N489n * New York State Franchise Tax on Business Corporations (Corporation Income Tax) C OMPLETE text of the New York State Corporation Franchise Tax Law, Article 9- A, as amended by Chap. 443, Laws of 1921, approved April 30, 1921, by Chap. 447, Laws of 1921, approved April 30, 1921, and by Chap. 705, Laws of 1921, approved May 12, 1921. m Equitable Trust Company OF NEW YORK New York State Franchise Tax on Business Corporations (Corporation Income Tax) Complete text of the New York State Corporation Franchise Tax Law, Article 9-A, as amended by Chap. 443, Laws of 1921, by Chap. 447, Laws of 1921, approved April 30, 1921, and Chap. 705, Laws of 1921, approved May 12, 1921 ( Issued June , 1921) the equitable Trust Company OF NEW YORK New York^ Offices 37 Wall Street 355 Madison Avenue (at 45th St.) 222 Broadway (at Park Row) Foreign Offices 3 King William Street, E. C. 4 London 23 Rue de la Paix Paris Digitized by the Internet Archive in 2017 with funding from University of Illinois Urbana-Champaign Alternates https://archive.org/details/newyorkstatefran00equi_0 FOREWORD 33 L.-U^r The New York State Franchise Tax on Business Corporations as amended by the legislature adjourned April 16, 192 i, is given on the following pages. The tax is based upon the net in- come of corporations and applies to all corporations doing business in the state not taxable under other sections of the law or specifically exempted. Matter stricken out by the amend- ments is omitted and new matter is shown in italics. The text herein given is supple- mented by marginal references and an index is to be found at the end of the pamphlet. The Equitable Trust Company of New York June, 1921. STATE OF NEW YORK Franchise Tax on Business Corporations Article 9-A of the Tax Law, as Amended by Chapter 443 of the Laws of 1921, approved April 30, 1921 ; and Chapter 447 of the Laws of 1921, approved April 30, 1921, and Chapter 705 of the Laws of 1921, Approved May 12, 1921. Amendments made by the Laws of 1921 are shown in italics, and are effective as indicated. ARTICLE 9-A . Franchise Tax on Business Corporations. Sec. 208. Definitions. 209. Franchise tax on corporations based on net income. 210. Corporations exempted from article. 21 1. Reports of corporations to tax com- mission. 212. Reports by corporation on basis of fiscal year. 213. Reports to be sworn to; forms. 214. Computation of tax. 214a. Taxation of corporations acquiring as- sets or franchises of other corpora- tions. 215. Rate of tax. 216. Penalty for failure to report. 1 FRANCHISE TAX ON BUSINESS CORPORATIONS Definition 217. Powers of tax commission. 218. Revision and readjustment of accounts by tax commission. 219. Review of determination of tax com- mission by certiorari and regula- tions as to writ. 219a. Audit and statement of tax. 219b. Notice of tax. 219c. When tax payable. 2i9d. Corrections and changes. 219c. Warrant for the collection of taxes. 21 9f. Action for recovery of taxes; forfei- ture of charter by delinquent cor- porations. 2i9g. Deposit of revenues collected. 2i9h. Disposition of revenues collected. 2 1 9!. Secrecy required of officials; penalty for violation. 2 1 9j. Exemptions from certain other taxa- tion. 219k. Limitation of time. 219I. Personal property defined. Sec. 208. Definitions. As used in this article : “Corporation” (1) The term “corporation” includes a joint- stock company or association; “Tangible personal property” (2) The words “tangible personal property” shall be taken to mean corporeal personal prop- erty, such as machinery, tools, implements, goods, Wares and merchandise, and shall not be taken to mean money, deposits in bank, shares of stock, bonds, notes, credits or evidences of an interest in property and evidences of debt; “Entire net income” (3) The term “entire net income” means the total net income before any deductions have been made for taxes paid or to be paid to the govern- FRANCHISE TAX ON BUSINESS CORPORATIONS ment of the United States on either profits or net income or for any losses sustained by the corpora- tion in other fiscal or calendar years whether deducted by the government of the United States or not. SEC. 209. Franchise Tax on Corporations Based on Net Income. For the privilege of exercising its franchise in this state in a corporate or organized capacity every domestic corporation, and for the privilege of doing business in this state, every foreign corporation, except corporations specified in the next section, shall annually pay in advance for the year beginning November first next succeeding the first day of July in each and every year an annual franchise tax, to be computed by the tax commission upon the basis of its entire net income for its fiscal or the calendar year next preceding, as hereinafter provided, which entire net income is presumably the same as the entire net income upon which such corporation is re- quired to pay a tax to the United States, or as other- wise provided by section two hundred and fourteen of the tax law, except that the entire net income of a corporation not organized under the laws of any state within the United States which shall be taken as the basis of computation by the tax commission shall be the entire net income in fact rather than the amount earned in the United States or the amount returned to the United States treasury department. SEC. 210. Corporations Exempted from Article. Corporations wholly engaged in the purchase and sale of, and holding title to, real estate for themselves, corporations whose sole business Tax based on net income Exempt corporations 3 *See note below fSee note Reports or returns due Contents of report FRANCHISE TAX ON BUSINESS CORPORATIONS consists of holding the