December 2017 Archives

Gennine Cooper December 21, 2017 No Comments

Maryland State Dept. of Assessment and Taxation Release Changes

Incorporating Services, Ltd. (Incserv) is an active member of the National Public Records Research Association (NPRRA). One of the many benefits of this membership is the continuous flow of information from other members regarding changes in policy, law and processing of public records searching and filing across the US. We received the below information from the NPRRA.

The Maryland State Department of Assessments and Taxation has issued a about changes to its Annual Report and Personal Property Tax Return. The press release states in part as follows:

“Beginning in 2018, the Department will be separating the Annual Report and Personal Property Tax Return filings, which historically have been combined in Form 1. All business entities will still be required to file a two-page Annual Report, and directions within that document will determine whether or not they must also attach a Personal Property Tax Return. The majority of business owners—roughly 200,000—do not actually own any personal property and will not be required to complete that section.”

A copy of the press release is attached, and also can be found online here: http://dat.maryland.gov/newsroom/Documents/2017.12.14%20Annual%20Report%20and%20Personal%20Property%20Tax%20Return%20Press%20Release.pdf

If you have questions or concerns, please contact our Washington, DC office at 202.386.7575, 877.531.1131 or dcorders@incserv.com.

Incserv December 20, 2017 No Comments

Delaware Annual Report & Franchise Tax – Help! Part Six

Today we close out our six-part Delaware Annual Report & Franchise Tax Series. If this happens to be the first blog you’re seeing in the series, click here to start from the beginning. We’ve covered the basics pertaining to filing a Delaware corporation annual report and paying Delaware franchise taxes. Now for a few of the “special case” scenarios…

I understand the assumed par value method of Delaware franchise tax calculation, but what happens if a stock amendment was filed during the year? If an amendment changing your stock or par value was filed with the Delaware Division of Corporations during the year, issued shares and total gross assets within 30 days of the amendment must be given for each portion of the year during which each distinct authorized amount of capital stock or par value was in effect. The tax is then prorated for each portion of the year dividing the number of days the stock/par value was in effect by 365 days (366 leap year), then multiplying this result by the tax calculated for that portion of the year. The total tax for the year is the sum of all the prorated taxes for each portion of the year.

Is a Delaware corporation that is ending its existence or reinstating required to file an annual report or pay franchise taxes? Yes, when a Delaware corporation is ending their existence or reinstating to return the entity to good standing, the corporation is required by law to file an annual report and pay any and all franchise tax due. If you’re handling the process on your own, you will need to reach out to the Franchise Tax Section of the Delaware Division of Corporations prior to submitting your Renewal, Merger, Dissolution, Conversion or any other document filing that will end the existence or renew the status of your Delaware corporation in order to determine the final franchise tax fees and annual report filing requirements. If you’re working with a service provider, such as us, we can handle this part for you.

What happens if I miss the deadline for filing my corporation’s Delaware annual report and paying my Delaware franchise tax? A penalty fee will be added if the annual report is not filed by the due date. In addition, 1.5% interest is assessed and added to the total amount due. The 1.5% interest is calculated based only on the total franchise tax due and does not include the annual report fee and penalty. Interest is continually accrued on the 6^th of each month until the franchise tax is paid or the entity goes into an inactive status.

What do I do if I made a mistake on my Delaware annual report filing? An amendment may be filed, but it must be filed before a subsequent report is filed. For example if you made a mistake on the 2016 report, the 2016 report must be amended before the 2017 report is filed. Otherwise the 2016 record will stand as is.

This wraps up our Delaware Annual Report & Franchise Tax Series. However, if you have any questions about or need assistance with filing a Delaware annual report or paying Delaware franchise tax, feel free to reach out to us. We’re here to help!

Incserv December 14, 2017 No Comments

Delaware Annual Report & Franchise Tax – Help! Part Five

Part Five of our Delaware Annual Report & Franchise Tax Series brings us to the assumed par value method for calculating Delaware franchise tax. As we previously mentioned, franchise taxes are an annual fee paid to the State of Delaware Division of Corporations for your entity. There are two options for calculating the franchise tax amount due. There is the authorized shares method and the assumed par value method. Entities with a large number of shares carrying a low par value often times opt for the latter method of Delaware franchise tax calculation.

Per the Delaware Secretary of State Division of Corporations:
To use the assumed par value method to calculate Delaware franchise tax, “you must give figures for all issued shares (including treasury shares) and total gross assets in the spaces provided in your Annual Franchise Tax Report. Total Gross Assets shall be those “total assets” reported on the U.S. Form 1120, Schedule L (Federal Return) relative to the company’s fiscal year ending the calendar year of the report. The tax rate under this method is $350.00 per million or portion of a million. If the assumed par value capital is less than $1,000,000, the tax is calculated by dividing the assumed par value capital by $1,000,000 then multiplying that result by $350.00.”

