NRAI Compliance Updates - December, 2006

NRAI Compliance Updates - December 2006

Greetings,

2006 is coming to a close and we are starting to see a few pre-filed bills for 2007. In the new year, we will be watching to see if an emerging trend occurs with State Legislatures reacting to the GAO report, Company Formations, Minimal Ownership Information is Collected and Available" GAO Report to the Permanent Subcommittee on Investigations, Committee on Homeland Security and Governmental Affairs, U.S. Senate, GAO-06-36, April 2006 and the Financial Action Task Force The Forty Recommendations, FATF, 20 June 2003 (incorporating the amendments of 22 October 2004). One bill reported below advocates for the abrogation of Bearer Shares in Wyoming which may be a reaction to the growing scrutiny on corporate conduct.

From everyone at NRAI, have a safe and happy holiday season. We will be back in January with a full slate of new bills when the legislative season kicks off.

Robert K. Rowell
General Counsel

New, Pending and Passed Legislation

Arkansas

HB 1009

An Act to enact the Uniform Limited Partnership Act (2001); to provide transitional rules; and for other purposes

Full Text available at: http://www.arkleg.state.ar.us/ftproot/bills/2007/public/HB1009.pdf

Current Bill Status: November 28, 2006 Pre-Filed

California

Franchise Tax Board

The instructions page of the Domestic Nonprofit Corporation Certificate of Dissolution form (Form DISS NP) has been modified. There have been no changes to the actual form, only the instructions relating to Franchise Tax Board contact information. Please refer to the California Secretary of State Business Portal website at http://www.ss.ca.gov/business/bpd_forms.htm for the most current version.

Kentucky

HB 87

Amend KRS 141.0401 to limit the limited liability entity tax to years beginning before January 1, 2008; create a new section of KRS Chapter 141 to replace the minimum tax with a minimum fee.

Full Text available at: http://www.lrc.ky.gov/record/07RS/HB87/bill.doc

Current Bill Status: Current Bill Status: November 28, 2006 Pre-Filed

HB 88

Amend KRS 141.0401 and create a new section of KRS Chapter 141 to repeal the limited liability entity tax and leave in place the $175 minimum tax, for tax years beginning on or after January 1, 2008.

Full Text available at: http://www.lrc.ky.gov/record/07RS/HB88/bill.doc

Current Bill Status: December 11, 2006 Draft Request

Louisiana

HB 5

An Act to amend and reenact R.S. 47:602(A) and (G), 605(C), and 609(A) and to repeal R.S. 47:603, relative to the corporation franchise tax; to exclude borrowed capital from taxable capital; to provide for an effective date; and to provide for related matters.

Full Text available at: http://www.legis.state.la.us/billdata/streamdocument.asp?did=413232

Current Bill Status: December 8, 2006 Read by title, rules suspended, referred to the Committee on Ways and Means

HB 66

An Act to amend and reenact R.S. 47:602(A) and (G), 603, 605(C), and 609(A) and to repeal R.S. 47:603, relative to the corporation franchise tax; to accelerate the elimination of borrowed capital from taxable capital; to provide for an effective date; and to provide for related matters.

Full Text available at: http://www.legis.state.la.us/billdata/streamdocument.asp?did=413715

Current Bill Status: December 8, 2006 Read by title, rules suspended, referred to the Committee on Ways and Means

Michigan

HB 6676 - 6680

The bill would implement Governor Granholm's proposed replacement for the Single Business Tax, which is set to be repealed effective December 31, 2007. Main features of the Michigan Business Tax (MBT) are:

• The tax base of the MBT would consist of (1) gross receipts, (2) assets, and (3) business income.

• The tax rate would be 0.125 percent on gross receipts and assets, and 1.875 percent on business income.

• The tax base for multi-state businesses would be apportioned to the state based entirely on the sales factor.

