I once stumbled into a conversation with a provider about setting up a business for her future, to document her income, etc.
Just curious: are there many providers out there who have earned lot's of money, but are not sure what to do with it, how to report any of it, and how best to start their future careers? I've met providers who've had ambitions ranging from running their own hotels, designing clothes, opening a flower shop, etc.
I've always found it facinating how this professional could help a provider begin her dream career...
I have always counselled my provider clients to open "real businesses" specifically to avoid the IRS and State tax risks. Failure to report significant income is a major crime with major reprecussions likely. Providing per se is usually not penalized in a major way.
Sadly, most take the risk. They are simply wrong; it's not worth it.
Girls can spend $1,000's per month on advertising. They give their personal credit card and identification to guys, many of them use that to harrass them later. The escorts I know, who have their act together have a corporation which pays their advertising, and there are simple ways to protect their privacy, enabling them to recieve mail, cash money orders, even take personal checks and use credit cards without anyone knowing their real name.
I'm not talking about hiding from the IRS, I agree, the chances that one day someone will rat her hout is there, so it's nice to have a "consulting" or web design, or other buisiness. It is also nice to have something so if they need to explain what they do to family, friends or a civie date, there really is something there (even if only a quasi shell).
Why, pray tell, would any individual provider incorporate? And don't tell me to incorporate in NV while doing business in some other state, please.
Incorporation creates more hassle, cost and visibility. Better to do a cheap DBA, get a bank account and keep track of expenses. The bookkeeping and tax benefits are identical -- assuming one elects sub-S tax status -- and there are zero corporate franchise tax fees, statements of officers and directors and on and on.
I know some who file for a dba in a faraway county, get their bank account with a statewide bank in that county and do their business at the other end of the state. Incorporating in this business doesn't seem smart to me.
Tell me why; I'd like to hear your thoughts.
You can incorporate anywhere you want. I would not choose a state which let's you check too much information on line. Then you can have "nominee" shareholders, you can also simply have a trusted friend, or CPA be your agent for service of process (e.g. if you care in Cal. and use a Cal. corp.) ON the corporation papers you also have the incorporator not be the actual owner. Then mix it up a bit and have the secretary of state change your corporate name. This makes it a little more ackward to track down the corporation since most people ask the secretary of state for infor by name of the entity. When you get a EIN don't use your own to apply for it, but again that of a friend.
For a post office box use a US Post office box, while I don't want someone to lie, perhaps the actual user of the box can't make it to open it, so the person who opens the box (a friend) goes down with his driver's license and a copy of a rental agreement, or utility bill, he pays cash, and gives the key to the "user". Now her name is not connected to the box in anyway.
While most escorts accept only cash from cleints, what happens if a vendor tries tracking down the girl. She wrote a check from a corporation. The checking account allows a "book keeper" with a different name as a signatory on the account. Without having a subpoena, all a vendor with a cancelled check could find is the name of the corporation and the name of the incorporator and agent for service of process. While annual statements are filed with the Secretary of state, no one checks who's name is on the document, and no social security numbers are required, so use a nom de plume. Again, while this sounds like a receipie for breaking the law, come on, cons have used these scams of ages.
By the way, ALWAYS use a bank account with no ties to the state in which you live. E.g. if in Calif. use a bank which only has a branch in Ohio or New York. Maybe etrade would work. This way no once can subpoena the account or even levy if there is a judgment. Again, this is not a secret. Then again, I just no more crooks then most lawyers.
Off shore is a waste of time for an escort.
Now if someone wants privacy, don't use a corporation, use a spendthrift trust.
Now I've given you guys secrets people pay big bucks for, or for which they hung out in prison to learn.
Now I'm curious if, or how much of this post gets posted.
Then again, like other say, this is just a delusional legal fiction of what might work. And, there are no guarrantees!
Your ideas are not only wrong, they and you are dangerous. Simply stated, you do not know what you are talking about.
1. It's true a person may incorporate in any state but then to do business in another state, the corporation is required to register with that state's governmental departments, pay that state's corporate fees, file tax returns and comply with its laws. If the corporation fails to do that (register as a foreign corporation) it has no standing (right) to defend or sue in that state's courts and all corporate protections are unavailable to it, its shareholders, officers and directors.
In the state of incorporation, there must also be a person or other corporation with an address - other than a P.O. box - in the incorporating state. Fees and taxes must be paid in the incorporating state too.
Finding a friend to stand-in for the provider is easily said but tougher to do and, when the cops or the IRS comes calling, they will rat you out in a trice.
