|
NRAI Compliance Updates - October,
2004
Greetings,
Since our last newsletter, the American Jobs Creation Act of 2004 was passed. The summary and link below will provide you with the information necessary to assess any tax ramifications the act may have. California was also the stage for various legislation effecting business entities, some of which were vetoed by the Governor. Overall, the legislative season is off to a swift start.
Rob Rowell
General Counsel
Federal
Legislation
HB 5067
Telecommuter Tax Fairness Act of 2004
To amend title 4 of the United States Code to prohibit the double taxation of telecommuters and others who work at home
Full Text available on Thomas, go to http://thomas.loc.gov/ and search for Bill H5067
Bill Status: Referred to the House Committee on the Judiciary on September 13, 2004.
H. R. 4520
The American Jobs Creation Act of 2004
Ends Sanctions and Provides Tax Benefits for Manufacturing
Repeals FSC-ETI. Provides more than $8 billion of transition relief over three years (2004-2006).
Provides a 9 percent tax deduction (equivalent to a 3 percent rate cut) on all domestic manufacturing activity. The deduction is available to C corporations, S corporations, partnerships, sole proprietorships, cooperatives, and estates and trusts. Includes an AMT hold harmless.
Tax Incentives for Businesses and Job Creators
Extends enhanced section 179 expensing so that small businesses can immediately expense up to $100,000 of new investments through 2007.
Reduces the depreciation period for restaurants and leasehold improvements from 39 years to 15 years.
Provides 10 provisions to simplify the tax treatment of S corporations and to make it easier for businesses to qualify as S corporations.
Enhances community revitalization incentives in economically distressed regions by enhancing eligibility criteria for Renewal Communities and the New Markets Tax Credit.
Includes numerous other tax relief provisions, such as repeal of the 4.3-cent fuel excise tax, temporary suspension of the special occupational tax on small businesses, an elective tonnage tax system for international shipping income, and a 50 percent tax credit for railroad track maintenance.
Tax Relief for Farmers and Small Manufacturers
Extends ethanol subsidies through 2010 and fully compensates the Highway Trust Fund for the cost of these subsidies. Creates new biodiesel tax subsidies through 2006.
Ensures that farmers and fishermen are not hit by the Alternative Minimum Tax (AMT) when they use income averaging to smooth out fluctuations in their annual incomes.
Provides several tax relief provisions for timber including: (1) capital gains treatment for outright sales of timber, (2) safe harbor rules for timber REITs, (3) expensing of reforestation costs, and (4) an election to treat timber as a sale or exchange.
Increases the number of small manufacturers eligible for Industrial Development Bond financing by increasing the capital expenditure limit from $10 million to $20 million.
Reduces or repeals excise taxes that create a competitive disadvantage for small manufacturers.
Extends 50-percent bonus depreciation for small aircraft by one year.
Provides tax incentives for small business refiners to help them comply with the Environmental Protection Agencys sulfur regulations.
Tax Reform and Simplification for U.S. Businesses
Includes several provisions to reduce double taxation of U.S.-based companies, such as reducing the foreign tax credit (FTC) baskets from nine to two and allowing FTCs to be carried forward for 10 years instead of five.
Repeals the 90-percent limitation on the use of FTCs against the alternative minimum tax.
Encourages companies to reinvest foreign earnings in the United States by temporarily taxing repatriated income at 5.25 percent.
Other Provisions
Allows taxpayers to deduct state and local sales taxes instead of state income taxes for 2004 and 2005. Taxpayers may deduct their actual sales taxes or used IRS-published tables.
Repeals the government-run tobacco quota program. Tobacco farmers and quota holders receive transitional assistance payments over 10 years financed with assessments on tobacco companies. Program cost is capped at $10.14 billion.
Expands the section 45 electricity production credit and allows it against the AMT.
Two-year suspension of section 815.
Two-year suspension of duties on ceiling fans, steam generators, and reactor vessel heads and pressures (i.e., products with absolutely no U.S. production).
