NORTH ROCKLAND, N.Y. -- Assemblyman James Skoufis (D-Woodbury) announced he has introduced legislation to increase transparency in financial and real estate transactions by requiring clear identification of limited liability company (LLC) owners.
Current law does not require LLCs to identify their owners, members or managers, leading many companies to purposefully cloak the identity of the people benefiting from the LLC’s transactions.
“Deep-pocketed individuals shouldn’t be able to hide behind the mask of an LLC,” said Skoufis. “Requiring these organizations to publicly disclose who their beneficiaries are will help law enforcement agencies better combat fraud as well as shine a light on developers seeking to buy up property under a shroud of secrecy.”
The potential for illegal activity by anonymous LLCs has even prompted the IRS to warn of “under-reporting of income, non-filing of tax returns, listed transactions, money-laundering, financial crimes and possibly terrorist financing.” Complete disclosure of company beneficiaries, as this legislation seeks to do, would assist law enforcement officials pursuing cases against law-breaking LLCs. LLCs are also frequently used as a vehicle in real estate transactions to cloak the identity of developing interests.
These “shell companies” can also make it extremely difficult for prompt enforcement of land and building ordinances since local officials do not have a human being to pursue action against.
Recently, residents of South Blooming Grove have witnessed a significant increase in real estate transactions by secretive LLCs. This legislation would require public disclosure of LLC owner and member identities alongside other important data already available on the Department of State’s website. Additionally, any person who provides false information or fails to comply with this law would face imprisonment for up to three years and fines of up to $5,000.
“Our local families deserve to know the identity of the investors and developers purchasing property on their blocks,” said South Blooming Grove Mayor Rob Jeroloman. “By increasing transparency and letting the public know who’s really behind real estate transactions, Skoufis’ proposal will shed light on what is currently a shroud of secrecy.”
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