The Corporate Transparency Act and New York LLC Transparency Act

​All business owners and investors should be aware of new federal and state legislation that may impact their corporate and business reporting requirements. 

The Corporate Transparency Act (CTA), which went into effect on January 1, 2024, requires all entities to report certain basic information about itself and certain beneficial owner information (BOI) to the U.S. Department of the Treasury Financial Crimes Enforcement Network (FinCEN).  Specifically, any entity formed (or formed in a foreign country and registered to do business within the U.S.) before January 1, 2024 has until January 1, 2025 to file its BOI report.  Entities formed (or formed in a foreign country and registered to do business within the U.S.) after January 1, 2024 have to file that report within 90 days of formation or registration.  Entities formed (or formed in a foreign country and registered to do business within the U.S.) after January 1, 2025 have to file within 30 days of formation or registration.  Failure to file on a timely basis can lead to penalties.

Additionally, New York’s governor recently signed the New York LLC Transparency Act (NYLTA) and its amendments, which goes into effect on January 1, 2026 ¹ and applies to LLCs formed in New York (or LLCs formed outside of New York and authorized to conduct business within the state of New York).  All LLCs formed (or LLCs formed outside of New York and authorized to conduct business within the state of New York) before January 1, 2026 will be required to submit BOI to the New York Department of State by January 1, 2027.  All LLCs formed (or LLCs formed outside of New York and authorized to conduct business within the state of New York) after January 1, 2027 will be required to submit BOI within 30 days of the filing of its articles of organization or application of authority. 

Please see below for more information about the new legislation.  If you have any questions or need further assistance, please reach out to us.

Please also note that an Alabama District Court has ruled that the CTA is unconstitutional.  The federal government has already filed an appeal, and the decision is limited insofar as it only prevents the Treasury Department and FinCEN from enforcing the CTA against the plaintiff and members of the National Small Business Association. 

Which entities are considered reporting companies and are required to file under the CTA?

​Any corporation, limited liability company, or other similar entity that was created (or formed in a foreign country and registered to conduct business in the U.S.) by filing a document with the secretary of state (or similar office) is required to file a BOI report. 

Which entities are exempt from filing?

There are 23 categories of exempt entities, which include large operating entities (gross receipts or sales of over $5,000,000 as shown on its previous year’s tax returns, an operating presence at a physical office in the U.S., and at least 20 employees) and subsidiaries of such companies, certain inactive entities, investment entities, tax-exempt entities, insurance companies, banks, and other regulated entities, and any company whose ownership interests are 100% owned by exempt entities.  

Who are the beneficial owners of a reporting company?

The beneficial owners of a reporting company are any individuals that either (i) directly or indirectly exercise substantial control over the reporting company or (ii) directly or indirectly own at least 25% of the ownership interests in the reporting company.  An individual has “substantial control” when they (i) are a senior officer; (ii) are able to appoint or remove senior officers or a majority of the directors of the reporting company; (iii) are an important decision maker at the reporting company; or (iv) have any other form of substantial control over the reporting company.  Examples of individuals who have substantial control over a reporting company include but are not limited to CEOs, CFOs, general counsel, board members, and managers (including someone who controls an intermediary that exercises substantial control over the reporting company).  Ownership interests include but are not limited to stock, equity, capital or profit interests, or any instrument that confers voting rights.  There are also certain narrow exceptions where someone who would normally qualify as a beneficial owner is exempt from providing BOI. 

What information will I need to provide on my BOI report under the CTA?

​A BOI reporting company will need to report the company name and address, jurisdiction of formation, and EIN.  Each beneficial owner will need to provide their name, date of birth, and current residential address, along with an image of a non-expired permitted identification, which includes a U.S. passport, state driver’s license, identification document issued by a state or local government, or foreign passport.  Any information reported that changes or is inaccurate, including but not limited to changes in a reporting company’s beneficial owners and their names or their residential address, changes to its officers, or registering a new DBA needs to be promptly updated within 30 days after the change occurs or the reporting company becomes aware or had reason to know about the inaccuracy.  Additionally, up to two people or companies who file and/or direct the filing of the formation documents of any reporting company formed (or registered to conduct business in the U.S.) on or after January 1, 2024 need to submit certain personal information along with the reporting company’s BOI report.

What is a FinCEN Identifier?

​A FinCEN identifier is a unique identifying number issued by FinCEN.  An individual beneficial owner can receive a FinCEN identifier that can be used in place of providing BOI.  Reporting companies can request a FinCEN identifier while completing its BOI report.

What is a company applicant and does my company need to report its company applicant?

​A company applicant, which can only be an individual and not a company, is either (a) a direct filer (i.e., the person who directly filed the documents to create the company or registered to conduct business in the U.S.) or (b) a person who directs or controls the filing.  A reporting company that is required to provide company applicant information would have at least one but no more than two company applicants.  Only reporting companies formed (or registered to conduct business in the U.S.) on or after January 1, 2024 must report the personal information of company applicants on its BOI report (reporting companies formed prior to that date to do not need to provide company applicant information).  A company applicant can obtain a FinCEN identifier and use that in place of providing personal information as well.

What happens if my company does not file a required BOI report to FinCEN?

​Anyone who violates or willfully fails to comply with BOI reporting requirements (including but not limited to failing to file or update a BOI report and willfully providing or attempting to provide false or fraudulent BOI) may be subject to civil penalties of $500 (adjusted annually for inflation; the 2024 rate is $591) for each day that the violation continues and criminal penalties of imprisonment for up to two years, a fine of up to $10,000, or both.

Are there any differences between the CTA and the NYLTA?

While there are similarities between the new laws, such as the same reporting company exemption categories, there are some key differences between the CTA and the NYLTA:
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• The NYLTA will be state law that only requires LLCs formed in the state of New York or foreign LLCs authorized to conduct business in the state of New York to register BOI. 
• BOI reported under the NYLTA is filed with the New York Department of State, not FinCEN.  
• LLCs exempt under the NYLTA must file an attestation of exemption, under the penalty of perjury, which shall include the specific exemption claimed and the facts on which such exemption is based.
• Company applicant information is not required to be provided under the NYLTA. 
• Under the NYLTA, reporting companies must update any changes or inaccuracies with reported information on an annual report confirming, among other things, its BOI.  
• There are no criminal penalties for noncompliance with the NYLTA (only civil penalties, including a fine of up to $500 per day the LLC is past due, the disclosure being shown as past due on the LLC’s DOS records, after two years, being shown as delinquent and requiring payment ($250 plus $500 per day that the LLC is delinquent) to remove the delinquency, and possible dissolution or cancelation of the LLC).

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1. There have already been amendments to the NYLTA and there may be further amendments before it goes into effect.