The example cited below is for a corporation having 1,000,000 shares of stock with a par value of $1.00 and 250,000 shares of stock with a par value of $5.00, gross assets of $1,000,000.00 and issued shares totaling 485,000.

Divide your total gross assets by your total issued shares carrying to 6 decimal places. The result is your “assumed par”.
Example: $1,000,000 assets, 485,000 issued shares = $2.061856 assumed par.
Multiply the assumed par by the number of authorized shares having a par value of less than the assumed par. Example: $2.061856 assumed par s 1,000,000 shares = $2,061,856.
Multiply the number of authorized shares with a par value greater than the assumed par by their respective par value.
Example: 250,000 shares s $5.00 par value = $1,250,000
Add the results of #2 and #3 above. The result is your assumed par value capital.
Example: $2,061,856 plus $1,250,000 = $3,311 956 assumed par value capital.
Figure your tax by dividing the assumed par value capital, rounded up to the next million if it is over $1,000,000, by 1,000,000 and then multiply by $350.00.
Example: 4 x $350.00 = $1,400.00
The minimum tax for the Assumed Par Value Capital Method of calculation is $350.00.

Be sure to check back next week for the final blog in the Delaware Annual Report & Franchise Tax Series. In the meantime, feel free to reach out to us if you have any questions or need assistance with filing a Delaware annual report or paying Delaware franchise tax. We’re here to help!

Incserv December 8, 2017 No Comments

Delaware Annual Report & Franchise Tax – Help! Part Four

Today, in Part Four of our Delaware Annual Report & Franchise Tax Series, we start to break down Delaware franchise taxes. As we previously mentioned, franchise taxes are an annual fee paid to the State of Delaware Division of Corporations for your entity. For corporations, the franchise tax fee is based on authorized shares, but for alternative entities, such as a limited liability company, the fee is a flat rate. Most Delaware entities are required to pay a franchise tax. The Delaware franchise tax fee is in addition to the $50 state fee to file a Corporation Delaware annual report.

For entities using the authorized shares method of Delaware franchise tax calculation, the fees break down as follows:

$175 minimum tax for corporations with 5,000 shares or less.
$350 minimum tax for corporations with 5,001 -10,000 shares
Each additional 10,000 shares or portion thereof adds $75.00..
$200,000 maximum tax. (This is an increase from the previous maximum tax rate of $180,000.)

Examples: A corporation with 10,005 shares authorized will pay $325.00. $250.00 + $75.00. A corporation with 100,000 shares authorized pays $925.00. $250.00 + 675.00 ($75.00 x 9)

Corporations that owe $5,000 or more in Delaware franchise taxes make estimated payments. The schedule for estimated franchise tax payments breaks down quarterly:

June 1st – 40% of total tax due
September 1st – 20% of total tax due
December 1st – 20% of total tax paid is due
March 1st – remainder of tax is due

Be sure to check back weekly or subscribe to the blog to follow along with the series. If you’re new to the Delaware Annual Report & Franchise Tax Series, click the hyperlink to start from the beginning. Next week we will cover the assumed par value method for calculating Delaware franchise taxes. As always, if you have a question in the meantime, feel free to reach out to us. We’d be happy to help you out!

Incserv December 1, 2017 No Comments

Delaware Annual Report & Franchise Tax – Help! Part Three

Today, in Part Three of our Delaware Annual Report & Franchise Tax Series, we continue to delve into the specifics of completing a Delaware annual report. If you’re new to the Delaware Annual Report & Franchise Tax Series, click here to start at the beginning.

When completing the Delaware annual report for a domestic profit corporation, certain information is mandatory for all filers. Once filed, this information is considered public record, with the exception of the gross assets and issued shares.

End of fiscal year date – For corporations not using the last day of the calendar year, the date will need to be updated to specify your corporation’s fiscal year end date.
Principal place of business address and phone number – This is the physical location of the principal place of business for the location. Delaware Law requires the city, town, street and number. A post office box address is not accepted. You may use an international address.
One officer – Only one officer is required, though additional officers may be added. The first and last name, title, and address of the officer are required. The officer authorizing the report must be listed.
All directors – The names and addresses of all the directors as of the filing date of the annual report must be listed. The only exception to this rule is for an initial Delaware annual report or a Delaware annual report being filed in conjunction with a dissolution pursuant to Section 274 or 275(c) of Title 8.
Signature line – The name, title, and address (no PO Boxes allowed) of the authorizing person must be listed.
Gross assets & issued shares – When filing a Delaware annual report for a corporation not considered minimum stock, calculation information is also required. This includes total gross assets and issued shares.

Be sure to check back weekly or subscribe to the blog to follow along with the series. Next week we will begin to break down Delaware franchise taxes. As always, if you have a question in the meantime, feel free to reach out to us. We’d be happy to help you out!