stocks of other corporations for the purpose of controlling the management and affairs of such other corporations, except such as are specifically subject to report under the pro- visions of subdivision nine of section two hundred and eleven of the tax law, and corporations liable to tax under sections one hundred and eighty- four to one hundred and eighty-nine inclusive of this chapter, banks, savings banks, institutions for savings, title guaranty, insurance or surety corpora- tions shall be exempt from the payment of the taxes prescribed by this article. SEC. 21 i. Reports of Corporations to Tax Commission. Every corporation taxable under this article as well as foreign corporations having officers, agents or representatives within the state shall annually on or before July first, or within thirty days after the making of its report of entire net income to the United States treasury depart- ment for any fiscal or calendar year, preceding said first day of July, transmit to the tax commis- sion a report in the form prescribed by the tax commission, specifying: (i) The name and loca- tion of the principal place of business of such cor- poration, the state under the laws of which or- ganized, and the date thereof; the amount of its ^Section 184 — Additional franchise tax on transportation and trans- mission corporations and associations. 185 — Franchise tax on elevated railroads or surface rail- roads not operated by steam. 186 — Franchise tax on waterworks companies, gas com- panies, electric or steam-heating, lighting and power com- panies. 187 — Franchise tax on insurance corporations. 188 — Franchise tax on trust companies. 188- A — Taxation of investment companies (Morris Plan and similar companies). 189 — Franchise tax on savings banks. tBanks, including foreign bankers. 4 FRANCHISE TAX ON BUSINESS CORPORATIONS issued capital stock and the kind of business trans- acted. Any corporation not organized under the laws of any state within the United States shall state the facts in relation to its entire net income wherever earned and as though organized under the laws of this state, and instead of stating its income as returned to the United States treasury department. (2) The amount of its entire net income for its preceding fiscal or the preceding calendar year as shown in the last return of annual net income made by it to the United States treasury depart- ment, except as provided in subdivision one of this section. If the corporation shall qlaim that the return made to the United States treasury depart- ment was inaccurate, the amount claimed by it to be the net income for such period shall be speci- fied. If any deduction has been allowed for losses sustained by the corporation in prior years the amount so allowed and deducted shall be specified. (3) The average monthly value for the fiscal or calendar year of its real property and tangible personal property in each city, village or portion of a town outside of a village within the state, and the average monthly value of all its real property and tangible personal property wherever located. (4) The average monthly value for the fiscal or calendar year of bills and accounts receivable aris- ing from (a) personal property sold by the cor- poration from merchandise manufactured by it within this state; (b) personal property owned by the corporation and not manufactured by it within this state but sold by it or its agents and located within the state at the time of the receipt of the Net income Claims for inaccuracies Losses Real and personal property Bills and accounts receivable 5 Stock of other corporations owned Principal places of business in state Other facts FRANCHISE TAX ON BUSINESS CORPORATIONS order; (c) the purchase or sale of, or trading in, goods, wares or merchandise not located at any place at which the corporation conducted a per- manent or continuous business without the state, and where the bills and accounts receivable arose from orders received or accepted by any officer or agent, or at any place of business, in this state; and (d) services performed by any officer, agent or rep- resentative of the corporation connected with, sent from, or reporting, either directly or indirectly, to any officer located in this state, or at any office located, owned, rented or occupied in this state. Also the average total monthly value for the fiscal or calendar year of bills and accounts receivable arising from the manufacture by it of personal property or the purchase or sale of, or trading in, personal property, or from services performed by the corporation, its officers or agents, excluding those arising in any way from advances or loans. (5) The average total value for the fiscal or cal- endar year of the stock of other corporations owned by the corporation, and the proportion of the aver- age value of the stock of such other corporations within the state of New York, as allocated pursu- ant to section two hundred and fourteen of this chapter. (6) If the corporation has no real or tangible personal property within the state, the city, village or portion of a town outside of a village in the state in which is located the office in which its principal financial concerns within the state are transacted. (7) Such other facts as the tax commission may require for the purpose of making any computa- 6 FRANCHISE TAX ON BUSINESS CORPORATIONS tion required by this article, or for the purpose of comparison with former reports to determine whether or not such reports were erroneous or fraudulent. (8) Any corporation taxable hereunder upon £ b t e s n ^ tain its entire net income may omit from its report the be omitted statements required by subdivisions four and five