RECENTLY ENACTED NEW YORK TRANSFER TAX RETURN DISCLOSURE REQUIREMENTS SEEK TO IDENTIFY LLC MEMBERS

By October 3, 2019Articles

By Sharon V. Skolnik, Esq., Stempel Bennett Claman & Hochberg, P.C. | October 3, 2019

On September 13, 2019, Chapter 297 of the Laws of 2019, was enacted by the New York State Senate and Assembly amending Section 1409(a) of New York Tax Law and amending Section 11-2105 of the Administrative Code of the City of New York to add a new subdivision (h), which created new disclosure requirements for conveyances of certain residential real property within New York State to or from a limited liability company (the “Act”).1  The Act took effect on September 13, 2019.

The Act prohibits the acceptance of transfer tax returns (Form TP-584 or Form TP-584-NYC) for filing by a recording officer within New York State in connection with the conveyance of a one-to-four family residence or a residential condominium unit when such real property is conveyed to or from a limited liability company (“LLC”) unless the transfer tax returns are accompanied by documentation identifying the names, business addresses and tax identification numbers of all members2, managers3 and other authorized persons4 of the LLC.  If any member of an LLC is also an LLC or other business entity, the Act requires disclosure documentation identifying the names, business addresses and tax identification numbers of all shareholders, directors, officers, members, managers and/or partners of the member LLC or other business entity member until the ultimate ownership by natural persons5 is fully disclosed.  The Act requires the disclosure documentation to report 100% of the ownership of each LLC and/or business entity.

Since a deed cannot be recorded without filing transfer tax returns, failure to submit the required disclosure documentation with the transfer tax returns will result in rejection of the deed for recording and rejection of the transfer tax documents for filing by the recording officer of the county where the real property is being conveyed.    The Act applies only to one-to-four family residential properties or a residential condominium unit conveyed by deed and does not apply to residential properties with more than four units or co-op apartment transfers.   Transfers of co-op apartments are not subject to the Act, since the ownership interest of a co-op apartment is conveyed by transferring shares of the cooperative corporation allocated to the co-op apartment.


1 Chapter 297 of the Laws of 2019, S.7190. See https://www.nysenate.gov/legislation/bills/2019/A7190
2 “Member” means a person who has been admitted as a member of a limited liability company in accordance with the terms and provisions of the operating agreement.  See New York Limited Liability Company Law §102(q).
3 “Manager” means a person designated by the members to manage the LLC as provided in the operating agreement.  See New York Limited Liability Company Law §102(p).
4 “Authorized Person” means a person, whether or not a member of the LLC, who is authorized by the operating agreement or other document or instrument, to act on behalf of the LLC or foreign LLC. See New York Limited Liability Company Law §102(c).
5 “Natural Person” means a human being who is the beneficial owner of the real property, not a business entity, estate or trust.