Reminder: New York’s Limited Liability Company Transparency Act Goes into Effect January 1, 2026

New York has updated its Limited Liability Company Transparency Act (NYLLCTA) through Senate Bill S8432 to create New York-specific standards for beneficial ownership reporting. These updates are designed to decouple the NYLLCTA from federal law to ensure that Limited Liability Companies (LLCs) formed or authorized to do business in New York are still subject to state disclosure obligations. The NYLLCTA goes into effect on January 1, 2026.

Key Takeaways

• New York's Limited Liability Company Transparency Act (NYLLCTA) has been updated to establish state-specific standards for beneficial ownership reporting, separate from federal regulations, and takes effect on January 1, 2026.
• The updated NYLLCTA includes new definitions for key terms like "beneficial owner," "reporting company," and "exempt company."
• New LLCs must comply with NYLLCTA disclosure requirements within 30 days of formation, effective January 1, 2026, while existing LLCs must adhere by January 1, 2027, or face accumulating penalties, underscoring the importance of timely compliance.
• Failure to comply with the NYLLCTA could result in public disclosure of noncompliance, monetary penalties, loss of good standing, and the inability to utilize the New York PTET deduction.

Why the NYLLCTA Was Updated

The original NYLLCTA, enacted in December 2023, required certain domestic and foreign LLCs to disclose beneficial ownership information to the New York Department of State. As drafted, the statute relied on definitions from the Corporate Transparency Act (CTA) for compliance guidance, including what entities were exempt from reporting. In April of 2025, the CTA was effectively nullified for domestic corporations and their owners through updated regulations. Accordingly, New York needed to develop its own definitions and exemptions to ensure that the NYLLCTA remains enforceable.

Key Changes to the NYLLCTA

The bill amended the definition of “beneficial owner,” “reporting company,” and “exempt company” for purposes of the NYLLCTA.

Beneficial Owner

The LLCTA defines a “beneficial owner” as any individual who directly or indirectly:

1. exercises substantial control over the entity; or
2. owns or controls at least 25 percent of the ownership interest of the entity.

Under this definition, “control” can be through any contract, arrangement, understanding, or relationship.

Reporting Company

A reporting company is defined as an LLC formed in New York or authorized to do business in the state. It excludes certain entities, such as registered securities issuers, banking organizations, credit unions, brokers and dealers, insurance companies, public utilities, investment advisors, pooled investment vehicles, and large operating companies that meet minimum employee, revenue, and physical presence thresholds. While similar, these exclusions no longer match the twenty-three exemptions under the CTA.

Exempt Company

The legislation exempts an LLC or foreign LLC if it meets one or more of the following criteria:

• A minor child (under age 18) owns the LLC
• An individual acts solely as a nominee, intermediary, custodian, or agent
• An individual derives control or economic benefit solely from employment
• An individual holds an interest in the LLC only by inheritance
• A creditor of the LLC does not meet beneficial ownership thresholds

Implementation and Compliance

The updated NYLLCTA takes effect on January 1, 2026. LLCs formed or authorized to do business in New York on or after January 1, 2026, must file either a beneficial ownership disclosure or an attestation of exemption within 30 days of formation. LLCs formed before January 1, 2026, will have until January 1, 2027, to comply with the NYLLCTA requirements. Both new and existing LLCs must update their information annually or whenever significant ownership changes occur, such as mergers, acquisitions, or succession events. It should be noted that this requirement appears to include any LLCs that elected to be treated as an S corporation for tax purposes.

The New York Department of State may fine any entity up to $500 per day if it fails to file its required disclosure (including attestation of exemptions) for more than 30 days. If an entity fails to do so, the Department will suspend the entity’s authority to conduct business in New York. Once the entity complies with the NYLLCTA requirements, the Department will lift the suspension.

Failure to comply with NYLLCTA requirements can result in public disclosure of noncompliance, monetary penalties, and loss of good standing, which may impair the entity’s ability to conduct business or complete transactions. Additionally, entities that fall out of good standing may be ineligible to make or maintain elections under the New York Pass-Through Entity Tax (PTET) regime, potentially losing access to valuable state tax benefits. Proactive compliance is critical to preserve tax planning opportunities and avoid reputational and financial risks.

While the CTA is no longer a concern for domestic companies and their owners, New York LLCs will still be subject to disclosure requirements. New York businesses should check that their ownership structures, filings, and internal processes are prepared to meet the disclosure obligations by January 1, 2026.