I'm forming a New York LLC for a client. Does an LLC have to register with the Department and file Form MT-610.1 under the Stock Transfer Tax's registration requirement, the way a corporation that maintains an office for selling its own stock would?

Plain-English summary

Attorney Sebastian Gheith planned to organize a limited liability company (LLC) under New York law on behalf of a client and asked whether the LLC would be subject to the registration requirement in Tax Law § 275-a and would need to file Form MT-610.1 -- a filing tied to New York's Stock Transfer Tax (Article 12).

Tax Law § 275-a actually imposes TWO distinct registration triggers. The FIRST applies to "every person" (individually or as a trustee, firm, company, association, or corporation) engaged in "making or negotiating" sales, agreements to sell, or transfers of taxable stock or certificates, or in "conducting or transacting a stock brokerage business" -- and the Department confirmed this DOES apply to an LLC if it is actually engaged in that kind of stock-dealing activity, since Tax Law § 2.6 generally treats an LLC as a "partnership" (a covered "person" category) for Tax Law purposes. The SECOND trigger applies specifically to "every corporation, stock association, company or trustee" that maintains a principal office or place of business in New York, or keeps a place within the state, FOR THE SALE, TRANSFER, OR DELIVERY OF ITS OWN STOCK OR CERTIFICATES. The Department ruled this second trigger does NOT apply to an LLC: an LLC is an unincorporated organization formed under the Limited Liability Company Law (not a corporation) that simply does not issue shares or certificates of its own stock at all -- membership interests in an LLC aren't "stock" in the sense Article 12 taxes. So merely forming and operating an ordinary LLC (which doesn't issue its own stock and isn't in the business of dealing in others' stock) does not, by itself, trigger the § 275-a registration/MT-610.1 filing requirement.

What this means for you

Attorneys and business owners forming a New York LLC

Simply organizing an LLC does not automatically create a Stock Transfer Tax registration obligation -- an LLC doesn't issue stock of its own, so the "maintains a place for selling its own stock" trigger in § 275-a doesn't apply to it, unlike a corporation.

LLCs that ARE engaged in stock brokerage or dealing in others' securities

If your LLC is actually in the business of making or negotiating sales of taxable stock/certificates, or running a stock brokerage operation, the registration requirement and Form MT-610.1 filing DO apply -- the exemption in this opinion covers only the "issuing its own stock" trigger, not the separate "dealing in taxable stock generally" trigger.

Accountants and formation attorneys distinguishing LLC and corporate compliance obligations

This is a useful, narrow confirmation that certain corporation-specific Stock Transfer Tax compliance obligations (here, § 275-a registration tied to maintaining a place for selling one's OWN stock) don't automatically extend to LLCs, even though the Tax Law broadly treats LLCs as "partnerships" for most other purposes.

Common questions

Q: Does this mean LLCs never have to register under § 275-a?
A: No -- an LLC that's actually engaged in making or negotiating stock sales, or running a stock brokerage business, is still covered by the FIRST registration trigger in § 275-a. This opinion only confirms the SECOND trigger (maintaining a place to sell one's own stock) doesn't apply, since LLCs don't issue their own stock.

Q: Why doesn't an LLC issue "stock" the way a corporation does?
A: An LLC is formed under the Limited Liability Company Law as an unincorporated organization with limited liability for its members -- its ownership interests are membership interests, not shares of corporate stock, so the Stock Transfer Tax's stock-specific provisions (which target corporate-style stock/certificates) don't attach to an LLC's own ownership interests.

Q: Does the Tax Law's general rule that "partnership" includes an LLC change this outcome?
A: No -- that general rule (Tax Law § 2.6) is what makes an LLC potentially covered under the FIRST § 275-a trigger (as a "person"/"company" dealing in others' taxable stock), but it doesn't change the fact that the LLC itself doesn't issue "stock" for purposes of the SECOND trigger.

Q: Can another attorney forming a similar LLC rely on this exact ruling?
A: No. An Advisory Opinion binds the Department only as to the petitioner and facts presented, though the underlying "LLCs don't issue stock" reasoning is a general legal characteristic of LLCs, not fact-specific to this petitioner.