by incorporating in its report a consent to be taxed upon its entire net income. Corporations having no net income shall, however, complete the segre- gation of assets in every case. ( o ) Any corporation owning or controlling, Holding corporations • i i -i- i 1 -it 11 r t may be squired to either directly or indirectly, substantially all of the consolidate returns capital stock of another corporation, or of other corporations, liable to report under this article, may be required to make a consolidated report showing the combined entire net income, such as- sets of the corporations as are required for the pur- poses of this article, and such other information as the tax commission may require, but excluding intercorporate stockholdings and intercorporate accounts. The tax commission may permit the filing of a combined report where substantially all the capi- tal stock of two or more corporations liable to taxation under this article is owned by the same interests. The tax commission may impose the tax provided by this article as though the com- bined entire net income and segregated assets were those of one corporation, or may, in such other manner as it shall determine, equitably adjust the tax. Where any corporation liable to taxation under this article conducts the business whether under agreement or otherwise in such manner as either 7 FRANCHISE TAX ON BUSINESS CORPORATIONS Fiscal year reports Reports to be sworn to directly or indirectly to benefit the members or stockholders of the corporation, or any of them, or any person or persons, directly or indirectly interested in such business by selling its products or the goods or commodities in which it deals at less than a fair price which might be obtained therefor, or where such a corporation, a substantial portion of whose capital stock is owned either directly or indirectly by another corporation, ac- quires and disposes of the products of the corpo- ration so owning the substantial portion of its capital stock in such a manner as to create a loss or improper net income, the tax commission may require such facts as it deems necessary for the proper computation provided by this article, and may for the purpose of the act determine the amount which shall be deemed to be the entire net income of the business of such corporation for the calendar or fiscal year, and in determining such entire net income the tax commission shall have regard to the fair profits which, but for any agree- ment, arrangement or understanding, might be or could have been obtained from dealing in such products, goods or commodities. SEC. 212. Reports by Corporation on Basis of Fiscal Year. A corporation which reports to the United States treasury department on the basis of its fiscal year, may report to the tax commission upon the same basis, except as provided in section two hundred and fourteen-a of this chapter. SEC. 213. Reports to be Sworn to; Forms. Every report required by this article shall have annexed thereto the affidavit of the presi- dent, vice-president, secretary or treasurer of 8 FRANCHISE TAX ON BUSINESS CORPORATIONS the corporation to the effect that the statements contained therein are true. Blank forms of re- port shall be furnished by the tax commission, on application, but failure to secure such a blank shall not release any corporation from the obliga- tion of making a report herein required. The commission may require a further or supple- mental report under this article to contain further information and data necessary for the computa- tion of the tax herein provided. SEC. 214. Computation of Tax. If the entire business of the corporation be transacted within the state, the tax imposed by this article, if im- posed upon the entire net income, shall be based upon the entire net income of such corporation for such fiscal or calendar year as defined in section two hundred and eight of this chapter, subject, however, to any correction thereof for fraud, eva- sion or error, as ascertained by the state tax com- mission. If the entire business of such corporation be not transacted within the state, the tax imposed by this article shall be based upon a proportion of such entire net income, to be determined in ac- cordance with the following rules: The propor- tion of the entire net income of the corporation upon which the tax under this article shall be based, shall be such portion of the entire net income as the aggregate of ( 1 ) The average monthly value of the real property and tangible personal property within the state. (2) The average monthly value of bills and ac- counts receivable arising from (a) personal prop- Forms to be furnished Computation of tax Net income determined Apportionment Average values of property in state Average of bills and accounts receivable appor- tioned to state 9 FRANCHISE TAX ON BUSINESS CORPORATIONS Value of stock apportioned to state Value of all property Bills and accounts receivable within and without state erty sold by the corporation from merchandise manufactured by it within this state; (b) personal property owned by the corporation and not manu- factured by it within this state but sold by it or its agents and located within the state at the time of the receipt of the order; (c) the purchase or sale of, or trading in, goods, wares or merchandise not located at any place at which the corporation con- ducted a permanent or continuous business with- out the state, and where the bills and accounts receivable arose from orders received or accepted by any office or agent, or at any place of business, in this state; and (d) services performed by any officer, agent or representative of the corporation connected with, sent from, or reporting, either