New Amendments to the New York LLC Transparency Act

On March 1, 2024, New York enacted 2023 Bill Text NY S.B. 8059 (the “Amendment”), which amended the New York LLC Transparency Act (the “NYLTA”) that had been passed only a few months earlier. Certain of the changes were anticipated by the legal community, given the chapter amendment which had been informally agreed upon between Governor Hochul and key legislative leadership members when the NYLTA was originally signed in December 2023. However, the Amendment also included many other unexpected modifications.

The NYLTA continues to be similar to the federal Corporate Transparency Act (the “CTA”), and to incorporate many of the CTA’s defined terms by reference. There also continues to be some significant differences between the NYLTA and the CTA, including a number of new differences arising from the Amendment. This Client Alert summarizes certain key provisions of the amended NYLTA which may be applicable to you, and some of the key differences between the amended NYLTA and the CTA. 

What Does the NYLTA Require?

While the Amendment implements a number of significant substantive changes as compared to the original NYLTA statute, the core substance of NYLTA remains largely intact – it requires a “reporting company” (as defined below) which is not exempt to file reports (“BO reports”) with the New York Department of State (the “DOS”) disclosing information regarding its direct and indirect “beneficial owners” (as defined in the CTA).

• Changes in the Amendment: As revised by the Amendment, the NYLTA’s effective date has been pushed back by two years and is now January 1, 2026.

What Companies are Subject to the NYLTA?

Although the CTA and the NYLTA both apply to any “reporting company”, that term is defined more narrowly under the NYLTA – it only includes a limited liability company (“LLC”) (not to corporations or other entities) and only if they are formed as a New York company or registered to transact business with the DOS. 

The NYLTA exempts LLCs from being a “reporting company” through use of the same 23 exemption categories set forth in the CTA, which are incorporated by reference to the CTA exemptions. A key departure from the CTA’s exemptions approach is that, in order to qualify for an exemption under the NYLTA, the LLC must file an exemption statement with the DOS indicating the exemption that it is relying upon. The form of exemption statement has not yet been made available by the DOS.

• Changes in the Amendment: The exemption statement now must also recite the facts upon which the claimed CTA exemption is based.

What Reports Must Be Filed Under the NYLTA?

The form of BO report has not yet been made available by the DOS. However, the disclosure will require each beneficial owner’s legal name, date of birth, business address, and the unique identifying number from a driver’s license, passport or other acceptable identification document.

• Changes in the Amendment: A beneficial owner’s home address may now be used instead of a business address

Some key differences between the disclosures required under the CTA and the NYLTA are:

Also, unlike the CTA, the NYLTA requires no disclosures regarding “company applicants”.

Can an LLC Satisfy the NYLTA by Submitting its CTA Report to the DOS?

Although the original NYLTA statute contemplated that CTA reports filed with FinCEN could be used to satisfy NYLTA reporting obligations, the Amendment deletes such provisions.

• Changes in the Amendment: CTA reports filed with FinCEN now cannot be used to satisfy NYLTA reporting obligations.

What if There is a Change in Information after a NYLTA Report or Exemption Statement is Filed?

The original NYLTA statute only required BO reports to be amended at such time (if any) as the LLC’s articles of organization were amended, and was silent as to exemption statement updates.

• Changes in the Amendment: After the initial BO report or exemption statement is filed, the LLC must now make annual update filings to (i) reflect changes to the information in the BO report (e.g., an address change or new beneficial owners) or exemption statement (e.g., a change in the facts upon which its CTA exemption is based) or (ii) confirm that the information is unchanged.

These revised NYLTA annual update rules differ from the CTA rules, which require CTA reports to be amended within 30 days of any changes in the reported information but does not otherwise require annual filings.

When Must the Beneficial Ownership Report or Exemption Statement Be Filed?

The initial filing date of a beneficial ownership disclosure, in the case of a reporting company, or exemption statement, in the case of an exempt company, depends on when the reporting company was first formed or registered to do business in New York through the filing of a document with the DOS: 

• Changes in the Amendment: The foregoing dates are revised deadlines which reflect a 2 year delay of the 2024/2025 implementation dates contemplated by the original NYLTA statute. Also, BO report and exemption statements are no longer required to be filed simultaneously with the LLC’s formation or foreign registration; they can be filed up to 30 days thereafter.

What are the Penalties for Past Due Filings under the NYLTA?

