NRAI Compliance Updates - January, 2006

NRAI Compliance Updates - January, 2006

Greetings,

The legislative season is off to a fast start. I have included what I believe are the bills of interest that have been filed so far. As always, I have provided links to the state legislative web sites that provide the full text of the current version of each bill. Also, in response to a great suggestion from one our readers, I have added an indicator after the bill number to help locate bills of interest.

Robert K. Rowell
General Counsel

New, Pending and Passed Legislation

Federal Legislation

HB 4618 Securities

To amend the Securities Exchange Act of 1934 to establish rules and procedures for the delegation of compliance and inspections authority to the operating divisions of the Securities and Exchange Commission, and for other purposes.

Full Text available at: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:h4618ih.txt.pdf

Current Bill Status: December 17, 2005 Referred to the House Committee on Financial Services

SB 2111 Federal Tax

A bill to amend the Internal Revenue Code of 1986 to provide a credit for small business employee training expenses, to increase the exclusion of capital gains from small business stocks, to extend expensing for small businesses, and for other purposes.

Full Text available at: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:s2111is.txt.pdf

Current Bill Status: December 15, 2005 referred to the Committee on Finance.

SB 2122 Federal Tax

A bill to terminate the Internal Revenue Code of 1986, and for other purposes

Full Text available at: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:s2122is.txt.pdf

Current Bill Status: December 16, 2005 referred to the Committee on Finance.

Delaware

Current Issue of the Delaware Register of Regulations: http://legis.state.de.us/LIS/Register.nsf/vwRegisters/97/$file/January2006.pdf?openelement

Kansas

HB 2548 Franchise Tax

Three-year phase out of the franchise tax

Full Text available at: http://www.kslegislature.org/bills/2006/2548.pdf

Current Bill Status: Introduced January 9, 2006

Kentucky

HB 234 Partnerships

Create two new subchapters of KRS Chapter 362, relating to partnerships, to adopt with changes the Uniform Partnership Act, as approved by the National Conference of Commissioners on Uniform State Laws in 1994 and with amendments thereto in 1997, and the Uniform Limited Partnership Act, as approved by the National Conference of Commissioners on Uniform State Laws in 2001; create a new section of KRS Chapter 275, the Kentucky Limited Liability Company Act, to permit the conversion of a limited liability company to a limited partnership; amend KRS 446.010, relating to definitions for the Kentucky Revised Statutes, to provide that the word "partnership" shall include all varieties of both general and limited partnerships, unless otherwise required by the context; amend KRS 365.015, 313.310, 148.851, 164.6011, 274.005, 275.010, 292.310, 342.0011, 67.750, various sections in Title XI, relating to revenue and taxation, and various sections in KRS Chapter 154, relating to state development, to conform; and, effective January 1, 2007, repeal the Uniform Partnership Act, KRS 362.150 to 362.360, the Kentucky Revised Uniform Limited Partnership Act, KRS 362.401 to 362.525, and remaining sections of KRS Chapter 362 relating to registered limited liability partnerships, merger of various partnerships with other business entities, and suits by and against partnerships.

Full Text available at: http://www.lrc.ky.gov/record/06rs/HB234/bill.doc

Current Bill Status: January 6, 2006 referred to Judiciary Committee

Maine

LD 1874 (HP 1314) Corporate

This bill makes changes to filing fees to be consistent with changes that were made as part of Public Law 2003, chapter 631 and Public Law 2005, chapter 12. Additionally, this bill makes corrections to the time period an entity has to replace its registered agent upon resignation from 30 to 60 days. These changes were missed when changing other 30-day periods to 60 days in 2003 and 2004.

Full Text available at: LINK

Current Bill Status: January 3, 2006 referred to the Committee on Judiciary

Maryland

HB 76 Income Tax

Corporate Income Tax Reform, Requiring specified corporations to compute Maryland taxable income using a specified method; providing that, except as provided by and subject to regulations of the Comptroller, specified groups of corporations shall file a combined income tax return reflecting the aggregate income tax liability of all of the members of the group for specified tax years; requiring the Comptroller to adopt regulations; applying the Act

Full Text available at: http://mlis.state.md.us/2006rs/bills/hb/hb0076f.pdf

Current Bill Status: January 11, 2006 First Reading in Ways and Means Committee.

Michigan

SB 203 Business Tax

This bill would amend the Single Business Tax Act (MCL 208.54) to extend for four years a provision allowing a "spun off" corporation to exclude sales made to its immediately preceding former parent corporation when calculating its sales factor used in apportioning its business activities to Michigan.
Under the act, firms that have business activity in Michigan and other states must calculate how much of their total business activity is apportioned to Michigan. The apportionment formula takes the weighted average of three factors: payroll, property, and sales. Generally, the sales factor is determined by dividing a firm's total amount of sales in Michigan by its total sales.

