​Over the last two years, fights over the federal Corporate Transparency Act (CTA) have caused confusion for many business owners. The concerns were mostly resolved earlier this year, as discussed in a prior post. In the interim, New York passed its own transparency law, which will go into effect on January 1, 2026. Importantly, there are significant differences between the statutes that owners must understand to avoid penalties and other consequences.

Federal Corporate Transparency Act

The federal CTA states that “reporting companies” must provide beneficial ownership information (BOI) to the Financial Crimes Enforcement Network, or FinCEN. Originally, the CTA defined reporting companies broadly, encompassing all corporations and limited liability companies registered to do business in the U.S. with certain limited exceptions. However, under the current version, reporting companies are limited to entities formed under the law of a foreign country and registered to do business in any U.S. State or tribal jurisdiction. Notably, foreign entities only have to report the beneficial ownership information of foreign persons, not “U.S. persons.” Companies based in the U.S. are exempt from reporting entirely.

While the scope of the federal law was being debated, New York passed its own version, which more closely mirrors the original CTA.

New York LLC Transparency Act

Under the new law, all LLCs formed or registered to do business in New York will be required to file similar beneficial ownership information as required by the federal Corporate Transparency Act.

However, while LLCs must file the same type of information as under the federal law, New York’s law applies much more broadly. The federal CTA is limited to foreign entities. New York’s definition of a reporting company is totally independent of FinCEN’s and requires all LLCs formed under the laws of New York or registered to do business in New York to disclose beneficial ownership information of the LLCs, with a few exceptions. The penalties for non-compliance range from a monetary penalty to suspension of the LLC or even dissolution of the LLC entirely.

The key point for LLC owners is that they will have to report BOI under New York’s law, regardless of whether they have to report under the CTA. The federal law does not supersede New York law.

If you would like to learn what this means for you or your company, please contact one of our trusted attorneys.