If a New Mexico anonymous LLC must register in California as a foreign LLC (for doing business in CA), does the LLC lose its anonymity?

Question

If a New Mexico anonymous LLC is required to register in California as a foreign LLC because it does business in the state of California, does that company as a whole lose some or all of its anonymity? Would those seeking to reveal the identity of the company's owners be able to through the California registration?

Answer 1

There is no separate and distinct entity type called a "New Mexico anonymous LLC". All New Mexico limited liability companies are anonymous to the same degree. New Mexico does not impose a separate entity level tax on LLCs that are taxed for federal income tax purposes as partnerships rather than as corporations and its income instead flows through to the individual tax returns of the members of IRS Form K-1. LLCs taxed at the federal level as corporations must file a state corporate income tax return in New Mexico if it does business there as well.

The New Mexico tax filings are confidential. But New Mexico tax officials have a right to disclosure of an LLCs owners from the LLC.

The ownership of an LLC is not disclosed on an application to register as a foreign LLC in California. California's Franchise Tax Board taxes limited liability companies doing business in the state on a crude, entity level income basis in which one of five possible flat fees is imposed based upon the California source income of the entity. In addition, owners of LLCs taxed as partnerships must report their share of California income from the LLC on California state income tax returns, and LLCs taxed as corporations must pay California state corporate income taxes.

The California tax filings are confidential. But California tax officials have a right to disclosure of an LLCs owners from the LLC.

There is (or recently was) litigation in California seeking to obtain disclosure of LLC ownership in a freedom of information act request (or the state equivalent). But it is unlikely to prevail because the only place that California maintains such records (and even then, not in an organized fashion) is in its tax records which are declared by statute to be confidential.

The privacy protections for owners of LLCs are essentially identical in California and New Mexico.

I am not aware of any U.S. state that makes ownership of an LLC a matter of public record, although I don't claim to know definitively the state of the LLC laws on that point in every single U.S. state.

The owners of an LLC must be disclosed to U.S. tax officials in connection with filing IRS Form 1065 with Schedule K-1 sent to the owners and filed with their personal form 1040s, if it is taxed as a partnership, and in connection IRS Form 1120 if it is taxed as a corporation, but this information is confidential.