Tax-Averse California Firms Go to Nevada

The State of California is more than a little upset that some are fleeing to low tax Nevada.The L.A. Times has a great story on rejecting the high tax state of California by incorporating in Nevada:

Nevada corporate secrecy laws can make it impossible to unearth how exactly money is being used once it is shifted there. Unlike most other states, Nevada doesn't work cooperatively with the IRS to root out tax cheats — something the office of the Nevada secretary of state highlights in a pamphlet titled "Why Incorporate in Nevada?"

The pamphlet also says: "Stockholders, directors and officers need not live or hold meetings in Nevada, or even be U.S. citizens." And it touts "minimal reporting and disclosure requirements."

The incorporation schemes, meanwhile, may have received a boost from a recent U.S. Supreme Court decision that limits how far California tax agents can go in pursuing cases over the state line.

"If you are trying to track down a fraudster and the trail leads to Nevada, it is a dead-end," said Jack Blum, a Washington, D.C., attorney and tax-shelter expert who has assisted Congress in financial crime investigations. "The place has become famous internationally for enabling people who want to evade taxes or hide what they are doing. A lot of California people have figured this out.

Maybe California should cut their budget and then they wouldn't chase companies away.If you read one article today this should be it.