How New York's LLC transparency law ended up covering almost no New York LLCs
A 2023 law meant to unmask anonymous LLC owners took effect January 1, but a federal rule change and a veto left it covering only foreign-formed LLCs.
New York's Limited Liability Company Transparency Act took effect January 1, 2026, requiring certain LLCs to tell the New York Department of State who actually owns and controls them. Governor Kathy Hochul signed the underlying bill more than two years earlier, in December 2023.
In the year before the law's start date, a federal rule change and a veto from Hochul herself cut the statute's reach far below what the Legislature intended. Department of State guidance issued at the end of December 2025 confirms the Act now applies only to LLCs formed outside the United States, not to the New York-formed LLCs it was written to reach.
A Law Meant To Unmask Anonymous Owners
State Senator Brad Hoylman-Sigal sponsored the bill, and Hochul signed it into law on December 22, 2023, as Chapter 772 of the Laws of 2023, according to the New York State Senate's bill page. The stated goal was to end "the practice of anonymous ownership of limited liability companies in New York" by requiring beneficial owners to identify themselves and publishing that information in a searchable state database.
Supporters included housing and tenant advocacy groups, labor unions and the Manhattan District Attorney's office, according to New York State Assembly records. Advocates said anonymous LLC landlords made it difficult for tenants to identify who owned their buildings and let owners obscure code violations and the size of their portfolios.
As enacted, the law covered every LLC formed in New York State, plus out-of-state and foreign LLCs authorized to do business here. It borrowed its definition of "beneficial owner" directly from the federal Corporate Transparency Act statute, 31 U.S.C. § 5336, rather than writing an independent state definition. Lawmakers amended the Act on March 1, 2024, and set its effective date for January 1, 2026.
How A Federal Rule Change Cut Its Reach
In March 2025, the U.S. Treasury Department's Financial Crimes Enforcement Network issued an interim final rule redefining "reporting company" under the federal Corporate Transparency Act. The revised definition covers only entities formed under the law of a foreign country that have registered to do business in a U.S. state or tribal jurisdiction. Every U.S.-formed entity, and its beneficial owners, became exempt from federal reporting as a result.
Because New York's statute defines "beneficial owner" and related terms by pointing to the federal law rather than restating them, the federal narrowing carried through automatically into the state law, according to multiple law firms that tracked the change, including Holland & Knight and Morgan Lewis.
The Veto, And The Reaction To It
State lawmakers moved to reverse the effect of the federal rule change. A bill, S8432/A8662-A, passed both houses of the Legislature and would have decoupled New York's law from the federal definitions, restoring coverage of both domestic and foreign LLCs.
Hochul vetoed the bill on December 19, 2025. Her veto memo stated that "imposing additional requirements on LLCs is not in the interest of New York State," according to Morgan Lewis's summary of the memo.
The Greater Rochester Chamber of Commerce publicly supported the veto, calling the vetoed bill "overreaching legislation" that would have burdened small businesses. On December 30, 2025, the Department of State published compliance materials, including 25 frequently asked questions and filing forms, confirming the narrower scope: only LLCs formed outside the United States and authorized to do business in New York are covered. Domestic LLCs, whether formed in New York or another state, do not have to file anything under the Act, including an exemption attestation.
Who Must File Now, And By When
Under the current scope, a foreign LLC authorized to do business in New York before January 1, 2026, must file a beneficial ownership disclosure or an attestation of exemption with the Department of State. Several law firms that reviewed the Department's December 2025 guidance, including Holland & Knight and Morgan Lewis, put that deadline at December 31, 2026. At least one earlier analysis, published before the guidance was issued, had cited January 1, 2027. Business owners should confirm the current deadline directly with the Department of State rather than rely on either figure.
A foreign LLC authorized on or after January 1, 2026, has 30 days from filing its application for authority to submit an initial disclosure or exemption attestation. After that first filing, covered LLCs must submit an annual statement confirming or updating their beneficial ownership information and the address of their principal executive office; the Department had not yet set a deadline for that annual filing as of the guidance reviewed. Companies generally have 90 days to correct erroneous information in a filing, unless the error was willful.
“Domestic LLCs, whether formed in New York or another state, do not have to file anything under the Act, including an exemption attestation.”
What Must Be Disclosed, And Who Is Exempt
A beneficial owner is defined as an individual who owns or controls 25 percent or more of an LLC's ownership interests, or who otherwise exercises substantial control over the company. For each beneficial owner, and each "applicant" who filed the paperwork to form or register the LLC, a disclosure must include the person's full legal name, date of birth, current street address, and an identifying number from an unexpired passport, driver's license or other qualifying government-issued document.
The Act's exemptions track the federal Corporate Transparency Act's list. They include large operating companies with more than 20 full-time U.S. employees, over $5 million in gross receipts or sales reported on federal tax returns, and a physical office in New York; publicly traded companies; registered investment advisers; pooled investment vehicles; and subsidiaries of otherwise-exempt entities. Because only foreign LLCs are covered at all right now, these exemptions currently matter to a much smaller pool of companies than lawmakers originally envisioned.
Penalties And How To File
A company that misses a filing deadline by more than 30 days is marked "past due" in the Department of State's public records; noncompliance lasting more than two years results in a "delinquent" designation. Two law firm summaries, from Morgan Lewis and Troutman Pepper Locke, describe an initial penalty of $250 for a missed or late filing, followed by a $500 fine for each day the company remains past due. Katten's review attributes enforcement of that daily fine to the New York Attorney General, who can also seek to dissolve or cancel a noncompliant LLC, or to annul a noncompliant foreign LLC's authorization to do business in New York. One firm's description of the law also referenced "civil and criminal" penalties without specifying which provisions carry criminal exposure. Katten's summary states the Act does not include criminal penalties, but Holland & Knight's review of the Department's FAQs states that knowingly providing false or fraudulent beneficial ownership information can result in criminal prosecution under Limited Liability Company Law Section 1108(c) and Penal Law Sections 175.30 and 175.35.
As of the Department of State's December 2025 guidance, LLCs were submitting beneficial ownership disclosures and exemption attestations as PDF forms, with a dedicated online filing portal described as still forthcoming.
