Potentially Deceptive Solicitation in Colorado

Colorado businesses are being notified by the Colorado Secretary of State of another possibly deceptive solicitation issued by “Compliance Services.”  Solicitations, which are titled “Annual Minutes Requirement Statement Directors and Shareholders” have been mailed to businesses in Colorado and are offering to prepare documents to satisfy the annual minutes requirement for a $125.00 fee.  Many businesses are required to keep records of annual minutes; however, there are no requirements to file such records of annual minutes under COLORADO REVISED STATUTES Section 7-90-501 with the Secretary of State’s Office, any other governmental entity or third party.

In addition, records of annual report filing with the Secretary of State’s Office are in fact a separate requirement from records of annual meetings.  Records of annual report filing, which for most businesses is just a $10 fee, may be filed with Colorado Secretary of State’s website at www.sos.state.co.us.

For additional information or clarification regarding this, please contact the Colorado Secretary of State office at 303-894-2200, then press 2, or email business@sos.state.co.us

State Income Tax Speculations

The only certainty when speculating on the state income tax fallout of the tax agendas put forth by the presidential candidates (which assumes they are supported by the legislature) is increased complexity.  Regardless of who is elected, there will be provisions of the federal tax code that will increase federal taxable income, and there will be provisions that decrease it.

For states that key off the federal law as their starting point for state income tax:

  • Provisions that decrease federal taxable income also decrease state taxable income.  To the extent such provisions are too costly to a state, the state can either decouple from the provision (as many states have done with bonus depreciation), completely overhaul their taxing regime (Texas is a good example with its gross receipts tax), or except the change and either make up revenue elsewhere (such as sales tax increases) or do without and cut services.  An example of a decrease, would be repealing the federal estate tax.  Two-thirds of the states base their estate tax on the federal law, so they would have to decide whether to create an estate tax of their own.
  •  Provision that increase federal taxable income also increase state taxable income.  A state is less likely to decouple from a federal provision if it increases the state’s revenue.  In certain instances however, a state may either decouple from a federal provision or revamp its taxing regime in order to appease an industry that has a strong lobby, etc.  A good example here would be the oil and gas industry.  If for instance, the federal provisions relating to the expensing of intangible drilling costs or percentage depletion allowance are repealed, certain states may be inclined to create a state tax credit or a state deduction designed to offset the increase in the state’s starting point for the income tax (federal taxable income).  Such a carve-out would theoretically put the company in no worse shape in the state, at least for state income tax purposes, than prior to the repeal of the provisions.

Delaware Unclaimed Property Amnesty

Delaware unclaimed property provisions are amended effective July 11, 2012 and authorize the Secretary of State to create a voluntary disclosure program for holders not currently reporting any amounts or types of unclaimed property or already engaged in claims resolution with the State Escheator.

Noncompliant holders that have indicated in writing their intent to enter into an unclaimed property voluntary disclosure agreement must submit an agreement form to the secretary on or before June 30, 2013, and make payment in full or enter into a payment plan on or before June 30, 2014, for property held prior to 1996. For noncompliant holders that submit an agreement form on or before June 30, 2013, and make payment in full or enter into a payment plan on or before June 30, 2015, the agreement applies to property held prior to 1993. Written notices of intent to enter into an agreement cannot be accepted after June 30, 2014.

The secretary cannot enter an unclaimed property voluntary self-disclosure agreement with or otherwise accept payment of any amounts of abandoned property from holders:

  • that have indicated in writing their intent to enter into an unclaimed property voluntary disclosure agreement by completing and delivering an agreement on or before June 30, 2012;
  • that have entered a voluntary self-disclosure agreement with the escheator on or before June 30, 2012;
  • to which a notice of examination has been mailed by the escheator; and
  • that the secretary has previously referred to the escheator.

After June 30, 2014, the secretary can no longer accept a notice in writing of intent to enter into an unclaimed property voluntary disclosure agreement. Furthermore, the secretary will not have authority to accept payment forany amounts of abandoned property after June 30, 2015.

Michigan Corporate Income Tax

On May 25, 2011, the Michigan Corporate Income Tax (CIT) was signed into law, imposing a 6% corporate income tax on C corporations and taxpayers taxed as corporations for federal income tax purposes.  The CIT allows only one credit, the small business alternative credit, offering an alternative tax rate of 1.8% of adjusted business income.

The CIT replaces the Michigan Business Tax (MBT) for most taxpayers and is effective January 1, 2012.  Taxpayers with less than $350,000 in allocated or apportioned gross receipts and/or less than or equal to $100 in annual liability are not required to file or pay the CIT.  The gross receipts threshold does not apply to financial institutions or insurance companies.

A CIT taxpayer’s tax year is the calendar year, or the fiscal year ending during the calendar year.  Fiscal year taxpayers must file a final MBT return for the year ending on December 31, 2011.  A taxpayer that is subject to the MBT and the CIT for fractional parts of the same fiscal year must use the same method to compute the MBT as used to compute the CIT for the other portion of the tax year.

Fiscal year taxpayers will be granted an automatic extension for their 2012 fiscal year annual CIT return.  Fiscal year returns ending in 2012 will be due the same date as 2012 calendar year returns, April 30, 2013.  An extension request form is not needed unless the taxpayer is required to transmit payment of any tax that would be due with the annual return.

Calendar year taxpayers must file a Michigan Application for Extension of Time to File by the due date of the CIT annual return, together with payment of estimated tax.  CIT annual returns for calendar year taxpayers is April 30th.

Annual returns will be finalized and posted to the Michigan website by the time the legislature adjourns for the year in December 2012.  It is anticipated that paper forms and instructions will be available for distribution in January 2013.

Individuals and flow-through entities, including partnerships, S corporations, and trusts are not subject to the CIT.

Flow-through entities may be subject to withholding.  A flow-through entity with business activity in Michigan that has more than $200,000 of business income after allocation or apportionment is required to withhold a tax on the distributive share of business income of each corporation or flow-through member of the flow-through entity in an amount computed pursuant to MCL 200.623.

Insurance companies are subject to tax equal to 1.25% of gross direct premiums written on property or risk located or residing in Michigan.

Financial institutions are subject to tax equal to 0.29% of their apportioned net capital.

Additional information may be obtained on the Michigan Department of Treasury website at:  http://www.michigan.gov/taxes/0,4676,7-238-59553—,00.html