Photo of NYC’s Billionaires’ Row in 2020: Wikimedia commons
State Sen. Brad Hoylman and Assembly Member Emily Gallagher on Tuesday introduced legislation that would help shine a light on the money behind Limited Liability Companies (LLCs) and anonymous shell companies. The new bill would help uncover assets of international oligarchs, trace tax evaders and help hold bad landlords accountable by requiring LLCs to disclose to the NYS Department of State the names and addresses of their beneficial owners.
The new bill would:
- Require LLCs to disclose their owners to the NYS Department of State and to include that information on their annual tax returns.
- Require DOS to create a public database where people would be able to find out which LLCs share common ownership, though individual information would be protected subject to a FOIL request.
As 6sqft previously reported, federal disclosure regulations known as Geographic Targeting Orders (GTOs) introduced in 2016 provide data on the purchase of residential real estate in several large U.S. cities including NYC. But many say the regulations aren’t very helpful for a number of reasons. For example, entering a buyer’s name into the database will not trigger an investigation, it will only support one that already exists.
Mayor Bill de Blasio had previously enacted similar rules to rein in LLCs buying luxury real estate in 2015. The former mayor’s efforts were intended to target property owners who avoid paying city income taxes by claiming legal residency outside the U.S. in addition to a focus on shell companies.
LLCs allow owners’ identities to be hidden in order to limit personal exposure. According to current New York law, owners only need to register a name, county and post office box to organize an LLC.
The proposed legislation follows recent scrutiny of New York City real estate as a safe financial haven for wealthy Russian nationals. International elites have long been able to purchase luxury homes through anonymous LLCs. According to a statement by the new bill’s sponsors, anonymous LLC landlords have also held up tens of thousands of rent relief applications last year and contributed to code violations.
“LLCs have operated in near total darkness for too long and our legislation would shine a badly needed light on them. For the international super-rich, LLCs are used as shell companies to move vast sums of money without little concern of detection,” Hoylman said in a statement.
“I’m proud to introduce this LLC transparency bill with Assemblymember Emily Gallagher to assist our state and federal governments in targeting international financial criminals, force tax scofflaws to pay their fair share, and ensure all business operators in our state – including bad landlords – are held accountable for any misdeeds.”
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Tags : Brad Hoylman, emily gallagher, LLCs, russia, sanctions, shell companies