Hi all -
I've received another tax preparation question. I tell people to go to their tax preparation professional, but apparently it doesn't sink in.
The question is whether a corporation established in Delaware owes taxes to that state if it has no property, wages or sales in that state. From what I can tell, no tax would be due under the circumstances. But because it was originally set up in Delaware, they should file a tax return showing no taxable state income.
How far off am I? Thanks.
From Delaware Revenue Dept.:
Any corporation that is incorporated in Delaware (regardless of where you conduct business) must file an Annual Franchise Tax Report and pay Franchise Tax for the privilege of incorporating in Delaware.
Franchise Taxes and annual Reports are due no later than March 1st of each year.
Details are here:
I don't know about Delaware, but I am in New Jersey. In New Jersey all corporations are require to pay a MINIMUM tax of $500 per year -- even if the corporation has no assets, no income, no expenses, no transactions, etc. I think it was passed in 2006. It's ridiculous, but that's what it is. And in accumulates each year -- $500 per year for as long as the corporation exists. The only way to stop it is to legally dissolve the corporation with the State. And, the only way to dissolve it is to pay all past due taxes, interest, and penalties.
Just a quick Google search seems to > Hi all -
Thanks. I should have specified that my question was about income tax, not the franchise tax that is based on the number of authorized shares or corporate capitalization.
Same link I gave you answers that question as well. Not doing business.... no tax... no need to file.
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