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NRAI Compliance Updates - December,
2004
Greetings,
The end of the year is upon us with all the 12/31 tax considerations. ‘Tis the season as they say!
The legislative calendar is starting to fill up with some interesting bills that apply to corporate practice. New York, for example, appears to be codifying clarification of publication requirements after the court challenges to the LLC publication. California and North Dakota are both taking aim at offshore corporation tax revenues that I’m sure we will see more of from other states.
Congratulations are also in order for all involved in developing and maintaining the NRAI Research Center. As a result of their hard work,
Legal Assistant Today has recognized NRAI.com as one of the “Eight Great Corporate Websites” in their November/December issue. Additional information may be found at
http://secure.nrai.com/html_research/LAT_Press_Release_12_04.htm.
Happy Holidays and we’ll catch you in the New Year!
Robert K. Rowell
General Counsel
Pending and Passed
Legislation
Federal Legislation
HB 5396
To amend the Internal Revenue Code of 1986 to allow a deduction for a portion of any dividend received by a domestic corporation from a qualified foreign corporation.
Full Text of Bill:
“H. R. 5396
To amend the Internal Revenue Code of 1986 to allow a deduction for a portion of any dividend received by a domestic corporation from a qualified foreign corporation.
IN THE HOUSE OF REPRESENTATIVES
November 19, 2004
Mr. ACEVEDO-VILA introduced the following bill; which was referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to allow a deduction for a portion of any dividend received by a domestic corporation from a qualified foreign corporation.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Financial Transactions Equity Act of 2004'.
SEC. 2. DIVIDEND RECEIVED DEDUCTION FOR DIVIDENDS RECEIVED FROM QUALIFIED FOREIGN CORPORATIONS.
(a) In General- Section 245 of the Internal Revenue Code of 1986 (relating to dividends received from certain foreign corporations) is amended by adding at the end the following new subsection:
`(d) Dividends Received From Corporations Organized Under the Laws of the Commonwealth of Puerto Rico-
`(1) IN GENERAL- In the case of dividends received by a domestic corporation from a corporation organized under the laws of the Commonwealth of Puerto Rico, there shall be allowed as a deduction an amount equal to the percent (specified in section 243 for the taxable year) of such dividends.
`(2) EXCLUSION OF CERTAIN DIVIDENDS- Paragraph (1) shall not apply to any dividend received from a corporation organized under the laws of the Commonwealth of Puerto Rico to the extent that the dividend consists of earnings and profits accumulated during a taxable year that such corporation was a controlled foreign corporation (as defined in section 957).
`(3) COORDINATION WITH SECTION 1248- For purposes of this subsection, the term `dividend' does not include any amount treated as a dividend under section 1248.'.
(b) Effective Date- The amendment made by this section shall apply to taxable years beginning after the date of the enactment of this Act.”
California
HB 34
Corporation tax: water's-edge election: tax havens. An act to amend Section 25110 of the Revenue and Taxation Code relating to taxation, to take effect immediately, tax levy.
Full Text available at: http://www.leginfo.ca.gov/pub/bill/asm/ab_0001-0050/ab_34_bill_20041206_introduced.pdf
Bill Status: Introduced December 7, 2004, may be heard in committee January 6, 2005.
Indiana
SB 5
Revised Uniform Partnership Act. Changes the Indiana Uniform Partnership Act to conform to the Revised Uniform Partnership Act. Provides for partnership administration and partnership property ownership rights, including conveyance procedures. Makes changes to the liability and fiduciary duty of a partnership and the partners. Provides for the dissolution and conversion of partnerships and for the merger of partnerships and limited partnerships. Makes other changes and conforming amendments. Repeals superseded statutes.
Full Text available at: http://www.in.gov/legislative/bills/2005/PDF/IN/IN0005.1.pdf
Bill Status: (Scheduled) January 4, 2005 First Reading and referral to Judiciary Committee
Montana
HB 118
Revise state banking laws. A bill for an act entitled: "an act revising banking laws; eliminating the prohibition on out-of-state banks and bank holding companies from acquiring in-state banks or branch banks by consolidation or merger; authorizing certain activities and establishing requirements for a bank resulting from consolidation or merger with respect to branch banking; authorizing in-state banks to establish out-of-state branch banks; repealing the authorization of out-of-state banks to do business in montana using their existing corporate name provided they do not engage in banking but only loan money; amending sections 32-1-371, 32-1-372, and 32-1-1001, mca; and repealing section 32-1-103, mca."