• The bill would retain the alternative tax on small businesses currently provided for in the SBT, but would reduce the rate from 2.0 percent to 1.8 percent.

• The bill would retain the current SBT filing threshold of $350,000 in gross receipts, but would eliminate the so-called "cliff" for businesses with gross receipts greater than $350,000 by phasing in tax liability for businesses with gross receipts between $350,000 and $700,000.

• The bill would increase the premiums tax imposed on Michigan based insurance companies from the current effective rate of 1.07 percent to 1.25 percent.

• The bill would retain many of the current economic development credits against the SBT, including those related to the Michigan Economic Growth Authority, brownfield redevelopment, and historic preservation. The bill would also create a new credit for research and development activities.

The other main feature of the tax plan is a 24-mill reduction in personal property taxes for commercial and industrial property. (This is the 6-mill State Education Tax and the 18 mills levied for school operating purposes.) The revenue loss associated with this would be made up by earmarking a portion of MBT revenue (24.4 percent) to the School Aid Fund. The property tax cuts are found in House Bills 6677-6680. Those bills are described later in the summary.

The bills are all tie-barred to one another meaning none can take effect unless all are enacted.

Full Text available at:
http://www.legislature.mi.gov/documents/2005-2006/billintroduced/House/pdf/2006-HIB-6676.pdf
http://www.legislature.mi.gov/documents/2005-2006/billintroduced/House/pdf/2006-HIB-6677.pdf
http://www.legislature.mi.gov/documents/2005-2006/billintroduced/House/pdf/2006-HIB-6678.pdf
http://www.legislature.mi.gov/documents/2005-2006/billintroduced/House/pdf/2006-HIB-6679.pdf
http://www.legislature.mi.gov/documents/2005-2006/billintroduced/House/pdf/2006-HIB-6680.pdf

Current Bill Status: December 5, 2006 Printed Bills filed

Ohio

HB 301

To amend sections 111.16, 1701.01, 1701.10, 1701.11, 1701.17, 1701.18, 1701.19, 1701.40, 1701.41, 1701.44, 1701.51, 1701.54, 1701.57, 1701.58, 1701.62, 1701.63, 1701.73, 1701.75, 1701.76, 1701.81, 1701.831, 1701.84, 1701.85, 1701.92, 1704.02, 1704.03, 1705.09, 1705.19, 1705.40, 1705.41, 1705.42, 1707.01, 1707.041, 1707.20, 1707.44, 1775.01, 1775.05, 1775.14, 1775.45 to 1775.52, 1782.435, 1782.436, and 1782.437 and to enact sections 1701.782, 1701.792, 1701.802, 1701.811, 1701.821, 1701.921, 1705.361, 1705.371, 1705.381, 1705.391, 1705.61, 1707.142, 1775.53 to 1775.56, 1782.438, 1782.439, 1782.4310, 1782.4311, and 1782.65 of the Revised Code to authorize and specify applicable provisions to conversions of business entities by corporations, limited liability companies, and general, limited liability, and limited partnerships; to expand the limited liability of registered limited liability partnerships; to limit liability to limited partnerships; to modify the Corporation Law relating to regulations or articles, shareholder rights, delegation authority, acceptable payments for shares, director meetings, executive committees, actions authorized after bankruptcy, distributions to shareholders when the issuing corporation "spins off" a subsidiary corporation, reorganization and restructuring of holding company corporations, and control share acquisitions; to modify the Limited Liability Company Law to specify acceptable forms of contributions; and to modify the Securities Law relating to dealer recordkeeping and filing requirements, tender offers, and incorporation in Ohio law of future amendments to federal securities laws.

Full Text available at: http://www.legislature.state.oh.us/bills.cfm?ID=126_HB_301

Current Bill Status: Signed by Governor July 11, 2006 with an effective date of October 11, 2006.

West Virginia

SB 2004

A Bill to amend and reenact §11-23-6 of the Code of West Virginia, 1931, as amended, relating to reducing the rate of business franchise tax.

