Corporation Sole

Commonly Used in Tax Schemes; Oregon Law Bans New Filings

With Gov. Kate Brown’s signing of Senate Bill 77 on June 8, 2015, Oregon law prevented the filing of new corporations sole. The obscure and obsolete form of religious nonprofit corporation is most commonly used in illegal tax-avoidance schemes.

Existing corporations sole may continue to operate as long as they maintain an active business registration with the Secretary of State Corporation Division.

The language was updated during the 2023 legislative session to prevent reinstatement of corporation soles that were administratively dissolved.

Because of heightened awareness of liability issues and fiduciary responsibility, most legitimate religious organizations ceased using the corporation sole form, instead electing to organize as traditional non-profit corporations.

Oregon Targeted

Promoters of corporations sole as a tax-avoidance scheme highlighted Oregon as a preferred state for filing. Of the 270 active corporation soles registered with the Secretary of State Corporation Division, 65% were filed in 2 years by promoters as tax-avoidance packages, costing victims hundreds or thousands of dollars.

IRS Weighs In

According to the Internal Revenue Service, a taxpayer cannot use a corporation sole created to avoid or evade income taxes as a means to exclude the taxpayer's personal income from tax. Promoters fraudulently claim that people who form and transfer all their assets into a corporation sole are exempt from taxes. In some cases, promoters market frivolous claims that the corporation sole exempts the person from federal, state and local laws as well.