The original NYLTA statute provides that, if the LLC fails to timely make the requisite filing of its beneficial ownership disclosure or exempt company statement (as applicable), then:

• If more than 30 days past due, the LLC will be shown on the DOS records to be “past due” until a  beneficial ownership disclosure (with up-to-date information) is filed.
• If more than 2 years past due, the DOS will mail a delinquency warning notice to the LLC. Unless the delinquency warning is remedied with 60 days of the mailing, the LLC will be placed in “delinquent” status on DOS records. Such “delinquency” status will be removed from the DOS records if the missing BO report is filed (with up-to-date information) and a $250 penalty is paid.

The Amendment revises the NYLTA’s penalties section to give the statute more teeth, and compliance should not be taken lightly.

• Changes in the Amendment: While there are still no criminal penalties, the amended NYLTA includes a number of additional enforcement measures and penalties for past due or delinquent LLCs:
  • The DOS may refer any past due or delinquent LLCs to the New York State Attorney General (the “AG”) for investigation, and the AG may:
    • assess a fine of up to $500 for each day past due or delinquent (similar to the CTA’s civil penalties), which must be paid in full (in addition to the base $250 penalty) before any “past due” or “delinquent” status can be removed; and/or
    • bring an action to dissolve or cancel, or annul the foreign registration of, any LLC which is in “delinquent” status. A court can grant such relief in its discretion.
• Any LLC that fails to make a timely filing may also be suspended by the DOS upon 30 days’ notice. A suspended LLC shall not conduct business in New York State until it makes its past due filings, at which point the suspension shall be deemed annulled and all corporate powers, privileges and immunities shall be restored retroactively.[1]
• The DOS is also now allowed to impose these enforcement measures and penalties on any LLC whose annual confirmation/update of a BO report or exemption statement is past due.

What are the Penalties if a NYLTA Report includes False Information?

The original NYLTA did not expressly address the consequences for providing false or fraudulent information in a NYLTA report or exemption statement.

• Changes in the Amendment: NYLTA exemption statements must now be signed under penalty of perjury. Although BO report filings are not similarly signed under penalty of perjury, another provision of the Amendment makes it unlawful to knowingly provide, or attempt to provide, false or fraudulent BO information, including a false or fraudulent identifying photograph or document, to the DOS.
  
  Good faith errors or omissions can be corrected without penalty if the filing is amended within 90 days after submission of the BO report.  The DOS may refer any LLC violations to the AG for investigation.

Are the NYLTA filings Accessible to the Public?

The original NYLTA statute made beneficial owners’ names and business addresses (but not the other information in the BO reports) available to the public on the DOS website, unless the owner qualified for certain limited confidentiality exceptions.

• Changes in the Amendment: The amended NYLTA requires that all beneficial owner information be held by the DOS confidentially, with access limited to law enforcement and certain government authorities or as required by court order. The DOS can also disclose a beneficial owner’s information  if such BO voluntarily consents in writing.

Has the New York DOS Published any Guidance Regarding the NYLTA?

No. As of the date of this client alert, the DOS has not yet published any guidance regarding the NYLTA.

Are there Vendors that Specialize in Providing Assistance with the Mechanics of Preparing and Filing Reports under the NYLTA?

We expect that online filing service vendors will be available to assist companies with the preparation and filing of BO reports under the NYLTA, including some of the vendors who currently provide such services with respect to the CTA.

Do such Filing Service Vendors Provide Legal Advice Regarding CTA Compliance?

No. While filing service vendors can assist you with the mechanics of filing reports under the NYLTA, these vendors do not provide substantive legal advice.

What if I have Legal Questions?

Our firm has closely followed the NYLTA since it was enacted and will continue to monitor it for any updates. Thus, while generally we will not be filing NYLTA reports on behalf of our clients, we will be available to consult with our clients and answer any questions they may have about the legal requirements related to potential obligations under the NYLTA and the completion of reports.

If you would like assistance from our law firm, including how the NYLTA may affect you, please do not hesitate to contact your Windels Marx relationship lawyer or one of the following members of our Corporate and Securities Practice Group: Charles Damato, Christopher Dean, Benjamin Fink, Jonathan Gray, Gregory Krauss, Jonathan Kret, Michael Moriarty, Robert Rossi or Robert Schwartz.

Disclaimer

Possession of this material does not constitute an attorney/client relationship. This information is provided for your convenience and does not constitute legal advice. It is prepared for the general information of our clients and other interested persons and it may include links to websites other than the Windels Marx website. This information should not be acted upon in any particular situation without first consulting with an attorney and obtaining legal advice based on your facts and circumstances.

Jonathan Gray
Partner
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