di- rectly or indirectly, to any officer located in this state or at any office located, owned, rented or oc- cupied in this state. (3) The proportion of the average value of the stocks of other corporations owned by the cor- poration, allocated to the state as provided by this section bears to the aggregate of (4) The average monthly value of all the real property and tangible personal property of the cor- poration, wherever located. (5) The average total monthly value for the fiscal or calendar year of bills and accounts receiv- able arising from (a) personal property sold by the corporation from merchandise manufactured by it within and without this state; and (b) the purchase, or sale of, or trading in, personal prop- erty, or from services performed by the corpora- 10 FRANCHISE TAX ON BUSINESS CORPORATIONS tion, its officers or agents, excluding those arising in any way from advances or loans. (6) The average total value of stocks of other corporations owned by the corporation. (7) In case any report is made as provided by subdivision nine of section two hundred and eleven of the tax law, the tax commission may assess the tax against either of the corporations whose assets or net income are involved in the report and upon the basis of the combined entire net income and the combined segregated assets of the corporation and upon such other information as it may possess, or may adjust the tax in such other manner as it shall determine to be equitable. Real property and tangible personal property shall be taken at its actual value where located. The value of share stock of another corporation owned by a corporation liable hereunder shall for purposes of allocation of assets be apportioned in and out of the state in accordance with the value of the physical property in and out of the state representing such share stock. It is further provided that every domestic cor- poration exercising its franchise in this state and every foreign corporation doing business in this state, other than those exempted by section two hundred and ten of this chapter, shall be subject to a minimum tax of not less than ten dollars and not less than one mill upon each dollar of such a part of its issued capital stock, at its face value, as the amount of its gross assets employed by it in its business in this state bears to its gross assets wher- ever employed by it in its business. But if such a corporation has stock without par value, then the Exception Value of all stocks owned Assessment on consolidated return Real and personal property at actual value Tax on domestic and foreign corporations Minimum tax provided No par value stock II Valuation of stock of no par value FRANCHISE TAX ON BUSINESS CORPORATIONS base of the tax, with relation to such stock , shall be such a portion of such issued capital stock, at not less than its actual or market value , and not less than five dollars per share, as may be determined by the tax commission, as its gross assets employed in its business in this state bear to the entire gross assets employed in its business. If such a corporation is subject to a tax at the rate of one mill, and it maintains no regular place of business outside this state, except a statutory office, it shall be taxed upon its entire issued cap- ital stock as herein provided. ( Amended by Chap- ter 705, Laws of 1921, approved May 12, 1921, ef- fective immediately.) Holding, merger and reorganization companies Consolidation of return Minimum tax assessed SEC. 214-a. Taxation of Corporations Acquir- ing Assets or Franchises of Other Corporations. If any corporation taxable under this article shall acquire either directly, indirectly or by merger or consolidation the major portion of the assets or the franchise of another corporation or of corpora- tions exercising any franchise or franchises or do- ing any business in this state during any year, it shall include in its own next annual return, in ad- dition to its own entire net income, so much of the entire net income of the corporation or corpora- tions whose assets or franchise it acquired as shall not have been used or included in measuring a franchise tax to this state, and shall be taxed upon such combined entire net incomes for the year to ensue and as hereinbefore provided. The pro- visions for a minimum tax shall be applied only when under such provisions a tax will result in excess of the amount which would be produced by a tax on entire net income as hereinbefore pro- vided and then in lieu thereof. 1 2 FRANCHISE TAX ON BUSINESS CORPORATIONS This section shall be construed as having been in effect as of the date of the original enactment of article nine-a of the tax law, as added by chapter seven hundred and twenty-six of the laws of nine- teen hundred and seventeen. SEC. 215. Rate of Tax. The tax imposed by this article shall be at the rate of four and one- half per centum of the entire net income of the corporation or portion thereof taxable within the state, determined as provided by this article, un- less taxable upon its capital stock at the rate of one mill or subject to the minimum tax of ten dollars, as provided in section two hundred and fourteen of the tax law. SEC. 216. Penalty for Failure to Report. Any corporation which fails to make any report re- quired by this article shall be liable to a penalty of not more than five thousand dollars to be paid to the state, to be collected in a civil action, at the instance of the tax commission; and any officer of any such corporation who makes a fraudulent re- turn or statement with intent to defeat or evade the payment of the taxes prescribed by this article shall be liable to a penalty of not more than one thousand