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WSJ: Nevada Corps Under IRS Scrutiny
I receive many calls people, and often retain new clients, who have previously established Nevada corporations or who ask me if I can help set up a Nevada corporation as part of an asset protection plan. I almost always respond that Nevada corporations are not necessary or beneficial asset protection tools for Florida residents. Nevertheless, many people have been convinced by some other source of the benefits of establishing business through Nevada corporations. There are on the internet many services which market services to help set up business in Nevada. Based on an article in today’s Wall Street Journal, the purported benefits of a Nevada corporation may be tax evasion rather than asset protection.
The December 6, 2006, issue of the Wall Street Journal had a Tax Report on the IRS efforts to crack down on taxpayers who attempt to evade taxes by forming entities with hidden ownership in states including Nevada and Delaware. The Journal says that the problem appears particularly severe in Nevada where random audits of Nevada corporations has exposes “widespread abuses.”The IRS is stepping up investigations of promoters of Nevada corporations as a wealth protection tool. In this case, these promoters are using “wealth protection” or “asset protection” as a euphemism for tax evasion.
As I have said many times before, asset protection may be a important element of estate planning and may be integrated with estate tax reduction, it usually has nothing to do with income tax. If s reduction. If someone is trying to convince you to set up a Nevada corporation for asset protection, please be careful and get a second opinion.
posted by Jonathan Alper, asset protection and banrkuptcy attorney, Orlando, Florida
December 6, 2006 in In The News | Permalink
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Comments
avoiding you paying big chunks of income taxes it does,but not in the sense most people understand it,instead your company owns your car,house ect,all the big purchases that you would have to show income on and pay tax on in order to buy them in the first place,instead everything right down to the dvd player in the house is owned by your nevada corporation,your just paid to live in it,or as an employee,and being paid a somewhat token yearly salary of sayy,16,000 to live on,THAT'S what you personally pay income tax on,
Posted by: gary | Feb 28, 2007 11:45:41 AM
The satellite radio channels are saturated with ads urging business owners to contact the advertisers to set up Nevada corporations to avoid taxes. The implication (never said outright) is that a person who has a business producing income in, say, Michigan can avoid paying taxes on that income by organizing the business as a Nevada corporation. We know better, but many people do not.
Posted by: M. Sean Fosmire | Dec 13, 2006 7:34:21 AM
