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Insights Insights
| 1 minute read

New York Passes "Mini CTA" for New York LLCs

In late 2023, New York's governor signed into law the state LLC Transparency Act, which will mimic certain requirements of the federal Corporate Transparency Act at the state level. Under the new law in New York, LLCs (but not corporations) formed or authorized to do business in the state by filing with the Secretary of State must file “beneficial ownership” information together with their formation/authorization documents. The law also has a catch-up period for pre-existing LLCs. Unlike the federal CTA, the NYLTA will also require exempt companies to file a statement indicating that they are exempt from the law. Companies that have filed their required report under the CTA may submit an identical copy of that filing to NY to satisfy state reporting requirements. The database will not be made available to the public, only to law enforcement.  

Why It Matters

New York is not the only state likely to pass legislation mirroring the CTA at the local level. New York's law foreshadows a patchwork of local reporting laws. Although the scope of the law is more limited than the CTA, since it only applies to local filings and only to LLCs, the local secretary of state may have a better ability than the feds to identify and pursue violators, since the Secretary of State already has contact and other information for any LLC that has filed with the state. Although the law only imposes a nominal civil fine for violations, non-compliant companies will be marked as delinquent on state rolls, which could affect their ability to renew annual registration and remain in good standing to do business.  

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Supporters of the measure maintain that permitting anonymous LLCs was a “public policy mistake” that has “contributed to numerous problems” and needs to be corrected. They maintain that anonymous shell companies are used to bypass sanctions, avoid taxes, circumvent wage laws, fund terrorist organizations, support organized crime, and launder money from drug and human trafficking. Also, according to their critics, anonymous LLCs leasing real property are correlated with more numerous code violations, higher rents, and more evictions compared to non-corporate owners.


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