Table of Contents:
What is the New York LLC Transparency Act (NYLTA)?
On December 22, 2023, Governor Kathy Hochul of New York signed into law Senate Bill 995B/Assembly Bill 3484A, marking a pivotal moment for Limited Liability Companies (LLCs) operating within the state. This legislation, known as the New York LLC Transparency Act (NYLTA), was significantly amended on March 1, 2024, changing the trajectory of this reporting requirement for entities domiciled in New York.
Key Provisions of the NYLTA
Under the NYLTA, both domestic LLCs formed in New York and foreign LLCs authorized to do business in New York must file beneficial ownership information (BOI) with the New York Department of State.
This requirement aligns with the federal Corporate Transparency Act (CTA), targeting LLCs that must file a beneficial ownership information (BOI) report with the Financial Crimes Enforcement Network (FinCEN). Exempt LLCs under the CTA, and thus the NYLTA, must submit a statement to the New York State Department, signed by a company member or manager, indicating the exemption provisions they qualify under.
Companies subject to reporting requirements must disclose beneficial owners’ full legal names, dates of birth, current business street addresses, and a unique identifying number from an acceptable document (e.g., US passport, driver’s license). The NYLTA’s definition of a “beneficial owner” mirrors the definition under the CTA as any individual who, directly or indirectly, exercises substantial control over the LLC or owns at least 25% of its ownership interests.
New York LLCs formed or registered before January 1, 2026, will have until January 1, 2027 to disclose their beneficial owner information to the state. Those formed after the effective date must report their BOI to the state the same day that they file formation documents. Failure to file within 30 days places an LLC in the public database with the status of “Past Due, escalating to “Delinquent” if the failure extends beyond two years without rectification.
The NYLTA introduces a dynamic aspect to compliance through its updating requirements. The March 1, 2024, amendment transformed the obligation into an annual confirmation or update of BOI or exempt status. This requirement varies greatly from that of the CTA, since the CTA requires that updates be filed within 30 days of a change. Also, the NYLTA sets a 90 day requirement on corrected reports, while the CTA’s is 30 days.
Privacy Considerations and Access to Information
Addressing privacy concerns, the NYLTA initially planned for a publicly accessible database of beneficial owners. However, the chapter amendment revises this approach, ensuring personal identifying information submitted under the LLCTA remains confidential. This measure balances the demand for transparency with the need to protect individual privacy, making information accessible solely for law enforcement or as required by court orders.
Submitting CTA BOI Reports to New York
The chapter amendment permits an entity to submit their initial BOI Report filed under the CTA, provided that all necessary information as required by the NYLTA is included. While this may help reduce reporting efforts, it is not applicable to all entities. Specifically, individuals and entities who obtain and report FinCEN Identifiers (FinCEN IDs) would prevent the NY entity from submitting that report to the state. This is because the information associated with a FinCEN ID is not accessible to the Secretary of State, resulting in an initial report that lacks the required information under the NYLTA.
Looking Ahead
The enactment of the NYLTA signifies a move towards greater transparency and accountability in the operations of LLCs in New York. As the legislative landscape continues to evolve, with amendments and potential replacements on the horizon, LLCs must stay vigilant and prepared to adapt to these new regulatory demands. The extended timelines and revised provisions offer entities additional time to align with the NYLTA’s requirements, underscoring the importance of proactive compliance and the ongoing dialogue between the state legislature, regulatory bodies, and the business community.