An incorporator remains the nominal CEO of the corporation until its board elects officers. When that's done, those names are required by the incorporating state. Service of process, if an individual, must be a person with a real address in the state. (Your crackpot theory requires 2 such agents, one for each state.
As to having a friend get an EIN that you can use has 2 flaws:
1. again, if your idea was valid, the friend would rat you out on the IRS' first call; and
2. it's the corporation that must apply for the EIN Dummy, not the individual.
Your other notion about hiding the name on a checking account is also nuts. If a vendor initiates a lawsuit, the vendor's lawyer can issue a subpoena for bank records; it's a snap. I do it frequently. And the Bank will comply. Corporations cannot oppose a bank subpoena as a person can on privacy issues so opposition will fail.
The nom de plume idea contradicts your statement that you don't encourage people to lie. And it's a perjurious statement as all corporate filings are made under penalty of perjury.
Yes, people try this kind of stuff. Big guys make it work as they have smart lawyers. I hope you are not a lawyer as your advice is illegal, unethical and wrong. I know you are not very smart. Spendthrift trust? You've got to be kidding.
Any provider who pays any attention to you is looking for trouble in many ways and all of it is unnecessary.
As I wrote above, you are dangerous.
Thanks so much for posting that rodmewell. I have been following the legal forum and I have seen so much tax advice that I feel is wrong and dangerous, but I am not that experienced and the information is given with such conviction that I figure they must know more than me.
Keep posting whenever the advice given could be dangerous because you really do help people.
-Kelley
Thank you for your reply. You seem to agree with what I said by your statement "people try this kind of stuff." and "Big guys make it work as they have smart lawyers."
Well, perhaps my post was not well written, as most posts, it was done in haste. Yes, I'm a lawyer, though maybe not as smart as you. I don't care, though as said above, you do seem to agree that my ideas are used and can work, though the legal morality may be questionable.
To be clear, the ideas I gave would not help someone hide money from the IRS, and if there was a law suit, then of course information could be found, technically yes, you should register in the state where you do business, and file a tax return. I though my post was clear that I was not saying to avoid paying taxes, but the goal was privacy and to have a legit business entity, etc. And yes, PO boxes are not to be used for corporate addresses, and while I have never heard of the Secretary of State suspending a corporation over that, I intended that the trusted friend, or preferably the CPA's address wouild be used on the statement of to protect the privacy of the indiviudal "owner". The EIN is for the corporation, but you need a human to call the IRS to get the number, or fill out the form, and they want your number for that. So who is the dummy?
Penalty of perjuy? What is the penalty for that? Pretty much nothing, and what if you accidently misspell your name a little, or just handwrote your name and it was hard to read? Yeah, I've seen it done before. And yes, that is the only aspect which is not kosher, but I don't think that will kill anybody, or make this great nation of ours collapse into anarchy. And believe me, so long as a tax return is filed, and the $800 is paid each year, or whatever your state requires, no government employee cares.
I guess some lawyers like to walk on the edge, and others don't. But since this is a forum for the free exchange of cutting edge ideas, or perhaps exchange of fantasies I guess I'm only as dangerous as I, or someone else lets me!
Recommending the acts which you say are no big deal is a major ethical breach and grounds for serious bar discipline. Lawyers walking on the edge is one thing, but you seem eager to jump off the edge and take others with you.
-- Modified on 4/11/2005 5:29:35 PM
I thought this was a forum for the free exchange of ideas and concepts, even if they are wild, on or over the edge; I guess I was wrong. I also don't think you guys have carefully considered what I propose for privacy protection. oh well.
The average escort pays money orders for advertising or uses their personal credit card. That’s stupid. They get shaken down for money and freebies from others who know their real names. You guys don’t want to do anything to help them and would have them store their money in a shoebox.
I think paying cash for rent, a new car, plane tickets, etc. is not the way to go. One day when someone does rat them out, they cannot justify their expenses. My way, they have a business, protect their privacy, justify some of their income, and pay taxes. What is wrong with that? Nothing is bullet proof, but I doubt someone will be suing an escort for anything related to their corporation so there is no way a subpoena can be served upon them.
You guys are just too narrow minded. And if someone sued the escort’s company, what they see will be payments to city source, etc. for advertising. Big deal. If they turn them into the IRS the IRS has a difficult case if the numbers are remotely are supported. Sure declaring $20,000 or less a year, with a life style far exceeding her apparent or imputed income. E.g. BMW, condo (or $3,000 month rent), lot’s of cash on deposit at a bank, stocks and mutual funds increasing with deposits but very little income, and no W2 from a employer, etc., personal or credit cards showing $100K+ of annual expenses flowing through it, and all paid by money orders, etc. Yeah, that is a tip off. I am also only talking about an escort who is making over $100K a year and not blowing it on drugs. For them, they are smart business people and can make it work.
