Wednesday, June 15, 2005 | 10:51 a.m.
One last-minute compromise bill approved by the Nevada Legislature before it adjourned last week would require limited liability companies to reveal more about their members in land transactions with state and local government.
If Senate Bill 338 is signed by Gov. Kenny Guinn, the identity of anyone who owns at least 1 percent of an LLC would have to be disclosed during land sales, leases or transfers involving the company and local or state government.
An LLC is an increasingly popular type of company whose owners, known as members, are usually taxed by the federal government as a partnership. An increasing number of land transactions in the Las Vegas Valley involve LLCs.
SB338 was passed after the Las Vegas Sun reported in May that investigators probing questionable Clark County airport land deals were having problems identifying all the businessmen involved because of the way state law protects the secrecy of LLC members.
Also reported was the increasing use of LLCs to make campaign contributions to political candidates, which has made it more difficult to trace the source of the donations since little is known about the companies. Each LLC may give $5,000 to statewide candidates in primary and general elections but there is nothing to stop businessmen from exceeding those limits by simply giving money through multiple LLCs.
An Assembly amendment to SB338 would have required each business campaign donor to reveal each person who owns at least 1 percent of the company. But that provision was dropped from the bill in the compromise that was adopted by the Legislature on June 5.
State law requires that when LLCs register with the Secretary of State's office only the name of the managing member has to be disclosed. The LLC has to file an informational return with the Internal Revenue Service that reveals the names of all company members who will be reporting income from the LLC on their individual federal tax returns.
But the only way that local and state authorities can gain access to that information from the IRS is through a court order.
There were 73,500 LLCs in Nevada last year, a sharp increase from the 3,317 that existed in 1995. SB338 is expected to have most impact on local government.
The city of Las Vegas already requires all LLCs that do business with the city to reveal all members who own at least 1 percent of the company. But the Clark County requirement, adopted in June 2002, requires disclosure only of members who own more than 5 percent of an LLC.
"The effect on the county will be negligible, but anytime you have greater disclosure the taxpayers benefit," county spokesman Erik Pappa said.
SB338 is not expected to have much impact on state land transactions, Assembly Majority Leader Barbara Buckley, D-Las Vegas, a backer of the legislation, said.
"The state generally doesn't get involved in that many land transactions," Buckley said.
The state currently requires LLCs and other companies involved in state land deals to reveal only information that is already forwarded to the secretary of state's office.
"We just have to make sure that it's a valid company," state public lands administrator Pam Wilcox said.
Wilcox said the state rarely gets involved in land transactions beyond acquisitions that involve environmentally sensitive acreage. The state owns about 3,000 acres of vacant land set aside for schools but none of that land is in the Las Vegas Valley.
"We might sell one parcel a year," Wilcox said.
Because most of the McCarran International Airport land swaps under investigation occurred before 2002, ownership disclosure was not required of any of the LLCs that participated in those transactions. The investigation centers on whether the county got a fair price for land that it swapped with the businessmen. In many cases, the businessmen quickly sold the property to others for large profits.
Derek Rowley, president of the Nevada Resident Agent Association, whose members represent thousands of LLCs in the state, did not return repeated telephone calls for comment.
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