Citations and references

Statutes and regulations:

• Tax Law § 2.5 (definition of "limited liability company")
• Tax Law § 2.6 ("partnership" includes a limited liability company unless context requires otherwise)
• Tax Law § 270(1) (imposition of the Stock Transfer Tax)
• Tax Law § 275-a (registration requirement for persons dealing in taxable stock/stock brokerage, and separately for corporations/stock associations/companies/trustees maintaining a place in New York for selling their own stock)
• New York Tax Status of Limited Liability Companies and Limited Liability Partnerships, Publication 16 (1/03) (an LLC is an unincorporated organization with limited liability, not formed as a corporation)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/stock_tran_ao.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/misc/a06_3m.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-06(3)M
Miscellaneous Tax
April 4, 2006

Office of Tax Policy Analysis
Technical Services Division
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. M060104A

On January 4, 2006, a Petition for Advisory Opinion was received from Sebastian Gheith,
Esq., 45 John Street, Suite 711, New York, NY 10038.
The issue raised by Petitioner, Sebastian Gheith, Esq., is whether a limited liability
company (LLC) is subject to the registration requirement imposed under section 275-a of the Tax
Law and, therefore, required to file New York State Form MT-610.1.
Petitioner submits the following fact as the basis for this Advisory Opinion.
Petitioner plans to organize the LLC under New York law on behalf of his client.
Applicable law and regulations
Section 2.5 of Article 1 of the Tax Law provides:
The term “limited liability company” means a domestic limited liability company
or a foreign limited liability company, as defined in section one hundred two of the
limited liability company law, a limited liability investment company formed pursuant to
section five hundred seven of the banking law, or a limited liability trust company formed
pursuant to section one hundred two-a of the banking law.
Section 2.6 of the Tax Law provides:
“Partnership and partner,” unless the context requires otherwise, shall include, but
shall not be limited to, a limited liability company and a member thereof, respectively.
Section 270(1) of Article 12 of the Tax Law provides in part:
There is hereby imposed … a tax … on all sales, or agreements to sell, or
memoranda of sales and all deliveries or transfers of shares or certificates of stock … in
any domestic or foreign association, company or corporation … whether made upon or
shown by the books of the association, company, corporation, or trustee, or by any
assignment in blank, or by any delivery, or by any paper or agreement or memorandum
or other evidence of sale or transfer, whether intermediate or final, and whether investing
the holder with the beneficial interest in or legal title to said stock, or other certificates
taxable hereunder, or merely with the possession or use thereof for any purpose ….
Section 275-a of the Tax Law provides in part:

-2­
TSB-A-06(3)M
Miscellaneous Tax
April 4, 2006

Every person acting individually or as a trustee, firm, company, association or
corporation engaged in whole or in part in the making or negotiating of sales, agreements
to sell, deliveries or transfers of shares or certificates taxable under this article, or
conducting or transacting a stock brokerage business, and every corporation, stock
association, company or trustee which shall maintain a principal office or place of
business within the state or which shall keep or cause to be kept within the state of
New York a place for the sale, transfer or delivery of its stock, or other certificates
included within this article, shall … file in the office of the tax commission a certificate
setting forth the name under which such business is, or is to be, conducted or transacted,
and the true or real full name or names of the person or persons conducting or transacting
the same, with the post office address or addresses of said person or persons, unless the
party so certifying be a corporation or trustee, in which event it shall set forth its said
principal office or place of business and when and where incorporated or organized….
Opinion
If a limited liability company (LLC) is engaged in making or negotiating sales or
transfers of shares or certificates of stock subject to tax under section 270 of the Tax Law or
conducting or transacting a stock brokerage business, the LLC is subject to the registration
requirement imposed under section 275-a of the Tax Law and is required to file Form MT-610.1.
However, an LLC is an unincorporated organization of one or more persons having
limited liability for the contractual and other liabilities of the business. (See New York Tax Status
of Limited Liability Companies and Limited Liability Partnerships, Publication 16 (1/03).) An
LLC is not formed as a corporation, but is formed pursuant to the New York Limited Liability
Company Law. For purposes of the Tax Law, the term “partnership” includes an LLC unless the
context requires otherwise. See section 2.6 of the Tax Law. An LLC does not issue shares or
certificates of its own stock. Therefore, the registration requirement placed by section 275-a of
the Tax Law on a corporation, stock association, company or trustee that maintains a principal
office, place of business, or a place within New York State for the sale, transfer or delivery of its
own stock or other certificates subject to tax under Article 12 of the Tax Law does not apply to
an LLC.

DATED: April 4, 2006

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein