Nevada Corporations and the IRS
If you have established a Nevada corporation as part of an asset protection plan and you are a Florida resident then you have probably learned of the great benefits of establishing a business through Nevada corporations. Based on an article in a recent column in the Wall Street Journal, the purported benefits of a Nevada corporation may be leaning toward tax evasion instead of asset protection.
On December 6, 2006, the Wall Street Journal wrote a column on the IRS' efforts to scrtinize taxpayers who attempted to evade income taxes by forming business entities with hidden ownership in states including Nevada and Delaware. The paper stated that the problem appeared widespead in Nevada where random audits of Nevada corporations have apparently exposed widespread abuse of business entities to avoid taxes.
The IRS is also apparently investigating promoters of Nevada corporations as wealth protection vehicles due to these promoters using "wealth protection" or "asset protection" as a vehicle for tax evasion.
Be advised that asset protection, although a very important part of estate planning and possibly integrated with estate tax reduction, usually has no bearing on income tax. If someone is trying to convince you to set up a Nevada corporation for asset protection, and says that you can evade income taxes, then don't do business with them and get professional advice.