Full Text available at: http://data.opi.state.mt.us/bills/2005/billhtml/HB0118.htm
Bill Status: November 29, 2004 Draft in Assembly
New York
SB 7782
Relating to clarifying certain provisions of law relating to the publication of notices by certain business entities. Clarifies certain provisions of law relating to the publication of notices by certain business entities.
Full Text available at: http://assembly.state.ny.us/leg/?bn=S07782&sh=t
Bill Status: November 12, 2004, referred to Rules Committee
SB 7787 (Same As Assembly Bill 11887)
Relating to clarifying the publication of notice requirements for limited liability companies and partnerships. Clarifies the publication of notice requirements for limited liability companies and partnerships, as proposed in S. 5902-B and A. 11205-A.
Full Text available at: http://assembly.state.ny.us/leg/?bn=S07787&sh=t
Bill Status: November 12, 2004, referred to Rules Committee
Ohio
HB 305
Nonprofit corporations--electronic/telephonic meetings/voting. To amend sections 1702.01, 1702.02, 1702.08, 1702.11, 1702.17, 1702.18, 1702.19, 1702.20, 1702.22, 1702.25, 1702.27, 1702.31, 1702.33, 1702.38, 1702.39, 1702.42, 1702.47, and 1702.58 of the Revised Code relating to the use of authorized communications equipment, including electronic or telephonic transmissions, in certain meetings and votings of nonprofit corporations and the authority to take action on behalf of a nonprofit corporation without a meeting of incorporators, directors, or members.
Full Text available at: http://www.legislature.state.oh.us/bills.cfm?ID=125_HB_305
Bill Status: November 18, 2004 assigned to Judiciary Committee
North Dakota
SB 2046
A BILL for an Act to amend and reenact sections 57-38.4-01 and 57-38.4-02 of the North Dakota Century Code, relating to inclusion of corporations in a unitary relationship and incorporated in a tax haven as part of a water's edge corporate income tax filing election; and to provide an effective date.
Full Text available at: http://www.state.nd.us/lr/assembly/59-2005/bill-text/FADJ0100.pdf
Bill Status: December 2, 2004 prefiled.
Texas
HB 176
Relating to the imposition of a minimum franchise tax.
Full Text: H.B. No. 176
A BILL TO BE ENTITLED AN ACT
relating to the imposition of a minimum franchise tax.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 171.002(a), (b), and (d), Tax Code, are
amended to read as follows:
(a) Except as provided by Subsection (d), the [The] rates of
the franchise tax are:
(1) 0.25 percent per year of privilege period of net
taxable capital; and
(2) 4.5 percent of net taxable earned surplus.
(b) Except as provided by Subsection (d), the [The] amount
of franchise tax on each corporation is computed by adding the
following:
(1) the amount calculated by applying the tax rate
prescribed by Subsection (a)(1) to the corporation's net taxable
capital; and
(2) the difference between:
(A) the amount calculated by applying the tax
rate prescribed by Subsection (a)(2) to the corporation's net
taxable earned surplus; and
(B) the amount determined under Subdivision (1).
(d) If the amount of tax computed under Subsection (b) is
less than $100 after all credits are claimed, the amount of the tax
is $100 [A corporation is not required to pay any tax and is not
considered to owe any tax for a period if:
[(1) the amount of tax computed for the corporation is
less than $100; or
[(2) the amount of the corporation's gross receipts:
[(A) from its entire business under Section
171.105 is less than $150,000; and
[(B) from its entire business under Section
171.1051, including the amount excepted under Section 171.1051(a),
is less than $150,000].
SECTION 2. Section 171.201(a), Tax Code, is amended to read
as follows:
(a) A [Except as provided by Section 171.2022, a]
corporation on which the franchise tax is imposed shall file an
initial report with the comptroller containing:
(1) information showing the financial condition of the
corporation on the day that is the last day of a calendar month and
that is nearest to the end of the corporation's first year of
business;
(2) the name and address of each officer and director
of the corporation;
(3) the name and address of the agent of the
corporation designated under Section 171.354; and
(4) other information required by the comptroller.
