Under New York’s BOI Reporting Law (Jan. 29, 2025).
[15] See The New York Senate, Senate Bill S8432, Sponsor Memo.
[16] N.Y. Senate Bill S8432 § 1.
[17] Id.
[18] See The New York Senate, Senate Bill S8432, Current Bill Status.