“accompanied by a document which identifies the names and business addresses of all members, managers, and any other authorized persons, if any, of such limited liability company and the names and business addresses or, if none, the business addresses of all shareholders, directors, officers, members, managers and partners of any limited liability company or other business entity that are to be the members, managers or authorized persons, if any, of such limited liability company. The identification of such names and addresses shall not be deemed an unwarranted invasion of personal privacy pursuant to article six of the public officers’ law. If any such member, manager or authorized person of the limited liability company is itself a limited liability company or other business entity, the names and addresses of the shareholders, directors, officers, members, managers, and partners of the limited liability company or other business entity shall also be disclosed until full disclosure of ultimate ownership by natural persons is achieved. For purposes of this subdivision, the terms “members”, “managers”, “authorized person”, “limited liability company” and “other business entity” shall have the same meaning as those terms are defined in section one hundred two of the limited liability company law.”

Although the Act appears to apply only to residential 1-4 family properties, it is our understanding that a residential condominium unit is subject to the Act. It is unclear if mixed-use real property will be subject to the Law and to be conservative, it is recommended to deem it as applicable in mixed-used real property conveyances. In addition, since the Act applies to transfers by deed, transfers of co-op apartments will not be subject to the Act.

The Act applies to Grantors and Grantees that are LLCs. It also applies irrespective of the amount of consideration paid for the conveyance.

Please note the following concerning the Guidance and some issues unaddressed by the Guidance:

• The Guidance does not provide a required form of Document. The Document must simply contain the substance of what is required by the Act as supplemented by the Guidance.

• The Guidance is silent regarding the applicability of the Act to mixed-use properties. To be conservative, it is recommended, any mixed-use property that contains up to four-family dwelling units should include the Document when submitting the applicable transfer tax forms.

• The Guidance states that the Document “…should demonstrate that 100% of the ownership of each entity has been reported.” The Department has informally advised that percentages of ownership should be provided in the Document.

• The Guidance does not provide any information concerning direct or indirect beneficial ownership of the LLC by a Trust. The Department has informally advised that the present beneficiaries of the Trust must be disclosed in the Document. 

• The Guidance also does not provide information concerning direct or indirect beneficial ownership of the LLC by an investment fund, publicly held corporation or any other similar entity that could be comprised of hundreds or potentially millions of investors. Despite the fact that disclosure of the ultimate natural persons who have ownership interests in such entities may be unmanageable or virtually impossible, the Act still requires this level of disclosure within the Document.

About the Author 

Alicea Castellanos is the CEO and Founder of Global Taxes LLC. Alicea provides personalized U.S. tax advisory and compliance services to high net worth families and their advisors. Alicea has more than 17 years of experience. Prior to forming Global Taxes, Alicea founded and oversaw operations at a boutique tax firm, worked at a prestigious global law firm and CPA firm. Alicea specializes in U.S. tax planning and compliance for non-U.S. families with global wealth and asset protection structures which include non-U.S. trusts, estates and foundations that have a U.S. connection.

Alicea also specializes in foreign investment in U.S. real estate property, and other U.S. assets, pre-immigration tax planning, U.S. expatriation matters, U.S. persons in receipt of foreign gifts and inheritances, foreign accounts and assets compliance, offshore voluntary disclosures/tax amnesties, FATCA registration, and foreign companies wanting to do business in the U.S. Alicea is fluent in Spanish and has a working knowledge of Portuguese.

Alicea is an active member of the Society of Trusts & Estates Practitioners (STEP), the New York City Bar, the New York State Society of Certified Public Accountants (NYSSCPAs), the American Institute of Certified Public Accountants (AICPA) and the International Fiscal Association (IFA).  She is the New York/Northeast Regional Representative of the Women of IFA Network (WIN). Distinctly, in 2020, Alicea was awarded with a prestigious NYSSCPA Forty Under 40 Award. She was selected as someone that has notable skills and is visibly making a difference in the accounting profession.

Please note: This content is intended for informational purposes only and is not a replacement for professional accounting or tax preparatory services. Consult your own accounting, tax, and legal professionals for advice related to your individual situation. Any copy or reproduction of our presentation is expressly prohibited. Any names or situations have been made up for illustrative purposes — any similarities found in real life are purely coincidental.