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Editorial 8 MIN READ

New York in late 2020: the fees did not move, the backlog did

A $200 filing fee, a $9 biennial bill, and a DOS processing queue that turned a five-day formation into a six-week wait

The Editors
Staff, Incorporator.org
8 min read Updated
Contents 8 sections
  1. The fee schedule, unchanged since the last review
  2. The one real cost still lives in the newspaper column
  3. The Biennial Statement mechanics
  4. The tax side: Tax Law § 658 and the gross-receipts tiers
  5. The COVID-era backlog is the real 2020 story
  6. Good-standing certificates and the diligence calendar
  7. Who New York still makes sense for in late 2020
  8. Sources

he New York LLC fee schedule did not change in 2020. Articles of Organization are still $200, the Biennial Statement is still $9, and the Tax Law § 658 gross-receipts fee still tops out at $4,500 for pass-throughs above a million dollars in New York source income. What changed is how long it takes the Department of State to stamp any of that paperwork.

This is a mid-cycle review for someone forming, renewing, or amending a New York entity in the last weeks of 2020, written for a reader who already knows the spine of the system from the 2016 New York formation guide and the 2018 publication-requirement review. The numbers are the same. The calendar is not.

The fee schedule, unchanged since the last review

The NY Department of State, Division of Corporations publishes a fee schedule at dos.ny.gov that has held flat through the whole TCJA era and through 2020. Articles of Organization for a domestic LLC are $200. An Application for Authority for a foreign LLC is $250. A Certificate of Amendment is $60. A Certificate of Change (to swap the address for service of process, or the registered agent, without touching anything else) is $30. A Certificate of Dissolution is $60, a Certificate of Surrender of Authority for a foreign LLC is $60. A Certificate of Publication, which you file after the six-week newspaper run under LLC Law § 206, is $50.

Expedited service is a separate menu paid on top of the substantive fee. The DOS sells 24-hour processing for $25, same-day for $75, and two-hour for $150. In ordinary years these prices buy what they advertise, assuming the document crosses the counter (or the fax, which the Department still runs) before the cut-off in the morning.

Corporations have their own line on the same schedule. A Certificate of Incorporation is $125 plus a share tax, computed at $0.05 per share for the first 20,000 authorized shares and tapering after. Most new C-corps file with 200 authorized shares and pay the $10 floor, bringing the total to $135. Foreign corporation qualification is $225. The corporate Biennial Statement is $9, same as the LLC version. New York has never used Biennial Statement fees as a revenue lever, and 2020 did not change that.

The one real cost still lives in the newspaper column

Section 206 of the Limited Liability Company Law remains in force, and nothing in the 2019-2020 legislative session dislodged it. Assembly Bill A1514 and its Senate companion S2375, both filed in January 2019 to repeal the publication requirement outright, sat in the Assembly Judiciary Committee and the Senate Corporations, Authorities, and Commissions Committee respectively, and neither came to a floor vote before the session concluded. This is the same posture the reform bills have occupied every session since the Jakks Pacific / Barklee trade press started running in 2006. The publication bill, for an LLC formed with a New York County (Manhattan) office address, still runs $1,500 to $2,000 across the two clerk-designated newspapers for the full six-week run, plus the $50 Certificate of Publication fee when you file the affidavits at DOS. An LLC that lists an office in Albany County or Erie County pays several hundred dollars less, because the designated papers in those counties price community rates rather than Manhattan legal-notice rates.

The $200 state filing is a rounding error against the publication bill. It has been since 1994, and it is in 2020.

The Biennial Statement mechanics

Every New York LLC and corporation files a Biennial Statement every two years. The filing window is the calendar month of the anniversary of formation or qualification. An LLC formed in March 2017 files its first Biennial Statement in March 2019 and its next in March 2021. The fee is $9, paid by credit card if you file online or by check if you mail the preprinted form the Department sends to the registered address. The form asks for the current service-of-process address, the CEO if the entity is a corporation, and nothing else.

Missing the Biennial Statement does not get the entity dissolved. It gets the entity marked "past due" on the DOS entity-search database, which is a problem when a lender, a landlord, or a counterparty pulls the record during diligence and sees a status that is not "Active." The cure is to file the overdue statement and the $9; there is no penalty. This is unusual; most states charge $25 or more for a late annual report. New York's posture here is that the Biennial Statement is a reminder system, not a revenue one.

