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Editorial 8 MIN READ

States pick up the pen after the federal CTA stalls

New York's LLC Transparency Act is live in January, and California, Massachusetts, Illinois, and Connecticut are running the same playbook

The Editors
Staff, Incorporator.org
8 min read Updated
Contents 7 sections
  1. What New York already did
  2. California reruns its bill
  3. Massachusetts, Illinois, Connecticut
  4. The shared architecture
  5. Why states are doing this now
  6. What this means operationally
  7. Sources

ith the federal Corporate Transparency Act hanging in litigation and enforcement effectively paused, five state legislatures have picked up the pen. New York's LLC Transparency Act is already law and switches on January 1, 2026; California, Massachusetts, Illinois, and Connecticut each have beneficial-ownership disclosure bills moving in 2025.

The state-level CTA equivalents are not identical to the federal statute, and they are not identical to each other. They are close enough that a multi-state operator should expect to file broadly the same information in two, three, or four jurisdictions by 2027, depending on where the company is organized and where it does business.

What New York already did

The New York LLC Transparency Act was signed in December 2023 and then amended by Chapter 102 of the Laws of 2024 before it ever took effect. The amended version sits at Limited Liability Company Law § 1106 and adds a companion provision at Business Corporation Law § 306-a that extends reach to foreign LLCs qualified to do business in New York. The effective date is January 1, 2026.

Every LLC formed in New York, and every foreign LLC that has qualified under § 802 of the LLC Law, owes a beneficial-ownership disclosure to the Department of State. Entities formed or qualified on or after January 1, 2026 file at the time of formation or qualification. Entities that already exist on that date have the calendar year 2026 to comply. The information mirrors the federal BOI schedule: full legal name, date of birth, current residential or business street address, and a unique identifying number from a passport, driver's license, or state identification card, along with an image of the document.

The Chapter 102 amendments changed two things that matter. First, the database is confidential rather than public. Only law enforcement, and certain regulators with a subpoena or court order, can pull a record. Second, the exemption list is imported wholesale from the federal CTA's 23 exempted categories, so a large operating company that never had to file federally will not have to file in New York either.

California reruns its bill

California tried this in 2023 with AB 1722 (Kalra), which stalled in appropriations and never reached the governor. The concept is back in 2025 as SB 828 (Min), reintroduced in the current session and pending before the Senate Judiciary Committee at the time of writing.

The California draft follows the federal architecture more tightly than New York's does. A beneficial owner is anyone who owns or controls at least 25% of the equity interests, or who exercises substantial control over the entity, and the bill incorporates the federal exemption categories by reference. The Secretary of State would maintain the registry, and access would be restricted to law enforcement and specifically authorized regulatory agencies.

Two fights are already visible. One is whether the California registry should be available to financial institutions performing customer due diligence, as the federal statute contemplates, or whether the state-level database should be narrower. The other is whether single- member LLCs formed for real-estate holding, which are the overwhelming majority of California filings by count, should have a simplified schedule. Neither question is resolved in the pending text.

Massachusetts, Illinois, Connecticut

Massachusetts House 1711 was filed in January 2025 and referred to the Joint Committee on State Administration and Regulatory Oversight. It applies to corporations and LLCs formed or registered in the Commonwealth, uses a 25%-or-substantial-control definition, and directs the Secretary of the Commonwealth to stand up a database accessible to law enforcement. The bill would take effect the calendar year after enactment if passed.

Illinois HB 4594 was introduced in February 2025 and assigned to the House Judiciary Civil Committee. It covers LLCs, LPs, and corporations registered with the Secretary of State, imports the federal beneficial-owner definition, and imposes civil penalties for knowingly false filings. Illinois already collects manager and member addresses for most LLCs under the Limited Liability Company Act; HB 4594 adds the federal-style identity schedule on top.

Connecticut SB 901, introduced in January 2025 and referred to the Joint Committee on Government Administration and Elections, is the tightest of the four pending bills in scope. It applies to newly formed and newly registered entities and does not sweep in existing ones on enactment, which substantially reduces the first-year filing volume for the Secretary of the State. The 25%-or-substantial-control definition and the federal exemption list are both imported.

Delaware, the formation capital that every other state competes against, has not introduced a state CTA equivalent. The Division of Corporations has said in industry forums that it is watching the federal litigation before proposing anything. That is a meaningful signal: the state with the most formations and the most to lose from a filing-burden increase is sitting this one out.