The Conference Report is revenue neutral
Costs are offset by:
1. Reducing tax avoidance through corporate inversions and individual expatriation,
2. Shutting down abusive tax shelters,
3. Closing corporate tax loopholes,
4. Combating fuel tax evasion,
5. Clarifying the tax treatment of executive deferred compensation plans,
6. Extending IRS user fees, and
7. Extending customs user fees.
Full Text of Conference Committee Report H. R. 4520
http://waysandmeans.house.gov/media/pdf/hr4520/hr4520confreptlegtext.pdf
Status: Passed by Senate October 7, 2004, October 11, 2004 cleared for White House
California
HB 1859
Limited Liability Company Certificate of Cancellation before doing business
This bill provides if a domestic limited liability company has not conducted any business, provide that a majority of the members, or if there are no members, the majority of the managers or, if none, the person or majority of the persons signing the articles of organization, could execute and acknowledge a certificate of cancellation of the
articles of organization meeting specified criteria. The bill would require that the certificate of cancellation be filed with the Secretary of State within 12 months of the filing of the articles of organization. The bill would provide that, upon the filing of that certificate of cancellation, a limited liability company is cancelled and its powers, rights, and privileges cease. The bill would make the exemption from the minimum franchise tax applicable to a limited liability company that files a certificate of cancellation, but would not entitle the company to a reimbursement of any annual taxes or fees already paid. The bill would also exempt the limited liability company from the requirement to obtain
a tax clearance certificate and would require the Secretary of State to notify the Franchise Tax Board of that cancellation.
Full Text Available at: http://www.assembly.ca.gov/acs/acsframeset2text.htm and search for Bill A1859
Bill Status: September 9, 2004 Chaptered as Chapter 416, Statutes of 2004
HB 2167
The Corporation Securities Law of 1968 prohibits a broker-dealer from effecting a transaction in, or inducing or attempting to induce the purchase or sale of, any security in this state without a certificate from the Commissioner of Corporations authorizing the
person to act in that capacity. Under existing law, an unlicensed person who caused injury as a result of engaging in specified activities for which a license is required is liable for treble the amount of assessed damages.
This bill authorizes a person who purchases a security from or sells a security to a broker-dealer without a certificate to bring an action for rescission of the sale or purchase, or for specified damages, and would authorize the court to award reasonable attorney's fees and costs to a plaintiff. The bill would extend the application of treble damages to these actions.
The Corporate Securities Act of 1968 makes it unlawful for a person to engage in certain fraudulent practices and prohibited acts.
Existing state law authorizes a civil action against a person who willfully violates these provisions, which must be brought within 4 years of the violation or within one year after the plaintiff's discovery of the violation, whichever comes first.
This bill, for proceedings that commence on or after January 1, 2005, extends the time that a plaintiff has to file a civil action to within 5 years after the violation or within 2 years of the plaintiff's discovery of the violation, whichever comes first.
Full Text Available at: http://www.assembly.ca.gov/acs/acsframeset2text.htm and search for Bill A2167
Bill Status: September 18, 2004 Chaptered by the Secretary of State as Chapter 575, Statutes of 2004
HB 1776
This bill specifies that a foreign corporation's irrevocable consent to service of process includes service of search warrants in addition to those already specified for information concerning applications or accounts in the name of a victim of identity theft.
This bill states that the irrevocable consent to service of process for all these specified means of gathering records extends to records located both inside and outside of the state.
In addition, this bill explicitly permits the same means of serving a foreign corporation as are authorized in the provisions authorizing special communications warrants to apply to any search warrant for identity theft records.
Full Text Available at: http://www.assembly.ca.gov/acs/acsframeset2text.htm and search for Bill A1776
Bill Status: September 21, 2004 Chaptered by the Secretary of State as Chapter 629 Statutes of 2004
HB 2752
An act to add Section 301.2 to the Corporations Code, relating to corporations. This bill would have required a publicly traded domestic corporation or foreign corporation, as defined, to file a copy of its corporate election procedures with the Secretary of State, and to make them available to a shareholder upon a written request from the shareholder to the corporation's investor relations department.
Status: Vetoed by Governor September 22, 2004
HB 1148
"S" corporation: federal conformity. An act to amend Section 76 of Chapter 35 of the Statutes of 2002, relating to taxation, and declaring the urgency thereof, to take effect immediately, tax levy.
Status: Vetoed by Governor September 29, 2004
HB 1000
An act to amend Sections 1502 and 2117 of, and to add Sections 1502.1 and 2117.1 to the Corporations Code, and to amend Section 12186 of the Government Code, relating to corporations, and declaring the urgency thereof, to take effect immediately.
Full text available at: http://www.assembly.ca.gov/acs/acsframeset2text.htm and search for Bill A1000
Status: September 27, 2004 Chaptered by Secretary of State- Chapter 819, Statutes of 2004
HB 2328
Corporation tax: federal conformity. An act to amend Sections 23809 and 24654 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.