The tax side: Tax Law § 658 and the gross-receipts tiers

New York's franchise-like charge on pass-through LLCs lives in Tax Law § 658(c)(3) and is still called, on the check stub, the "annual filing fee." It is paid by the LLC itself, on IT-204-LL, by the fifteenth day of the third month after the end of the LLC's tax year; for a calendar-year LLC, that is March 15. The tiers, unchanged through 2020:

  • Up to $100,000 in New York source gross income: $25
  • $100,001 to $250,000: $50
  • $250,001 to $500,000: $175
  • $500,001 to $1,000,000: $500
  • $1,000,001 to $5,000,000: $1,500
  • $5,000,001 to $25,000,000: $3,000
  • Over $25,000,000: $4,500

Single-member LLCs disregarded for federal tax purposes still pay a flat $25 regardless of their New York source gross income, which makes the structure cheap for a sole-proprietor consultancy and expensive for a three-partner real-estate fund hitting the middle tiers. Partnerships that are not LLCs pay under the same schedule. S-corp conversions pay separately on CT-3-S.

The tiers are based on New York source gross income, not federal taxable income. A profitable LLC with $400,000 of gross receipts and $80,000 of net income pays the $175 bracket, not the bracket its profit margin would suggest. Founders who form in New York and expect high gross, low net should price this into year-one projections and not treat the $25 minimum as the working number.

The COVID-era backlog is the real 2020 story

From March 2020 through the summer, the Department of State closed its walk-in counter at 99 Washington Avenue in Albany and shifted to a fully mailed, faxed, or online workflow. The online workflow handles name reservations, LLC Articles of Organization for the most common templates, Biennial Statements, and Certificates of Change. Anything non-standard, anything a corporation has to file, any amendment that touches unusual clauses, and any expedite request that cannot be processed online still had to move by fax or mail, and the backlog on that side of the house grew through the spring and fall.

In ordinary years, standard LLC Articles of Organization filed online return a filing receipt in one to two business days. Standard corporate filings by mail return in five to seven business days. In November and December 2020, the DOS's own status page has been reporting processing times of four to six weeks on mailed-in corporate filings, and the Department has acknowledged the backlog in several calls to the New York State Bar Association's Business Law Section. The expedited fees still bought their advertised turnaround on filings that qualified for the online or fax path. They did not buy it on filings that sat in the mailroom.

For a founder or counsel moving a deal to close in Q4 2020, the working assumption should be: file online where you can; pay the $25 expedite; and if the filing has to go by mail, add four weeks and work the conditional-closing language accordingly. Planning against the pre-pandemic seven-day horizon has left several deal teams scrambling for bridging paperwork in October and November.

Good-standing certificates and the diligence calendar

A Certificate of Status (New York's version of a Certificate of Good Standing) costs $25 and is available online through the DOS's certificate-request system. The online product is the fast path and has held up through the pandemic. Certified copies of filed documents, which a lender or acquirer will ask for alongside the status certificate, cost $10 per document and run through the same queue as paper filings, meaning the current four-to-six-week mail backlog applies. A deal diligence checklist that assumes "pull certified copies this week, close next week" has been failing since roughly April. Add the same four weeks to the diligence calendar that you added to the filing calendar.

Dissolutions deserve a separate note. A New York LLC dissolving in 2020 files a Certificate of Dissolution for $60 after winding up and, if it is a non-disregarded filer, has to clear its § 658 annual filing fee through the date of dissolution. The Department of Taxation and Finance issues a consent letter for corporations but does not for LLCs; an LLC dissolves by filing with DOS alone. Tax clearance for the corporate side has slowed along with everything else, and counsel moving a corporate wind-down should assume two to three months rather than the four to six weeks that was typical in 2019.

Who New York still makes sense for in late 2020

The answer is the same as it was in 2016, with a heavier footnote on timing. New York makes sense for an operating business whose customers, employees, and office are in New York and that would be foreign- qualifying back in anyway if it formed out of state. It makes sense for a real-estate LLC holding a New York property, because the foreign-qualification route for a Delaware holder will pull the same publication bill in any event. It makes sense for a professional service LLC whose members are New York licensees and whose practice has to comply with New York's professional-entity rules.

It does not make sense as a paper-domicile play. Wyoming, South Dakota, and Delaware are all cheaper to form in and cheaper to maintain, and none of them carry the publication bill or the backlog. A consultancy whose only New York tie is the founder's apartment lease should form at home if home is not New York, and otherwise should price the first year at the $200 filing fee plus the $1,500 to $2,000 Manhattan publication bill plus the $25 annual filing fee plus the registered-agent charge, total in the range of $2,000 to $2,500, and decide on that basis.

The fee schedule held through 2020. The calendar did not, and will not be fully back until the Department works through the mail queue it accumulated while the counter was closed. Anyone relying on a New York filing to land on a specific date in early 2021 should file it now.

Sources

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