Shell corporationsFeb 15, 2017 By Steven R. Peck
Wyoming is doing what it can to respond to the 'Panama Papers'
Last year Wyoming found itself somewhat prominently mentioned in the big "Panama Papers" document leak that revealed to the public how wealthy individuals and corporations can use so-called "shell corporations" as deceptive front doors to hidden transactions that help the wealthy manipulators hide money overseas and avoid paying taxes in the United States.
Now the Wyoming Legislature wants to do something about it - but it can't do all that much.
Without going into deep detail on the Panama Papers, the leaked documents showed how it was possible to set up an empty corporation that has a name and an address, with someone's signature on the paperwork, but in effect does nothing more than create a legal entity in this country whose money actually is held offshore, where are tax laws are quite different. Money passes right through the shell corporation to hiding places with familiar names in the realm of tax division: Switzerland, the British Virgin Islands, the Bahamas and Hong Kong, among others.
Actually, United States isn't so big a player in these transactions as might be expected, but the Panama Papers did show that two U.S. states have by far the largest numbers of shell corporations used for these tax-evading purposes: Nevada and Wyoming. A lengthy news story in USA Today last year detailed some of these operations in Cheyenne.
Legislation proposed this year in the Wyoming Legislature aims to make it harder to register a shell corporation in the state by raising the corporate filing fee from $50 to...$75.
Obviously, that's not such a big increase that billionaires who are benefiting from Wyoming's corporate filing process are going to be all that discouraged. But it is an overt message of recognition to all involved that Wyoming has noticed this practice, that Wyoming doesn't particularly enjoy being linked to offshore tax havens, and that our state's officials are now watching more closely than they did before. (Further changes to Wyoming's protocol could remove some of the privacy protections for all corporate filings, but the state so far is disinclined to take that step.)
Beyond that, raising the fees to a level that actually would make a shell filer think twice also would impede corporate filings for completely legitimate operations in the state. We don't want that.So we are taking the steps we can take.
By no means is any of this Wyoming's fault. These business filings and related transactions are entirely legal. Wyoming did not create federal tax law, nor did the state actively participate in creating the deceptive paper trails that allow these billionaires and corporations to skirt federal taxes.
We do have a corporate filing structure and mechanism that was recognized by the manipulators and now is being used in ways that do deny the federal treasury of tax revenue is rightfully deserves.
The real solution to that won't come from action by the Wyoming Legislature. We are doing what we can. If more must be done, Congress and the president will have to get involved.