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Editorial 7 MIN READ

New York's own transparency act, and the California bill that died

Albany built a state twin of the federal beneficial ownership regime; Sacramento chose not to

The Editors
Staff, Incorporator.org
7 min read Updated
Contents 7 sections
  1. What the New York statute actually does
  2. The fees, the penalties, and the mechanics
  3. The confidentiality fix
  4. Why California's AB 1722 didn't pass
  5. The dual-filing problem
  6. What to do between now and January 2026
  7. Sources

ew York now has its own Corporate Transparency Act, which takes effect January 1, 2026, and which will require every LLC formed or authorized in the state to file beneficial-owner information a second time, with the New York Department of State, on top of the federal filing already due to FinCEN. California looked at the same idea in 2023 and chose not to enact it.

The New York LLC Transparency Act (NY LLCTA), carried as A3484-B in the Assembly and S995-B in the Senate, was signed by Governor Hochul on December 22, 2023, and then amended in March 2024 to push the effective date back a full year and to tighten the confidentiality provisions. It is the first state twin of the federal Corporate Transparency Act to clear both chambers, survive a governor, and land on the books.

What the New York statute actually does

NY LLCTA inserts a new Article into the New York Limited Liability Company Law that borrows the federal vocabulary wholesale. A "reporting company" under the state law is any LLC formed under NY LLC Law or any foreign LLC authorized to do business in New York. Corporations and limited partnerships are outside the statute. Albany did not build a general state beneficial ownership register; it built one for the entity form most associated with anonymous ownership of New York real estate.

The definition of "beneficial owner" tracks the federal rule under 31 U.S.C. § 5336 and 31 C.F.R. § 1010.380 almost word for word. An individual is a beneficial owner if they directly or indirectly exercise substantial control over the LLC or own or control at least 25 percent of the ownership interests. The 23 federal exemptions (banks, public companies, large operating companies with more than 20 full-time U.S. employees and more than $5 million in gross receipts, tax-exempt entities) carry through into the state statute by cross-reference. If an entity is exempt from the federal BOI filing, it is exempt from the New York one.

Existing LLCs (those formed or qualified before January 1, 2026) have until January 1, 2027 to make their initial disclosure. Entities formed on or after January 1, 2026 must file within 30 days. Any change to beneficial ownership or to any reported detail triggers an updated filing within 90 days. Every LLC must also submit an annual statement confirming or updating the information on file, a requirement with no federal analog.

The fees, the penalties, and the mechanics

The filing carries a $15 fee, nominal and consistent with the Department of State's other LLC fees. The real teeth are in the delinquency regime. An LLC that is more than 30 days past due on the disclosure or the annual confirmation is marked "past due" on the public-facing entity record. An LLC that is more than two years past due is marked "delinquent" and loses the ability to carry on business in New York until it cures the filing and pays a $250 late fee. The Attorney General can also seek civil penalties of up to $500 per day, capped at an unspecified amount in the statute and subject to the usual enforcement-discretion filters.

Compare that to the federal structure. Under 31 U.S.C. § 5336(h), a willful reporting failure under the federal CTA can carry civil penalties of up to $591 per day (adjusted for inflation from the $500 figure in the statute) and criminal penalties of up to two years and a $10,000 fine. The New York regime is civil only; there is no state criminal liability for a missed filing. That distinction matters for entities weighing which filing to prioritize when calendars slip.

Filings go through the Department of State's online portal. Reporting companies must designate beneficial owners by full legal name, date of birth, current residential or business street address, and an identifying number from a passport, driver's license, or other government-issued ID. The state does not require an image of the identification document, a small but meaningful deviation from the federal rule (FinCEN does require the image).

The confidentiality fix

The version of the bill Hochul originally signed in December 2023 would have made most of the beneficial-owner data public. The March 2024 amendment (Chapter 102 of the Laws of 2024) closed that door. Under the amended statute, the beneficial ownership database is confidential and exempt from the Freedom of Information Law. Access is limited to law enforcement, to state and federal agencies with a statutory oversight role, and to the subject of the record itself with the subject's written consent.

That mirrors the federal architecture under 31 C.F.R. § 1010.955, which restricts BOI access to federal agencies engaged in national security, intelligence, or law enforcement, to state and local agencies under a court order, to Treasury for tax administration, and to financial institutions with customer consent for due-diligence purposes.

The same amendment pushed the effective date from December 21, 2024 to January 1, 2026, giving the Department of State time to build the filing infrastructure and the private bar time to work out which portions of the federal BOI record can be reused.

Why California's AB 1722 didn't pass

California considered its own state-level transparency bill in the 2023 session. AB 1722, introduced by Assembly Member Kalra, would have required LLCs, corporations, and limited partnerships formed or qualified in California to file beneficial-owner information with the Secretary of State, with an initial filing due in 2025 and ongoing updates on change. The bill went to the Assembly Committee on Banking and Finance and did not come back out. It was not enacted in the 2023 session, did not carry over, and was not reintroduced in substantially similar form in 2024.

California was simultaneously processing the federal CTA (effective January 1, 2024), the state's climate disclosure regime under SB 253 and SB 261, and an omnibus LLC modernization package. Adding a second state-level beneficial ownership filing was a hard sell to a Banking Committee that had received substantial comment from trade groups arguing the federal rule made state duplication redundant.

That argument did not carry in Albany, where the legislative read was that federal BOI data, housed in a database state law enforcement can access only under narrow conditions, is not a practical substitute for a state record the state itself controls. The practical effect is a two-track national picture: a California LLC that files its federal BOI has satisfied its only beneficial-ownership obligation; a New York LLC will have two filings, two portals, and two deadline calendars.

The dual-filing problem

For practitioners, the dual filing is the part that matters operationally. An LLC formed in 2025 must file a federal BOIR within 30 days of formation; an LLC formed before January 1, 2024 had until January 1, 2025 for its initial federal filing; federal updates are due within 30 days of any change.

The New York layer sits on top. The same LLC, if formed or qualified in New York, must also file with the Department of State starting January 1, 2026. Existing LLCs have until January 1, 2027. New formations from January 1, 2026 onward have 30 days. The state update window is 90 days, and the annual confirmation has no federal analog.

The two regimes use the same definitions but different trigger windows, different fees, different penalties, different portals, and different data fields. A compliance calendar that tracks only the federal deadlines will be wrong for New York LLCs. The firms most affected are the single-purpose real-estate LLCs that dominate New York commercial and residential title, which were the political target of the legislation.

What to do between now and January 2026

For New York LLCs, the work through 2025 is not the filing itself (the Department of State portal does not yet accept submissions) but the record-keeping. The federal BOI report already requires a full beneficial-owner list updated for every qualifying change. That record, kept current through 2025, is most of what the January 2026 New York filing will need.

The more interesting question is whether Albany's move is the start of a pattern. Several other states have had early-stage transparency proposals in committee, and a statute on New York's books makes the next state-level bill easier to draft. The federal regime is not going away; the state twins are where the next year of compliance work lives.

Sources

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