United States

Delaware: Franchise Tax Increase; Bill Goes to Governor

Jun 26, 2017
From KPMG TaxWatch

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Delaware House Bill 175, which increases the state’s franchise tax, has been sent to Governor Carney for signature. Notably, the bill increases the maximum franchise tax from $175,000 to $200,000 effective tax years beginning January 1, 2017. The maximum tax is further increased to $250,000 for certain “Large Corporate Filers.” These are generally corporations that have a class or series of stock listed on a national securities exchange and meet various other requirements. The increased maximum tax for “Large Corporate Filers” is also effective tax years beginning January 1, 2017.

For calculating the franchise tax under the authorized shares method, House Bill 275 increases from $75 to $85 the authorized shares multiplier for corporations with greater than 10,000 authorized shares. For calculating the tax under the assumed par value capital method, the bill also increases the assumed par value multiplier from $75 to $85 per $1 million of assumed no-par capital, or part thereof, in excess of $1 million of assumed no-par capital. Taxpayers choosing this method must currently add $350 to the amount of tax attributable to the corporation’s assumed no par capital for each $1 million or fraction thereof in excess of $1 million of assumed par value capital (as calculated). The bill increases that amount from $350 to $400. The increases to the assumed par value multiplier and the authorized shares multiplier shall take effect for the tax year beginning on January 1, 2018. The bill also increases the penalties for failure to file a complete franchise tax report from $175 to $200, effective the tax year beginning January 1, 2017. For more information on these changes, please contact Niki Scarpinato at 267-256-5837.

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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.

The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.