Under the act, a spun off corporation may use an alternative sales factor calculation, whereby it excludes from Michigan and total sales, those sales that are made to its immediately preceding former parent corporation. The spun off corporation may use this alternative calculation for a period of five years, if certain conditions are met, and for an additional two years if, among other requirements, the spun off corporation makes a commitment to make at least $200 million in capital investment in the state during that two-year period. Senate Bill 203 would add that the spun off corporation could also use the alternative calculation for the two additional years if it, alternatively, commits to make $700 million in capital investment within the seven-year period beginning with the year in which the "restructuring transaction" was completed (i.e., the year in which the corporation is "spun off" from its former parent corporation.) Under the act, if a spun off corporation does not live up to its commitment, it must file an amended SBT return and pay additional taxes and interest, based on the standard sales factor calculation, for the years in which it used the alternative calculation.
Further, Senate Bill 203 would add that a spun off corporation could, upon request, use the alternative calculation for four more years—beyond the additional two years currently provided by the act. To continue using the alternative calculation, the firm would have to have met its commitment for the previous two-year period. Additionally, the spun off corporation would have to commit to make at least an additional $200 million in capital investment in the state during that additional four-year period and maintain at least 80 percent of the number of full-time equivalent (FTE) employees in the state at the beginning of that four-year period. The number of FTE employees would include (1) those that are on temporary leave other than a temporary layoff or strike, (2) those that are transferred by the spun off corporation to a related entity or its immediately preceding former parent corporation, and (3) those that are transferred by the spun off corporation to another employer due to a sale in the employees' worksite.
If the spun off corporation does not live up to its commitment for that four-year period, the corporation would file an amended SBT return for the four tax years, irrespective of any statute of limitations provided under the Revenue Act, and would be subject to additional taxes and interest, based on the standard sales factor calculation.

Full Text available at: http://www.legislature.mi.gov/documents/2005-2006/publicact/pdf/2005-PA-0296.pdf

Current Bill Status: Assigned AP 0296'05 with immediate effect.

Mississippi

HB 509 Income Tax

An act to phase out the state income tax on corporations; and for related purposes

Full Text available at: http://billstatus.ls.state.ms.us/documents/2006/html/HB/0500-0599/HB0509IN.htm

Current Bill Status: January 6, 2006 Referred To Ways and Means

SB 2364 Franchise Tax

An act to amend sections 27-13-5 and 27-13-7, Mississippi code of 1972, to increase the franchise tax or excise tax upon foreign and domestic corporations; and for related purposes

Full Text available at: http://billstatus.ls.state.ms.us/documents/2006/html/SB/2300-2399/SB2364IN.htm

Current Bill Status: January 9, 2006 referred to Finance Committee

Missouri

HB 1169 Name Reservation

Currently, the Secretary of State reserves a corporate name for an applicant's exclusive use for a 60-day period. This bill extends that holding period to a maximum of 180 days from the date of the first application and prohibits the name from being placed back in a reserve status.

Full Text available at: http://www.house.state.mo.us/bills061/biltxt/intro/HB1169I.htm

Current Bill Status: January 5, 2006 read second time

New Hampshire

HB 1205 Service of Process

This bill allows New Hampshire plaintiffs to serve the secretary of state after a failed attempt to serve a foreign corporation.

Full Text available at: http://www.gencourt.state.nh.us/legislation/2006/HB1205.html

Current Bill Status: January 4. 2006 Introduced and referred to Judiciary

HB 1227 Late fees

This bill changes the late filing fees charged to certain business entities and requires the repayment of certain late filing fees and reinstatement fees.

Full Text available at: http://www.gencourt.state.nh.us/legislation/2006/HB1227.html

Current Bill Status: January 4, 2006 Introduced and referred to Commerce Committee

SB 295 Registration and Dissolution

This bill makes a variety of changes to laws relating to the registration and dissolution of certain business entities and raises certain fees.

Full Text available at: http://www.gencourt.state.nh.us/legislation/2006/SB0295.html

Current Bill Status: January 4, 2006 Introduced and Referred to Internal Affairs

New Jersey

HB 4539 Workman’s Compensation

Permits corporation with one or two employees who are the only shareholders to opt out of workers' compensation

Full Text available at: http://www.njleg.state.nj.us/2004/Bills/A3500/4539_I1.PDF

Current Bill Status: December 12, 2005 Introduced, Referred to Assembly Labor Committee

SB 2152 Business tax

An Act prohibiting the imposition of the corporation business tax on certain foreign corporations by reason of their storage of certain personal property in this State , amending P.L.1945, c.162.

