After the Federal Exemption: The State BOI Registries That Didn't Quite Fill the Gap

Earlier this year I wrote about FinCEN's August 14, 2026 Final Rule permanently exempting US-formed entities from the federal Corporate Transparency Act's beneficial ownership reporting requirements. The rule closed a chapter that had been open since 2021 for domestic small businesses, resolving in favor of exemption what had been three years of injunctions, stays, and interim guidance. For most of the LLCs and corporations I represent, the federal BOI reporting question is now closed: the answer is no, you do not need to file.

The natural next question is whether the states will fill the gap. The Corporate Transparency Act had a policy purpose — cracking down on anonymous shell companies used for money laundering, sanctions evasion, and fraud — and the federal exemption did not repeal the purpose. It just took the federal government out of the business of pursuing it through beneficial ownership disclosure. Someone else, the thinking went, would step in.

The state-level story that has actually unfolded in 2025 and 2026 is more interesting than that thinking anticipated. This article walks through what New York did, what New York almost did but did not, what California has and has not done, and what it means for a small business owner deciding whether to worry about state BOI compliance.

New York: the only operative state registry

New York's LLC Transparency Act was signed by Governor Hochul on March 1, 2024. As enacted, it was scoped to apply to all LLCs formed in New York or authorized to do business in the state — domestic and foreign, incorporating the federal CTA's definitions of “reporting company,” “exempt company,” and “beneficial owner” by reference. The Act took effect on January 1, 2026.

The problem the New York legislature saw coming, and the reason it revisited the statute in 2025, was that the federal CTA on which the New York law relied was narrowed by FinCEN's March 2025 interim final rule to apply only to foreign entities. Because the New York statute incorporated the federal definitions by reference, the narrowing of the federal definitions automatically narrowed the New York statute. What had been designed as broad state-level BOI reporting became, by operation of the federal change, reporting that applied only to foreign LLCs authorized to do business in New York.

The New York legislature responded by passing SB S8432 in June 2025, which would have replaced the incorporated federal definitions with independent state-level definitions that captured all New York LLCs regardless of federal enforcement policy. Governor Hochul vetoed SB S8432 on December 19, 2025, clarifying in her veto message that the Act “was not intended to impose compliance burdens on New York businesses that go beyond federal requirements.”

The result of the veto is the New York LLC Transparency Act you actually live with in 2026: a beneficial ownership disclosure regime that applies only to non-US LLCs authorized to do business in New York State. The New York Department of State issued guidance confirming the narrow scope on December 31, 2025, one day before the Act took effect. US-formed LLCs, including LLCs formed in New York, are exempt from the New York disclosure obligation. Foreign LLCs authorized before January 1, 2026 must file by December 31, 2026. Foreign LLCs authorized on or after January 1, 2026 must file within 30 days of authorization. The filing fee is $25 per Disclosure Statement or Attestation of Exemption. Non-exempt reporting companies must file annually thereafter.

If you own a New York LLC — and you almost certainly do, if you own any LLC that does business in New York — the practical implication is straightforward. Unless your LLC was formed under the laws of a foreign country and separately qualified to do business in New York State, you have no filing obligation under the New York LLC Transparency Act. The Act is on the books. It does not apply to you.

The California story that isn't

California introduced SB 1201 in February 2024, aiming to require domestic and foreign corporations and LLCs doing business in California to disclose beneficial ownership information in their periodic Statements of Information with the Secretary of State — publicly, unlike the federal CTA's non-public registry. The bill passed the Senate on May 23, 2024. It has not moved to enactment since.

I want to be careful here about what I do and do not know. As of September 2026, the bill has not been signed into law. The 2024 California legislative session ended without action on the Assembly side. The bill has continued to appear in California legislative tracking systems, but I have not confirmed that it has been re-introduced, that it has passed the Assembly, or that it has been signed by the Governor. If you are relying on SB 1201 status for a compliance decision, verify against the California Secretary of State and the California Legislative Information system directly. The safe reading of the current picture: California has considered a public state-level BOI registry, has not enacted one, and there is no imminent enforcement mechanism in place.

Massachusetts and Illinois have been mentioned in the trade press as considering similar legislation. Neither has enacted anything comparable to the New York statute. The state-by-state wave that many practitioners expected to follow the FinCEN exemption has, so far, not materialized as a wave.

