Resident agents counter governor's plan

Nevada's Senate Judiciary Committee will soon introduce a bill proposing a different scheme for generating more revenue from the fees charged to corporations by the state's Secretary of State.

Gov.

Kenny Guinn's tax plan, which the Senate and Assembly Taxation Committees began debating last week, includes increasing all Secretary of State fees by 50 percent.

The Judiciary bill, written by the Nevada Resident Agents Association, does not go that far but its sponsors claim it would raise a lot more revenue than the governor's recommendation.

"The governor's plan would lose money by raising the barriers to entry to filing here," said Derek Rowley, president of the Nevada Resident Agents Association as well as president of Corporate Service Center Inc., a Reno-based resident agent.

"The governor's proposal showed a complete lack of understanding of the industry."

Resident agents act as the legal representatives of companies that choose to incorporate in Nevada.

Many firms specialize in the work.

About 50,000 companies incorporate here every year because the state has no income tax and its regulations require corporations to divulge little information.

But Rowley says Nevada would lose its competitive edge if its fees were raised by as much as the governor is suggesting.

Rowley compares Nevada to four other states with which it most closely competes for corporate filings Delaware, Florida, Colorado and Wyoming.

The national average among all states is one corporate filing per 184 citizens.

The average among those four states is one filing per 67 citizens.

In Nevada, its one filing per 35 citizens, according to Rowley.

But Nevada's costs are higher than its four closest rivals and the governor's plan would push Nevada out of the race, claims Rowley.

"A 50 percent increase would take us out of the competition," he said.

The average state corporate filing fee, for example, is $70.

Nevada's is now $175, and a 50 percent jump would put it over $260.

The initial lists that corporations must file a month after incorporating now costs $160 here compared to $37.50 on average in other states.

The governor's plan would bump that to $240.

So the resident agents' bill recommends lowering, instead of raising, some of the existing fees.

Its plan calls for dropping the fee for incorporation to $75, from the current $175, and lowering the initial list fee to $125, from the current $175.

Instead, the resident agents propose raising some of the fees that accrue after a company incorporates here, such as fees paid when filing amendments or dissolution.

In addition, the group says the initial filing fees could be stratified so that companies with higher valuations would pay a higher fee.

Follow-on fees could also be tiered, said Rowley.

Another component of the resident agents' bill is a provision for the creation of limited liability limited partnerships.

Currently, limited liability partnerships include limited partners whose liability is limited to their investment, and general partners who manage the operation and assume unlimited liability.

The resident agents propose creating a new kind of entity that allows general partners to also limit their liability.

The new category would make the state more competitive with a handful of other states where LLLPs are allowed, and it would help raise revenue by creating a new set of fees, said Rowley.

The final piece of the resident agents' bill is a collection of miscellaneous provisions that the group claims would make Nevada more appealing to incorporate in.

The bill, for example, proposes allowing a third party to file limited partnerships here.

Now a general partner must sign a lot of paperwork which Rowley says deters limited partnerships from filing here.

The association originally filed three bill draft requests that are now being consolidated into a single bill.

Rowley expects it to be introduced into the Senate within the next few weeks.

"We're coming to the legislature saying look we don't want to avoid paying fees," said Rowley.

"But we propose reorganizing the Secretary of State fees so they make sense."