2004 Legislation Regarding Business Corporation Tax And Business Tax Credits Passed By General Assembly

2004 Legislation Regarding Business Corporation Tax And Business Tax Credits Passed By General Assembly

Legislation passed increasing the minimum tax from $250.00 to $500.00 beginning with years starting 1/1/04 and thereafter in accordance with Chapter 44-11-2(e). The franchise tax has also been increased from a minimum of $250.00 to $500.00 starting with years beginning on or after 1/1/04 in accordance with Chaplet 44-12-1. This is important to note since any requests for Letter of Good Standing for purposes of dissolution, withdrawal, merger or major sale of assets filed after July 31, 2004 where a short period return is required will necessitate the payment of a min/franchise tax of $500.00 for years starting 1/1/04 and thereafter. When the actual final return is filed at a later date you may take credit for any advance payment of $500.00 that you make for Letter of Good Standing purposes.

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Legislation passed reducing the amount a qualified business in an enterprise zone is allowed to take as a wage credit for years ending on or after 1/1/04 from $10,000 to $2,500 for those employees only working in the zone and from $15,000 to $5,000 for those employees both working and living in the zone. Any unused enterprise zone credits carried forward from years ending prior to 1/1/04 will still be allowed as a credit for the following three tax years as long as there is sufficient tax to be offset and the employer maintains his level of employment as last certified in accordance with Chapter 42-64.3-6(6).

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Legislation passed requiring Pass-Through Entities such as "s" corporations, general partnerships, limited partnerships, limited liability partnerships, trust, or limited liability companies that are not taxed as corporations for federal tax purposed to withhold from the member's share of income of the entity which is derived from or attributable to sources within this state distributed to each nonresident member and pay the withheld amount to the Tax Division at either the highest individual rate or nine percent (9%) for corporations. A pass through entity is not required to withhold tax for a nonresident member if:

1. the member has a pro rata or distributive share of income from the pass through entity from doing business in this state of less than $1,000 per annual accounting period<o:p></o:p>
2. the tax administrator has determined by regulation, ruling or instruction that the member's income is not subject to withholding, or<o:p></o:p>
3. the member elects to have the tax due paid as part of a composite return filed by the pass-through entity, or<o:p></o:p>
4. the entity is a publicly traded partnership ad defined by section 7704(b) of the Internal Revenue Code that is treated as a partnership for the purposes of the Internal Revenue Code and that has agreed to file an annual information return reporting the name, address, taxpayer identification number and other information requested by the tax administrator of each unit holder with an income in this state in excess of $500.<o:p></o:p>