SECTION 3. Sections 171.202(a) and (d), Tax Code, are
amended to read as follows:
(a) A [Except as provided by Section 171.2022, a]
corporation on which the franchise tax is imposed shall file an
annual report with the comptroller containing:
(1) financial information of the corporation
necessary to compute the tax under this chapter;
(2) the name and address of each officer and director
of the corporation;
(3) the name and address of the agent of the
corporation designated under Section 171.354; and
(4) other information required by the comptroller.
(d) In the case of a taxpayer whose previous return was its
initial report, the optional payment provided under Subsection
(c)(2)(B) or (e)(2)(B) must be equal to the greater of:
(1) an amount produced by multiplying the net taxable
capital, as reported on the initial report filed on or before May
14, by the rate of tax in Section 171.002(a)(1) that is effective
January 1 of the year in which the report is due; [or]
(2) an amount produced by multiplying the net taxable
earned surplus, as reported on the initial report filed on or before
May 14, by the rate of tax in Section 171.002(a)(2) that is
effective January 1 of the year in which the report is due; or
(3) $100.
SECTION 4. Section 171.203(a), Tax Code, is amended to read
as follows:
(a) A corporation on which the franchise tax is imposed,
regardless of whether the corporation is required to pay any tax,
shall file a report with the comptroller containing:
(1) the name of each corporation in which the
corporation filing the report owns a 10 percent or greater interest
and the percentage owned by the corporation;
(2) the name of each corporation that owns a 10 percent
or greater interest in the corporation filing the report;
(3) the name, title, and mailing address of each
person who is an officer or director of the corporation on the date
the report is filed and the expiration date of each person's term as
an officer or director, if any;
(4) the name and address of the agent of the
corporation designated under Section 171.354 of this code; and
(5) the address of the corporation's principal office
and principal place of business.
SECTION 5. Section 171.204, Tax Code, is amended to read as
follows:
Sec. 171.204. INFORMATION REPORT. To [(a) Except as
provided by Subsection (b), to determine eligibility for the
exemption provided by Section 171.2022, or to] determine the amount
of the franchise tax or the correctness of a franchise tax report,
the comptroller may require an officer of a corporation that may be
subject to the tax imposed under this chapter to file an information
report with the comptroller stating the amount of the corporation's
taxable capital and earned surplus, or any other information the
comptroller may request.
[(b) The comptroller may require an officer of a corporation
that does not owe any tax because of the application of Section
171.002(d)(2) to file an abbreviated information report with the
comptroller stating the amount of the corporation's gross receipts
from its entire business. The comptroller may not require a
corporation described by this subsection to file an information
report that requires the corporation to report or compute its
earned surplus or taxable capital.]
SECTION 6. Section 171.851, Tax Code, is amended to read as
follows:
Sec. 171.851. LIMITATION. The total credits claimed under
this chapter for a report, including the amount of any carryforward
credits, may not exceed the amount of franchise tax due for the
report as computed under Section 171.002(b).
SECTION 7. Section 171.2022, Tax Code, is repealed.
SECTION 8. This Act applies only to a report originally due
on or after the effective date of this Act. A report originally due
before that date is governed by the law in effect on that date, and
that law is continued in effect for the purpose of the liability for
and collection of those taxes.
SECTION 9. This Act takes effect January 1, 2006.
Bill Status: Filed November 30, 2004
Virginia
HB 1520
Pro se representation.
Pro se representation; closely held corporations. Expands the authority of a nonlawyer appearing on behalf of a closely held corporation in civil actions in general district court by authorizing them to file a bill of particulars or grounds of defense; argue motions; file or interrogate at debtor interrogatories; or file, issue or argue any other paper, pleading or proceeding that may be filed, issued or argued by a lawyer.
Full Text available at: http://leg1.state.va.us/cgi-bin/legp504.exe?051+ful+HB1520
Bill Status: 11/15/04 House: Prefiled & ordered printed
Previous issues of the NRAI Newsletter may be found
at: http://secure.nrai.com/dynamic_frame.asp?page=research
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