Full Text available at: http://www.njleg.state.nj.us/2004/Bills/S2500/2152_I1.PDF

Current Bill Status: December 23, 2005 Fiscal Note reported.

South Dakota

SB 50 LLC and Partnerships

An Act to make certain members of limited liability companies and partnerships personally responsible for certain tax debts.

Full Text available at: http://legis.state.sd.us/sessions/2006/bills/SB50p.htm

Current Bill Status: January 6, 2006 Introduced

Vermont

HB 600 LLC and Partnership Tax

Taxation; income tax; pass-through entities; payment of estimated tax - This bill proposes to provide a safe harbor for payment of estimated tax of a member of a pass-through entity.

Full Text available at: http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2006/bills/intro/H-600.htm

Current Bill Status: January 6, 2006 referred to Ways and Means Committee

SB 238 Cooperatives

Vermont Cooperative Associations Act - This bill proposes to enact the Vermont Cooperative Associations Act” to revise comprehensively the manner of organizing and empowering agricultural and other cooperative associations in the state, except electric cooperatives.

Full Text available at: http://www.leg.state.vt.us/docs/legdoc.cfm?URL=/docs/2006/bills/intro/S-238.HTM

Current Bill Status: Introduced January 3, 2006

Virginia

HB 538 State Corporation Commission; fees.

Establishes a charge of $0.50 per page for copies of records furnished by the State Corporation Commission. Currently the charge is $1 for the first two pages and $0.50 per each additional page.

Full Text available at: http://leg1.state.va.us/cgi-bin/legp504.exe?061+ful+HB538

Current Bill Status: January 9, 2006 Committee Referral Pending

SB 78 Merger

Establishes a procedure by which a constituent corporation may merge an indirect subsidiary into itself, or merge itself into an indirect subsidiary, to form a holding company. The process may be accomplished without approval of shareholders of the constituent corporation or the directors or shareholders of the indirect subsidiary if specified conditions are met.

Full Text available at: http://leg1.state.va.us/cgi-bin/legp504.exe?061+ful+SB78

Current Bill Status: January 6, 2006 Referred to Committee on Commerce and Labor

SB 166 Service of Process

Service of process; personal service on agent. Requires personal service where a natural person is sued in such person's capacity as a registered agent, officer, director, trustee, administrator, or other representative of an entity recognized by law. This bill is a recommendation of the Committee on District Courts.

Full Text available at: http://leg1.state.va.us/cgi-bin/legp504.exe?061+ful+SB166

Current Bill Status: January 10, 2006 Referred to Committee for Courts of Justice

Washington

HB 2551 Campaign Contributions

Regulating campaign contributions by limited liability companies.

Full Text available at: http://www.leg.wa.gov/pub/billinfo/2005-06/Pdf/Bills/House%20Bills/2551.pdf

Current Bill Status: January 10, 2006 referred to State Government Operations & Accountability Committee

Wisconsin

SB 496 LLC’s

An Act to amend 183.09025 (4) (a) (intro.) of the statutes; relating to: administratively dissolved limited liability companies (suggested as remedial legislation by the Department of Financial Institutions).

Full Text available at: http://www.legis.state.wi.us/2005/data/SB-496.pdf

Current Bill Status: December 27, 2005 Read first time and referred to Committee on Housing and Financial Institutions

Previous issues of the NRAI Newsletter may be found at: http://secure.nrai.com/dynamic_frame.asp?page=research

NRAI Research Center

The NRAI "Research Center" provides a collection of useful links for all 50 states with access to information of interest and use to the corporate and tax practitioner. As identified as one of the "Eight Great Corporate Websites" by Legal Assistant Today (http://secure.nrai.com/html_research/LAT_Eight_Great_Corporate_Websites.pdf), the National Registered Agents, Inc. website, www.nrai.com was featured with other well-known and highly-regarded business information sites, such as Hoovers Online, as well as government information sites, including EDGARpro Legal, a part of EDGAR Online.

NRAI Research Tools

Incorporation Chart - Filing requirements and fees for domestic business formation in all 50 states.

Qualification Chart - Filing requirements and fees for foreign business registration/qualification in all 50 states.

Limited Liability Company Formation Chart - Filing requirements and fees for limited liability organization in all 50 states.

Limited Liability Company Foreign Registration Chart - Filing requirements and fees for foreign limited liability registration/qualification in all 50 states.

Limited Partnership Formation Chart - The minimum requirements, where applicable, for domestic limited partnership formation in all 50 states.

Limited Partnership Foreign Registration Chart - Filing requirements and fees for foreign limited partnership foreign registration/qualification in all 50 states.

Tax Chart - Guide to determine minimum requirements to be met by business corporations, limited partnerships and limited liability companies.

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