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Limited Liability Companies.
It has been reported that Trump's lawyer, Michael Cohen paid off a porn star thru a LLC? We know that Trump has dozens, perhaps hundreds, of companies registered as "LLC's".
Obviously, these"LLC's" are a major component in these money-laundering operations. So, why can't the Congress do something about LLC's??
Why can they not pass a law to make LLC's more transparent?
Why can they not pass a law that would require all LLC transactions be moved to other types of business models or to show all transactions, with names and dates, of the LLC's?
Why cannot the Congress do away with LLC's completely? Declare them outlaws and punish those that have not obeyed the law?
In my opinion, money-laundering and LLC's are connected at the hip and should be reformed or dismantled.
Wounded Bear
(58,654 posts)I don't think we want to eliminate LLC's entirely, but transparency should be a pre-requisite.
We certainly need to do something there, but there are probably many LLC's that could be traced to government officials of all stripes, and there will be push back, likely from both sides.
kentuck
(111,094 posts)But hopefully, not the majority of Congress.
lastlib
(23,227 posts)Five employees, counting the owner and his wife who does his bookkeeping. Owner is the most honest and fair-minded individual I've ever known in my life. Small landscaping business, absolutely nothing shady.
That said, something needs to be done about the LLCs owned by the Manaforts of the world. (Or more importantly, something needs to be done about the Manaforts of the world.......)
MineralMan
(146,308 posts)The problem is that they're too hard to explain simply to the public. That's the real problem. If we could take it to court, we'd win, but in the court of public opinion, people want simplicity in their scandals.
It's too bad.
kentuck
(111,094 posts)The public likes "simple".
Wounded Bear
(58,654 posts)people are hiding and moving money using these instruments illegally all over the world.
It needs to be cleaned up.
MineralMan
(146,308 posts)of nefarious purposes. It's a business structure that naturally leads to a lack of transparency. Yet, most LLCs are just fine, and are just using that status to avoid the complexity of forming a corporation.
I'm not sure what the answer is, really. Getting rid of the LLC business organization as an organizational thing probably won't happen. They're relatively transparent to the IRS, but the IRS doesn't disclose tax information about individuals or companies. It can't, by law. Firing up an LLC is easy, cheap and public, but what transactions an LLC engages in isn't public information. Neither are the transactions of many corporations.
The issue here is that it will be very difficult to tie any of this directly to Trump. He has shell companies all over the place, often without his name being present on any of the original filing paperwork. That's why this won't be enough to affect Trump. It's too complicated to be outlined in a headline. And people are barely reading even headlines these days.
It's a real problem, but the real solution isn't simple at all.
lagomorph777
(30,613 posts)That doesn't seem to be simple enough to get any traction.
The Despicable Disposable Deplorables are simpler than simpletons, it seems.
MineralMan
(146,308 posts)That only works for Democrats. Republicans can get away with as much extramarital boinking as they want. They've been doing it for decades.
Trump's base celebrates philandering.
smirkymonkey
(63,221 posts)ever again after this. That pales in comparison to anything that Trump has done.
jberryhill
(62,444 posts)Because corporate formation and governance of corporate entities is a creature of state law, not federal law.
kentuck
(111,094 posts)As would a few other states that have turned into tax havens.
Wounded Bear
(58,654 posts)kentuck
(111,094 posts)But I don't know that Joe had anything to do with the creation of LLCs?
ksoze
(2,068 posts)LLC's are using extensively by small businesses, trusts, etc.. In most cases because the structure may be more favorable for shareholder tax reasons, etc. Because bad people can exploit them does mean they do not serve a good purpose in building a thriving economy. Trump, et al, will find a way around any corporate structure and the LLC was likely set up because it is easy to do - which is also a benefit to honest small business.
kentuck
(111,094 posts)...so long as they can get the benefit of LLCs. They could be reformed.
jberryhill
(62,444 posts)What do you mean by "transparency"? My law practice is an LLC, and I'm not opening the books for public review.
You seem to have latched onto this particular form of business organization to be somehow uniquely susceptible to being used for ill purposes than any other form of business organization merely based on the fact that it is a common form.
HopeAgain
(4,407 posts)Corporations (or Inc.s) are no more transparent. The United States has recognized legal entities since it's inception. L.L.C.s are a little more lax with regards to corporate requirements, but I don't think that makes them any more effective for carrying on criminal behavior than regular corporations.
kentuck
(111,094 posts)Yes, LLCs do have some advantages for small businesses but it is pretty obvious that they are being used in money laundering operations.
HopeAgain
(4,407 posts)The reporting requirements are the same for LLC's, corporations and partnerships.
Corporations are subjected to old-fashioned requirements that are nonsensical for small businesses. LLC's have fewer corporate formalities and greater tax flexibility, but that doesn't make it so they can get away with money laundering that corporations cannot.