Now I assume that the lawyers on this board who are criticizing me also regularly engage in breaking the law, indirectly practice law in jurisdictions to which you are not licensed, directly or indirectly counsel and advise others to break the law, conspire with others to break the law, and perhaps by their participation in the free speech this board provides, are assisting in what some law enforcement agencies would consider a criminal enterprise (because it assists others to break the law, even if not directly, but I can see a RICO action here). Yet you hypocrites want this board to be the equivalent of a free legal service.
Come on, you guys are hypocrites. I doubt very few of you guys have ever prosecuted or defended a white collar criminal, dealt or tried real estate and financial fraud cases. Criminals are not only smarter then most lawyers; they are the practical and aware of the limitations of government bureaucrats. They know they can get away with almost anything so long as they don’t rip off the wrong person.
The more I think about what I previously posted, while there are some additional steps I have had clients do, and I have thought of some more ideas, I stand behind what I posted, and if you thought about it, you would see that it works. Then again, I am dangerous, have a “sharp practice”, etc. I represent some very rich and private people. My clients have their privacy protected, which is what they really care about, and if they every got caught, they can easily explain a mistake in filling out the forms. My clients pay taxes, and have peace of mind
Here is a query for you, recently I advised clients not to file for CA tax amnesty. I think it is another example of another governmental trap and is a fraud against honest business people of the state. My clients all had valid LLC’s or corporations, no debts other then failure to pay annual corporate taxes and file annual statements. Most filed final tax returns.
I would assume you guys would also counsel your corporate clients to apply for Calif. tax amnesty paying $1,000’s of past annual fees and penalties, apply for an offer in compromise, and to formerly dissolve it rather then to assert a defense under Ralite. Yeah, I’m sure you think that this old decision is cutting edge and illegal.
I guess this will be my last posting on or over the cutting edge, since I’m dangerous and this board is not open to other's opinions. I'll just slither away. Cie la vie!
I regularly have told my provider clients to establish a business legitimately, to declare their income, to pay by check and to avoid IRS hassles thereby. Regularly. Read my prior posts on the topic.
There are legitimate procedures for establishing such a business. Your recommendations were illegitimate, dangerous for the provider-client and unethical.
As to experience, I have decades of corporate experience, including running an international public corporation with thousands of employees. As an attorney, I regularly handle business, business litigation and family law litigation. That is more than enough for any provider's protection.
This is not a forum for the exchange of crackpot approaches to serious issues. Those of us who care about doing the task properly have a duty to expose those loose cannons like you.
If, in fact, you have posted your last, good riddance.
You are missing the basic point. When people seek guidance on this board, they want guidance that will help them AVOID legal problems. Your suggestions would CREATE legal problems.
Legal advice should never take the form of "go ahead and commit this crime, since you'll probably get away with it". You freely cross that line and act as if it is just an arbitrary standard. Since you seem determined not to recognize the problem in your reasoning, I won't waste time trying to explain it.
And for the record - I have never, ever, suggested that a client perform an illegal act and I have never practiced in a jurisdiction which had not authorized me to do so. The other issues have not come up in my practice, but if they do I will not conduct myself the way you "assume" we all do "regularly".
Your comments about the illegality of hobbying also miss the point. Hobbying only puts the hobbyist and the provider at risk, and both are taking that risk knowingly and willingly. You seem to regularly put others at risk, and the others evidently include people to whom you owe a fiduciary duty.
What I wrote before stands. If you really are a lawyer then you are a danger to your clients and to the profession. Rodmewell is 100% right about you. People on this board who act on your suggestions are just asking for trouble, and you should stop posting before you really destroy someone's life.
I am looking into this but for right now I just bought 3 roundtrip international tickets cheaply and will let the money flow overseas
I'm not up to speed on federal laws and custom rules, but transporting money overseas is not the answer. My gut tells me hiding your money in your mattress would be more prudent than trying to evade tax consequences through international travel. You don't want to be a mule. Now is not the time to be caught with a suitcase of cash heading for some 3rd world country. Go see a reputable lawyer, explain your situation, and ask if there is anything you can do to reduce your criminal exposure.
And make sure the lawyer you talk to is not LAAvocat. I shudder at the thought of what you and he might come up with if you put your heads together.
I meant to say that I bought three roundtrip tickets and intend on having alot of fun drinking and partying up a storm. I don't have this hobby full time b/c of tax issues but when I start to get more than I can handle, it is time to buy a lot of film and go first class thro Europe w/o a paper trail