As of December 26, 2024, the Fifth Circuit restored the nationwide injunction against the federal Corporate Transparency Act (“CTA”), issued in Texas Top Cop Shop. No enforcement of the filings requirements is currently allowed. The federal government asked the U.S. Supreme Court for a stay against the injunction, but as of this writing the lower federal court hearings on the appeal of Texas Top will occur in March 2025. Entities may choose to voluntarily file beneficial ownership information (“BOI”) while federal litigation continues. Meanwhile, various states are considering or moving forward with their own CTA legislation, potentially adding compliance burdens for entities.
Federal and State-Level CTA Overview
Federal challenges have questioned the CTA’s preemption of state regulation. However, state-specific regulation of entity filing is not affected by this constitutional challenge. Maryland, Massachusetts and California considered and failed, so far, to pass their own state versions of the CTA. Other states may follow. New York has enacted its own CTA statute.
New York’s CTA, the New York Limited Liability Company Transparency Act (“NYTA”), presently has an effective date of January 1, 2026. Entities formed or authorized to do business before that date must comply by January 1, 2027. While the NYTA aligns with the federal CTA in many respects, there are notable distinctions:
- Scope: Unlike the federal CTA, which applies broadly, the NYTA is limited to limited liability companies (“LLCs”) formed or doing business in New York.
- Registration Timing: New LLCs as of January 1, 2026 must file BOI simultaneously with their formation documents. The NYTA has no 30 day grace period as under the federal CTA.
- Exemptions and Reporting: While the NYTA recognizes the same 23 exemptions as the federal CTA, exempt LLCs must explicitly report their exemption category in an “attestation of exemption”. Additionally, LLCs must submit annual statements confirming the accuracy of all previously reported information.
- No FinCEN ID: The NYTA does not offer a centralized identifier for beneficial owners. Owners must submit BOI separately for each LLC they control.
New York businesses should evaluate these requirements and consider whether legal counsel may facilitate compliance.
Preparing for Compliance
Despite the failures of the previously introduced state-versions of the CTA to pass, business formed or operating in Maryland, Massachusetts, and California should remain vigilant for future developments and possible re-introduction. New York LLCs must begin to plan to comply with the NYTA over the course of 2026. The future of the federal CTA may be uncertain, but state-versions appear more likely. Businesses must be prepared to navigate any potentially overlapping or heightened requirements.