My point is that the problem is not the type of entity at all.
kentuck
(111,094 posts)The money is much easier disguised under LLCs, don"t you think?
HopeAgain
(4,407 posts)I don't think there are any additional advantages for anonymity with LLC's. At least not any I am aware of. Corporations have to list at least one officer/Director and LLC's have to list on member, so that's the same.
jberryhill
(62,444 posts)Disclosure of that information is not required either in many states, absent a public stock offering.
panader0
(25,816 posts)Kilgore
(1,733 posts)Not the Feds.
kentuck
(111,094 posts)Just like they passed Federal marijuana laws. Some states say that is their business and they will approve marijuana if they want. But it is still a Federal law and people can be prosecuted if the Federal government so desires.
beachbum bob
(10,437 posts)and can have IRS oversight at any time, but like with personal tax structure, your privacy is shielded and can not have info released. Really this is an enforcement issue
SomethingNew
(279 posts)How is a LLC less transparent than anything else? I cant think if a single reason why an LLC is better for illegal activities.
regnaD kciN
(26,044 posts)...one for my photography business, one for my film-production company, and one for a now-dormant software and web development service.
If, as you suggest, LLCs be "outlawed," I would have no choice but to close down all three (and, in particular, to stop offering my photographs for sale and stock use, and to pull my feature film out of distribution). Operating any of these ventures as a sole proprietorship would be exposing myself to far too much risk (in general, I think you have to be nuts to run any business that way today), and running them as full corporations would be financially unfeasible.
Merlot
(9,696 posts)BoneyardDem
(1,202 posts)Last edited Fri Jan 19, 2018, 01:19 PM - Edit history (1)
to list Members or Managing Members at the time the papers are filed. Some states require that those members be listed within 1 year of filing. There is one State, Delaware, that Trump's organization (and in my experience many others) frequently uses to establish their LLC's. Not only because it's a tax haven for that type o entity, but also because that state permits LLC's to live in shadows and never requires a list of the members to be provided to the State for public records.
Gothmog
(145,231 posts)This is the so-called race to the bottom where some states such as Delaware and Nevada compete to be the less restrictive state
BoneyardDem
(1,202 posts)thanks.
And yes, I see a lot of Nevada entities, because of the tax advantages by forming the company entity in that state.
Gothmog
(145,231 posts)BoneyardDem
(1,202 posts)and that foreign LLC, is owned by two LLC's and both LLC's formed in Delaware. So we never get to see the names of the actual Members. The required in-state Agent is a corporation, in the business of registering LLC's, so getting details of the business operations is next to impossible. Almost always it's business activities that are vaguely described and subject to multiple interpretations. I work with local zoning official and details are always necessary for implementation of their Land Use Codes.
NCTraveler
(30,481 posts)It provides limited protections while still holding corporate status. Handymen, lawn crews, etc are often LLC. They are easy and the individual's don't always have to receive a 1099. It gives some control benefits like a sole proprietorship while affording access to corporate tax laws.
Gothmog
(145,231 posts)Back in the old days, limited partnerships had to have a general partner with real net worth to qualify as a partnership for tax ruling purposes. Those tax rules went away under "check the box" rules back in 1996 and since then LLCs have become more popular. A LLC is in effect a limited partnership with limited liability for its members or owners without the requirement of having a general partner. Limited partnerships are now being formed with general partners have a zero percentage interest in the limited partnership but still having management rights.
I have been using LLCs for deals for a long while and it now more common to use LLC instead of limited partnerships in many deals. Most of the portfolio companies in oil and gas deals that I represent are LLC in that the sponsors like the flexibility of LLCs. Many real estate deals now use LLCs instead of limited partnerships.
LLC can be single member entities while you always need two entities for a partnership. This helps you structure deals with bankruptcy remote entities that are necessary for Fannie Man and Freddie Mac loans.
Attacking LLC is like attacking trusts, corporations or limited partnerships. It is not the form of entity that is evil but what is being done with the entity.
Stinky The Clown
(67,799 posts)Lee-Lee
(6,324 posts)I have an LLC I formed when I was offered a chance to do some consulting work for another company part time doing what I do for my regular job.
Its nothing more than another type of business organization. Doing what I do as a sole proprietorship would be way too risky and not allow the same tax advatantges. What I do isnt big enough to need to organize as any kind of S-Corp or other corporation.
I will bet almost every small business you interact and do business with every day is an LLC.
And no, there is no need for more transparency. My business details are between me, my accountant and the IRS and nobody else. As mentioned DU itself is an LLC- should they be allowed to open their books to every GOP operative?
BoneyardDem
(1,202 posts)AT&T Mobility LLC., being one. Wal Mart Transportation LLC., Wal Mart.Com USA LLC., and numerous franchisees for well know national chains (7-Eleven and McDonalds for instance)