Full text available at: http://www.assembly.ca.gov/acs/acsframeset2text.htm and search for Bill A2328
Status: September 24, 2004 Chaptered by Secretary of State- Chapter 782, Statutes of 2004
Michigan
HB 6238
Businesses; professional corporations; formation of practice by different licensed health care providers. A bill to amend 1962 PA 192, entitled "Professional service corporation act," by amending section 4 (MCL 450.224), as amended by 2000 PA 335.
Full Text available at: http://www.michiganlegislature.org/documents/2003-2004/billintroduced/house/pdf/2004-HIB-6238.pdf
Status: September 29, 2005 referred to Committee on Health Policy
HB 6237
Businesses; limited liability; formation of practice by different licensed health care providers. A bill to amend 1993 PA 23, entitled "Michigan limited liability company act," by amending section 904 (MCL 450.4904), as amended by 2000 PA 333.
Full Text available at: http://www.michiganlegislature.org/documents/2003-2004/billintroduced/house/pdf/2004-HIB-6238.pdf
Status: September 29, 2005 referred to Committee on Health Policy
New Jersey
SB 1859
Revises the alternative minimum assessment under the corporation business tax.
Full Text available at: http://www.njleg.state.nj.us/2004/Bills/S2000/1859_I1.PDF
Status: October 4, 2004 Introduced in the Senate, Referred to Senate Budget and Appropriations Committee
SB 1903
Restores the former net operating loss deduction for corporation business tax years 2002-2005.
Full Text available at: http://www.njleg.state.nj.us/2004/Bills/S2000/1903_I1.PDF
Status: October 4, 2004 Introduced in the Senate, Referred to Senate Budget and Appropriations Committee
SB 1920
Establishes credit under gross income tax and corporation business tax for purchase
of certain qualified hybrid vehicles.
Full Text available at: http://www.njleg.state.nj.us/2004/Bills/S2000/1920_I1.PDF
Status: October 4, 2004 Introduced in the Senate, Referred to Senate Budget and Appropriations Committee
New York
HB 11784
Exempts theatrical limited liability companies from provisions requiring them to publish their articles of organization once each week for six weeks in two newspapers.
Full Text available at: http://assembly.state.ny.us/leg/?bn=A11784&sh=t
Status: Signed by Governor September 28, 2004
SB 5114
Includes limited liability companies as entities which may provide chemical dependence services.
Full Text available at: http://assembly.state.ny.us/leg/?bn=S05114&sh=t
Status Signed by Governor September 28, 2004
Previous issues of the NRAI Newsletter may be found
at: http://secure.nrai.com/dynamic_frame.asp?page=research
|
NRAI
Independent Director / Member Services
|
As you know, standards from lending institutions and credit rating
agencies have become stricter in light of the Sarbanes-Oxley Act and
recent allegations of corporate misconduct. Many lending
institutions are now requiring borrowers to appoint Independent
Directors as a loan condition. National Registered Agents,
Inc.(NRAI) continues to be a leading provider of Independent
Directors or LLC Independent Members for entities involved in
financial transactions requiring this service.
|
| |
|
 |
Its
Wednesday afternoon at 4:00 |
|
The loan officer just informed you of the requirement of an
independent director. Your client needs this loan closed Friday.
. .
. . . Who do you call?
National Registered Agents, Inc.
will provide qualified, competent, eligible individuals to fulfill the
Independent Director or Member requirements your client needs.
Quickly, Competently, Efficiently |
| |
| |
Advantages |
| |
of NRAI
Independent Director / Member services include:
·
Simplified requirements for indemnification.
·
Expedited turn-around time
·
Competitively priced (multiple agreement discounts may apply) |
| |
|
|
For more information regarding NRAI's Independent Director / Member
services, contact National Registered Agents, Inc. at 800.550.6724 or info@nrai.com |
|
About
NRAI
National Registered Agents, Inc. (NRAI) is a professional
Registered Agent for new and established business entities. NRAI is
fully licensed to maintain Registered Office and receive legal
process for companies throughout the United States and around the
globe.
The NRAI Network encompasses 23 operating affiliates, with
more than 400 associates, and 36 offices nationwide. The Network is
focused on providing comprehensive corporate and public record
information, research, retrieval, filing, and corporate services
for both law firms and corporate legal departments.
For
more information regarding NRAI services, please contact us at
800.550.6724 or info@nrai.com
|
|
|
