This is a two part question.

1.  I am trying to determine which U.S. states (if any) allow complete
anonymity for the principals (officers, directors, and shareholders
alike) of closely held C corporations.  I would like to avoid using
nominee officers as a way of gaining this privacy protection, if
possible, and I am not interested in bearer share options.  I thought
I had found my answer when I found a website which claimed that
incorporating in Delaware provides this very protection.  However, I
then found another site which said that in the annual filing which
Delaware requires, officers and directors DO need to be named...and so
any initial anonymity would be short-lived (if the website was in fact
correct).  Which (if either) of these sites was correct?  And if
Delaware does not provide this privacy, can it be found in any other
U.S. state?  Again, I am interested in privacy for ALL principals, not
just shareholders.  And note that although I am opposed to nominee
officers, I am in no way against having resident agents (which are
probably required for any out-of-state incorporation), and I would not
be opposed to having a resident agent's information appear in the
public record.  Finally, I believe that Delaware LLC's can provide the
principal privacy I seek, but what I'm requesting is information on
the closely held C corp.

2.  Is there any state which allows "principal privacy" as described
above, but for S corporations?  Just like part 1, I have read very
contradictory things on the internet and so I don't know what to
believe.  A site which brought this into question for me was one that
said that the IRS requires S corporations to explicitly name (on form
1120S perhaps?) all shareholders and the number of shares they hold. 
I don't mind the IRS knowing -- and if names are divulged on the 1120S
then I suppose it's not exactly in the public record -- but there are
times when businesses may need to provide copies of past tax returns
to potential creditors or investors, and through such means privacy
could be compromised if principal information must be included.  One
more thing I should mention here is that my current state of residence
is Pennsylvania.  If the state of incorporation disallows S
corporation pass-through taxation treatment for nonresidents such as
myself, then I may not want to incorporate an S corporation there. 
However, please do not exclude such a state from your answer, because
if moving is the only way to achieve what I want then I might consider
it.

Thank you, and good luck.

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Clarification of Question by timw1-ga on 09 Apr 2005 14:16 PDT

I have looked into part 2 of my question a little further and can now
simplify this somewhat.  Apparently the S corp reveals individual
shareholder information on K-1 Schedules, one for each shareholder. 
Each K-1 gives one particular shareholder's pro rata share of the
company's overall net income/loss that is reported on Schedule K.  If
a lender or investor would like to see the S corp's tax return, I
think it would be sufficient to include Schedule K without the various
K-1's...and so my previously mentioned concern about being required to
show principal information in such cases is probably not a problem. 
Only those guaranteeing the loan would have to provide their own
personal information.  So if Part 1 is answered successfully, Part 2
might be easy if in fact revealing principal information on schedules
K-1 is really the only difference privacy-wise between the C corp and
the S corp.  If that's the case, then the answer to part 2 could be
the same state as part 1 provided the state in question allows
nonresidents to treat the S corp as a pass-through entity.

I should also point out that if you verify that NO states offer the
privacy protection I want (again, without requring nominee officers or
bearer shares) -- then this would still be an acceptible answer
deserving of payment.

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Request for Question Clarification by pafalafa-ga on 11 Apr 2005 09:17 PDT

Hello there.

You might want to have a good look at this site:


http://www.nvinc.com/piercecorp.htm


It seems to say that (a) you're not going to find absolute privacy in
any state, but (b) the directors certainly get more legal protections
in some states than in others.


Is this sort of thing helpful, at all?


pafalafa-ga

---

Clarification of Question by timw1-ga on 11 Apr 2005 14:24 PDT

Hi pafalafa-ga, and thank you for the link.  I did find the
information interesting in that Nevada seems to be a state with a lot
of protections.

As far as the site seemingly implying not being able to find absolute
privacy in any state...I assume you are referring to the following
comment they make, which is really the only place they address the
subject: "once you obtain a business license in Nevada or, more
likely, in your home state, your privacy is out the window!"

I happen to know that this is a misrepresentation on their part. 
Business license requirements vary from place to place, and it is true
that in many cases you are required to publicly disclose private
information.  But their blanket statement that this is always the case
is not correct.  In fact, it isn't even correct for their own state of
Nevada.  In Nevada, business license provisions vary by county.  In
Douglas county, you don't need to file a business license at all:
http://www.nevada123.com/assettutorial.asp#privacy

Why would the first site fail to mention this?  I would assume that
it's because they themselves are not from Douglas county, but want my
business.  This is exactly the sort of problem I've run across when I
tried to find the answers to my questions myself: conflicting
information due to sites being wrong or, as is probably the case here,
even purposely deceitful.

Needless to say, I don't feel that this site answers the privacy
question.  I would accept an "it's not possible" answer, but I would
need a more reputable source than this.  Still, I thank you for the
link.  Although it didn't answer my questions, it did provide other
useful information.

This is only a comment, but I would like to point out that in any open
and legal governmental environment there should be no reason to
conceal the names of principals of a company  -  and I hope the laws
of no US state do.
The establishment of a corporation - a legal body that under the law
is treated as as individual would be -  separates responsibility for
the actions of the corporation from the those of the owners and those
of the managing individuals - in so far as it cannot be proved that
they are individually culpable.  The French name for a corporation,
societe anonyme - SA, describes the this principle relative to the
owners, which also applies to such corporations in other countries.
The laws for the incorporation of such companies, define the duties of
the managers, whatever their titles, and make them legally
responsible.  Since breaching of these responsibilites could give rise
to civil suits, the individuals deserve no protection of anonynimity.
Internet misuse is an example of the reasons for this:  the
concealment of the principals behind a website that spams or worse.
A question seeking information about where the anonymity of the
principals might be possible, raises the counter question:  What does
anyone want to do with information that would identify a US state of a
forein country that provieded this?