Why the wave didn't come

Three explanations for the underperformance of state BOI legislation are worth understanding, because they affect whether you should expect the picture to change.

The New York example was chilling, not encouraging. New York enacted first, thought about it, and then narrowed. The Governor's veto of SB S8432 signaled that even in a state generally receptive to transparency and disclosure obligations, the political cost of imposing new compliance burdens on domestic small businesses turned out to be higher than the political benefit of anti-money-laundering symbolism. Other state legislatures watching New York took the same lesson.

The FinCEN Final Rule made the case for state action harder to argue. When FinCEN's exemption was an interim final rule, state legislators could argue that the federal government was in flux and state action was necessary to preserve the transparency purpose. The August 14, 2026 Final Rule made the federal position permanent. It is harder now to argue that state action is filling a temporary gap; the gap is intentional and durable.

The compliance industry that mobilized around the federal CTA moved on. The registered agents, corporate service companies, and law firms that had built practices around federal CTA compliance had spent significant resources gearing up for a filing population of tens of millions. After the exemption, the practical population shrank to foreign entities registered in the US. That population is much smaller and did not support the same scale of compliance infrastructure. The trade press coverage that had been driving small-business awareness of BOI compliance largely stopped.

What this means for your small business

If you own an LLC or corporation formed in the United States, you have essentially no beneficial ownership reporting obligation in September 2026. FinCEN does not require it under the federal CTA. New York does not require it unless your entity was formed in a foreign country. California, Massachusetts, and Illinois have not enacted comparable statutes. The regulatory picture that had absorbed hours of my clients' time for the better part of three years has collapsed into a single-sentence answer for most of them: no filing needed.

There are three qualifications on that answer worth stating.

One: if you own or beneficially own a foreign entity registered to do business in the United States, you still have exposure. The federal CTA continues to apply to foreign reporting companies. If any of your LLCs, holding companies, or investment vehicles are formed under the laws of another country and registered to do business in a US state, they are reporting companies under the federal statute and, if they do business in New York, under the New York statute as well. The Final Rule did not touch that population.

Two: the CTA is still federal law. Congress could re-expand reporting scope by amending the statute, and a future FinCEN could revisit the Final Rule through notice-and-comment rulemaking. Neither is imminent based on current signals, but neither can be ruled out. If your compliance planning horizon runs to five or ten years, the durability of the current exemption is a legitimate question.

Three: state anti-money-laundering enforcement has other tools that do not depend on beneficial ownership registries. State attorneys general, state financial regulators, and state tax authorities have their own investigative powers. A New York small business owner who genuinely uses an LLC to launder money is not made safer by the narrowness of the LLC Transparency Act; they are still exposed to state and federal money-laundering enforcement under other statutes. The absence of a beneficial ownership registry is not the absence of anti-money-laundering law.

The client I keep in mind

The client I keep coming back to on this topic is the same one from the federal BOI piece: the two-person LLC that spent hundreds of dollars in early 2025 preparing to file with an attorney's help, then read about the March 2025 interim final rule and did not file, then heard about the New York LLC Transparency Act taking effect January 1, 2026 and asked whether they now needed to file after all. The answer for that client was no in March 2025, still no in December 2025, and still no now. If the client's LLC had been formed in the Cayman Islands and registered to do business in Manhattan, the answer would have been different. It was formed in Buffalo, so it is not.

Most of my small business clients are in exactly that position. The story has closed. The state-level story, so far, has not opened as widely as anyone expected. When it does open — and something like it likely will over the next two to five years, either through federal reversal or through state action in a jurisdiction we are not currently watching — I will write about it here.

For ongoing tracking

For every change to state-level beneficial ownership legislation, federal CTA developments, and enforcement actions since this article went to press, see silvertonpublishing.com/ai-current. Beneficial ownership is not an AI topic, but it fits the same volatility profile the tracker is designed for.

Frequently Asked Questions

This article reflects the state-level beneficial ownership landscape as of September 2026. Legislative developments in this area can change quickly. Confirm the current status of any specific statute before relying on it for a compliance decision. Nothing in this article is legal advice for your specific situation.

This article is for educational purposes only and does not constitute legal, tax, or financial advice. Consult a qualified professional for guidance specific to your situation.