Full Text:

ARTICLE 23. BUSINESS FRANCHISE TAX.

§11-23-6. Imposition of tax; change in rate of tax.

(a) General. -- An annual business franchise tax is hereby imposed on the privilege of doing business in this state and in respect of the benefits and protection conferred. Such tax shall be collected from every domestic corporation, every corporation having its commercial domicile in this state, every foreign or domestic corporation owning or leasing real or tangible personal property located in this state or doing business in this state and from every partnership owning or leasing real or tangible personal property located in this state or doing business in this state, effective on and after the first day of July, one thousand nine hundred eighty-seven.

(b) Amount of tax and rate; effective date. --

(1) On and after the first day of July, one thousand nine hundred eighty-seven, the amount of tax shall be the greater of fifty dollars or fifty-five one hundredths of one percent of the value of the tax base, as determined under this article: Provided, That when the taxpayer's first taxable year under this article is a short taxable year, the taxpayer's liability shall be prorated based upon the ratio which the number of months in which such short taxable year bears to twelve: Provided, however, That this subdivision shall not apply to taxable years beginning on or after the first day of January, one thousand nine hundred eighty-nine.

(2) Taxable years after December 31, 1988. -- For taxable years beginning on or after the first day of January, one thousand nine hundred eighty-nine, the amount of tax due under this article shall be the greater of fifty dollars or seventy-five one hundredths of one percent of the value of the tax base as determined under this article.

(3) Taxable years after June 30, 1997. -- For taxable years beginning on or after the first day of July, one thousand nine hundred ninety-seven, the amount of tax due under this article shall be the greater of fifty dollars or seventy hundredths of one percent of the value of the tax base as determined under this article.

(4) Taxable years after January 1, 2007. -- For taxable years beginning on or after the first day of January, two thousand seven, the amount of tax due under this article shall be the greater of fifty dollars or fifty-five one hundredths of one percent of the value of the tax base as determined under this article.

(c) Short taxable years. -- When the taxpayer's taxable year for federal income tax purposes is a short taxable year, the tax determined by application of the tax rate to the taxpayer's tax base shall be prorated based upon the ratio which the number of months in such short taxable year bears to twelve: Provided, That when the taxpayer's first taxable year under this article is less than twelve months, the taxpayer's liability shall be prorated based upon the ratio which the number of months the taxpayer was doing business in this state bears to twelve but in no event shall the tax due be less than fifty dollars.

Current Bill Status: Signed by Governor November 30, 2006

Wyoming

HD 52

AN ACT relating to limited partnerships; providing for limited liability limited partnerships; limiting liability of general partners in limited liability limited partnerships; providing for registration of foreign limited liability limited partnerships; providing definitions; providing conforming amendments; and providing for an effective date of July 1, 2007

Full Text not yet available

Current Bill Status: Draft requested.

HB 4

An Act relating to limited partnerships and registered limited liability partnerships; providing for reinstatement within two years of administrative dissolution or lapse of registration for failure to pay fees; and providing for an effective date

Full Text available at: http://legisweb.state.wy.us/2007/Introduced/HB0004.pdf

Current Bill Status: December 6, 2006 Pre-filed

HB 5

An Act relating to business entities; providing for manual, facsimile, conformed or electronic signatures on documents and filings; providing conforming amendments; providing definitions; providing penalties; and providing for an effective date.

Full Text available at: http://legisweb.state.wy.us/2007/Introduced/HB0005.pdf

Current Bill Status: December 6, 2006 Pre-filed

HB 9

An Act relating to corporations; prohibiting the issuance of bearer shares; and providing for an effective date.

Full Text available at: http://legisweb.state.wy.us/2007/Introduced/HB0009.pdf

Current Bill Status: December 6, 2006 Pre-filed

For an archive of NRAI Legislative Updates, visit www.nrai.com and select Research Center.

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