With all due respect, there ARE legitimate, legal reasons for wanting
privacy, and I do have such reasons.  A desire for privacy does NOT
equate with devious plans and whatnot.  For example, I have no
interest in skirting any taxes I might owe, as you should be able to
see from the way I phrased my question -- namely, in what I said would
constitute an acceptible answer.  I don't care what the IRS can find
out, only others who have no business knowing my finances.

I respect your point of view, and you do make salient points.  But
your stance that there could be no good reason for wanting privacy is
simply wrong.  For one, we don't live in a perfect society.  People
can and do become targets of spurious lawsuits simply because of the
assets they own.  I do not wish to become such a target simply due to
the shares I might own or the office I might hold.  Secondly, I will
be starting companies in totally unrelated fields.  I want each
company to have a fair chance to build a good reputation for itself
without being weighed down by my fortunes with the other.  If I am as
successful as I hope to be, then it is possible that if my name were
publicized it could become synonomous with one of the companies. 
Sounds great, except that just like an actor/actress I do not wish to
be pigeonholed/typecast -- because that would be to the detriment of
the other company.  You would understand all this better if I were to
describe the two companies to you -- but that would ruin the whole
privacy thing, wouldn't it?  Suffice it to say that they will both be
upstanding, law-abiding companies -- and my reasons for wanting
personal privacy are perfectly valid.

A desire for privacy does not, and should not, equate with nefarious
intent.  And frankly, I feel that someone who believes this is the
ONLY reason one could desire privacy has a point of view that maybe
could use some enlightenment.

Timw1-ga,
No offense was intended, and I do now understand your concern. I hope
someone can give you the answer that you want, but I still doubt it,
not just because the government will insist on knowing who the
principals really are, but also because  the tax accounting between
the S corp. and the K-1s would have to be for parties with the same
name.
I have tried to search for hits with "legal alias", but found nothing
that  suggested that a person could have a legal alias parallel to his
real name except in the situation of "doing business as", operating a
company that had personal name that differed from his real one.  You
probably know that already, but here is g-a answer on the subject: 
http://answers.google.com/answers/threadview?id=20069

It is also understandable that any lender would like to know with whom
he is dealing.  Banks and their staff are not supposed to reveal
information about customers, of course, but ..., well, you may be
justified to doubt that there could still be a leak.
My apologies for having appeared to question your integrity.
Good Luck!

Hi myoarin-ga,

No apology needed -- no harm, no foul :-)  And in fact I do agree with
you that in a world of anonymous companies there is potential for
abuse.  Due to my own morals and respect for the law, I would not
personally "go there" -- but I do understand the concern that those
lacking in morals might.

As for your comment that you'd expect governments to insist on knowing
who the principals are...this is usually the case, but not always.  If
I didn't have in my question a requirement that I don't wish to use
bearer shares or nominee officers, it would in fact be very easy to be
anonymous.  For example, Nevada, Wyoming, and many offshore companies
allow bearer shares.  Bearer shares don't have your name on them --
whoever holds them, owns the company.  This is actually the form those
with evil intent probably choose...they can hold the shares in a
saftety deposit box and control things, yet be free from a paper trail
if things "go wrong".  In my case (due to being quite legal) I *want*
proof of ownership, except I would prefer only those who really need
to, to be able to see (such as the IRS).

Also, the use of nominee officers is a widespread practice.  Nominees
are basically people whom you pay to be puppet officers in your
corporation, solely for the purpose listing their name in the public
records instead of your own.  I don't like this practice though, and
would like to achieve personal privacy by other legal means.  If I'm
not mistaken, it is in fact possible to form a Delaware LLC without
having to reveal the principals, and without using bearer shares or
nominee officers.  This is the only case I've found thus far though,
and it doesn't apply to C/S corporations.

As for your tax form comment -- I may have not made myself clear, but
I do realize that the names would need to match up, and I don't have a
problem at all with that.  I was only saying that if a bank needs to
see my *business* return, it should be sufficient for them to see
Schedule K, without seeing all the various K-1's (since the K-1's all
"add up" to what's on Schedule K).  If someone would *personally*
vouch for the loan then yea, the bank would probably want to see that
person's *individual* return too...but only that one person's, and
that person wouldn't necessarily have to be an officer or shareholder.

Oh, and thanks for the "legal alias" info...I found that interesting. 
But I agree that probably isn't going to provide the privacy I desire.
 With the alias being posted in the public record, one could probably
easily trace a name back to the original name.  If I'm not mistaken,
these DBA's aren't really for privacy protection but more for just the
ability to operate under a second name in addition to the first.  I
suppose they could provide *some* degree of privacy protection, but
only if nobody ever investigated.  This is the exact same situation as
with corporations though...you wouldn't know who the treasurer was,
say, unless you looked it up.  So I'm not sure we're looking at any
additional protection with that.

I agree with you down the line.  It seems to me that the problem is
wanting to have the advantage of an S corp, which I can understand. 
How much is the advantage, weighed against your desire for privacy?
But I guess it is not that simple, either.
I now see that Pafalafa has asked for a clarification, and he has
probably done more searching that gave even less useful results.
It is a very interesting question, but I doubt (I'm sure!) that I
can't provide anything more.

Good luck!