BILL NUMBER: S8112
SPONSOR: SKOUFIS
 
TITLE OF BILL:
An act to amend the tax law, in relation to requiring certain joint tax
returns pertaining to residential real estate cash purchases by limited
liability companies to disclose the source of funds used for the
purchase
 
PURPOSE::
This bill will require LLCs that are purchasing certain residential real
estate in cash to disclose information about the source of funds used in
the purchase as part of tax returns to the Department of Taxation and
Finance.
 
SUMMARY OF PROVISIONS::
Section one of the bill amends section 1409 of the tax law, as amended
by section 3 of part 0 of chapter 59 of the laws of 2021, to require
that LLCs purchasing residential real estate, with up to four dwelling
units, including condos and coops, and the purchase is not secured by a
mortgage, to provide the source of funds including the type of funding
used for the purchase, the bank account information of any funds used in
the purchase and the amount used by each source of funds. In addition,
any source of funds that originates from a foreign national would
require identifying the name and address of such person and any corpo-
rate entities they own.
Section two of the bill relates to the effective date.
 
JUSTIFICATION::
This new disclosure builds upon a law I sponsored (Chapter 297 of 2019)
which requires LLCs purchasing residential real estate to disclose the
natural persons who own such LLCs in an effort to increase transparency
of these transactions. All cash transactions through LLCs are able to
not only shield their identity but evade anti money laundering laws and
regulations. These shadow transactions allow money to flow towards the
purchase of residential real estate through anonymous means. This bill
would pull back the curtain on these transactions and require informa-
tion on the source of funds used to be reported to the Department of
Taxation and Finance.
This legislation is modeled off similar federal requirements for LLC all
cash purchases that is currently operating as a pilot program by the
Financial Crimes Enforcement Network (FinCEN) in 12 US cities including
New York City. The pilot program known, as Geographic Targeting Orders
(GT0s), was recently renewed and applies to residential transactions,
over $300,000. This legislation will apply to all residential trans-
actions not secured by a mortgage, regardless of the purchase price,
throughout the State. Given the recent scrutiny of Russian oligarch
purchases of real estate in New York and other US States, this gives the
State new tools to crack down on money laundering schemes.
 
LEGISLATIVE HISTORY::
Assembly
2021-2022- A8398, Referred to Health
 
FISCAL IMPLICATIONS::
None.
 
EFFECTIVE DATE::
This act shall take effect immediately and shall apply to returns filled
on and after January 1, 2023.

Statutes affected:
S8112: 1409 tax law