The shared architecture

Read the five live bills side by side and the same blueprint shows through.

The trigger is ownership of 25% or more of the equity interests, or exercise of substantial control, using the federal CTA definition as the anchor. Substantial control is the looser half of the test and is where disputes will cluster; an officer with signing authority, a general partner of an LP that is an LLC member, or a trust protector can all qualify without crossing the 25% line.

The exemption set is the federal list: 23 categories covering banks, credit unions, SEC-registered issuers, insurance companies, tax-exempt organizations, large operating companies with more than 20 US employees and more than $5 million in gross receipts, and so on. Importing the list keeps state and federal obligations aligned for companies that fall on either side of a threshold and avoids a fifty-state patchwork of exemption math.

The information schedule is the same four items: full legal name, date of birth, current street address, and a government-issued identifying number with an image of the source document. The filing cadence is a snapshot at formation or qualification, with an updating obligation when any reported fact changes. New York settled on thirty days to update; California's and Illinois's drafts are in the same range.

Access is restricted. Each state's proposed or enacted database is closed to the public and open to law enforcement with process, plus specifically authorized regulators. None of the pending bills replicates the federal CTA's financial-institution access provision, which means a bank doing CDD on a New York LLC still has to rely on the federal database for that purpose (and the federal database is what is currently in question).

The penalty architecture is civil rather than criminal for knowing false filings, with per-day fines for continuing violations. New York caps its civil penalty for late filing at $250 if cured within the cure window; California's draft is higher and punitive-looking; the Massachusetts and Illinois bills use per-day fines in the low hundreds.

Why states are doing this now

The federal CTA was enjoined by a district court in Texas in December 2024, partially reinstated on appeal, then enjoined again, and the Fifth Circuit and the Supreme Court have both had a hand in the interim relief. FinCEN paused enforcement during the spring of 2025 while the litigation plays out. The operational effect for founders and counsel has been months of uncertainty about whether the January filing deadlines still counted.

State legislators who had been watching federal preemption concerns, and who had held fire on parallel statutes while the federal database spun up, read the injunctions as an invitation. If the federal database either goes away or becomes functionally unusable, a state can stand up its own without running into the preemption problem the federal rule was supposed to solve.

New York's statute predates the federal litigation and was always going to go live on its own schedule. The other four bills are explicitly a response to the federal uncertainty, and each sponsor's bill memo says so.

What this means operationally

A company formed in Delaware with a New York qualification, a California qualification, and operations in Massachusetts will by 2027 face a federal filing (if the CTA is in force), a New York § 1106 filing, a California SB 828 filing if enacted, and a Massachusetts H.1711 filing if enacted. The information is substantially the same. The filings are not consolidated. Each state's database is independent.

There is no current interstate compact and no proposed one. A beneficial owner who changes addresses generates four update obligations on four different clocks. A 25% owner who sells down to 24% triggers removal filings in each jurisdiction.

The compliance build for a multi-state operator looks like the one firms stood up for federal BOI in 2024: a controlled list of beneficial owners, a document repository for the identity images, and a calendar of reporting triggers. The difference is that the matrix runs horizontally across states instead of vertically into a single federal system. Law firms and corporate services providers that built federal-BOI workflows last year are retooling them for state multiplicity this year.

For a single-state operator the burden is lower: one filing, one database, one cure window. New York-only LLCs will feel § 1106 as an incremental registration task on top of the biennial statement already required under LLC Law § 301-e. California-only LLCs, if SB 828 passes, will feel it as an addition to the Statement of Information under R&TC-linked filings.

The loose end worth watching: whether any of the pending state bills adds a public-facing component before enactment. Public access is how the UK's Companies House register works, and a minority view in each state's legislative debate favors going further than the federal CTA in that direction. New York took public access out at the amendment stage; California, Massachusetts, Illinois, and Connecticut have so far kept it out. If one state breaks from that pattern, the dual- filing landscape gets meaningfully more complicated for privacy- sensitive owners.

If you are forming or qualifying this year, assume state disclosure is coming in each jurisdiction you touch, and that the federal position will be clarified one way or the other before the end of 2025. For a window into the formation state most likely to stay quiet on this question, see our Delaware LLC formation guide.

Sources

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