dollars, to be collected in like manner. ( Amended by Chapter 443, Laws of 1921, ap- proved April 30, 1921, effective July 1, 1921.) SEC. 217. Powers of Tax Commission. The tax commission may for good cause shown ex- tend the time within which any corporation is re- quired to report by this article. If any report re- quired by this article be not made as herein re- quired, the tax commission is authorized to make an estimate of the net income of such corporation Rate of tax Penalty for failure to make return Powers of tax commission Extension of time 13 Revision of accounts by tax commission Certiorari to review commission’s finding FRANCHISE TAX ON BUSINESS CORPORATIONS and of the amount of tax due under this article, from any information in its possession, and to or- der and state an account according to such estimate for the taxes, penalties and interest due the state from such corporation. All the authority and powers conferred on the tax commission by the provision of section one hundred and ninety-five of the tax law shall have full force and effect in respect of corporations which may be liable here- under. SEC. 2 i 8 . Revision and Readjustment of Ac- counts by Tax Commission. If an application for revision be filed with the commission by a cor- poration against which an account is audited and stated within one year from the time any such ac- count shall have been audited and stated, the com- mission shall grant a hearing thereon and if it shall be made to appear upon any such hearing by evidence submitted to it or otherwise, that any such account included taxes or other charges which could not have been lawfully demanded, or that payment has been illegally made or exacted of any such account, the commision shall resettle the same according to law and the facts, and adjust the accounts for taxes accordingly, and may, in its discretion, modify the penalty imposed for failure to report as provided in this article, and shall send notice of its determination thereon to the corpora- tion forthwith. ( Amended by Chapter 443, Laws of 1921, approved April 30, 1921, effective July 1, 1921.) SEC. 219. Review of Determination of Tax Commission by Certiorari and Regulations as to Writ. The determination of the commission upon 14 FRANCHISE TAX ON BUSINESS CORPORATIONS any application made to it by any corporation for revision and resettlement of any account, as pre- scribed by this article, may be reviewed in the manner prescribed by and subject to the provisions of section one hundred and ninety-nine of this chapter. No certiorari to review any audit and statement of an account or any determination by the com- mission under this article shall be granted unless notice of application therefor is made within thirty days after the service of the notice of such determination. Eight days’ notice shall be given to the commission of the application for such writ. The full amount of the taxes, percentage, interest and other charges audited and stated in such ac- count must be deposited with the state tax commis- sion before making the application and an under- taking filed with the commission, in such amount and with such sureties as a justice of the supreme court shall approve, to the effect that if such writ is dismissed or the determination of the commission affirmed, the applicant for the writ will pay all costs and charges which may accrue against it in the prosecution of the writ, including costs of all ap- peals. ( Amended by Chapter 443, Laws of 1921, approved April 2 o, 1921, effective July 1, 1921.) Sec. 219-a. Audit and Statement of Tax. On A f u { !t a nd or before the first day of December in each year of tax the tax commission shall audit and state the ac- count of each corporation known to be liable to a tax under this article, for its preceding fiscal or the preceding calendar year, and shall compute the tax thereon and proceed to collect the same. The tax commission shall determine the portion of such tax to be distributed to the several counties and the 15 Notice of tax assessment Tax payable January 1 Penalty for delay FRANCHISE TAX ON BUSINESS CORPORATIONS amounts to be credited to the several cities or towns thereof, when the same is collected and shall cer- tify such determination to the state comptroller. If the corporation has real property or tangible personal property located in a village, or if it has no real or tangible personal property in the state but the office in which its principal financial con- cerns within the state are transacted is located in a village, the tax commission shall certify such facts to the state comptroller, with the name of the vil- lage in which such office or property is located. [Amended by Chapter 443, Laws of 1921, ap- proved April 30, 1921, effective July 1, 1921.) Sec. 219-b. Notice of Tax. Every report re- quired by section two hundred and eleven of this chapter shall contain the post-office address of the corporation and lines or spaces upon which the corporation shall enter its entire net income. Notice of tax assessment shall be sent by mail to the post-office address given in the report, and the record that such notice has been sent shall be pre- sumptive evidence of the giving of the notice and such record shall be preserved by the tax com- mission. SEC. 219-c. When Tax Payable. The tax hereby imposed shall be paid to the state tax com- mission on or before the first day of January of each year, or within thirty days after notice of the tax has been given as provided in section two hun- dred and nineteen-b of this chapter if such notice is given subsequent to the first day of December of the year for which such tax is imposed. If such tax be not so paid, or in the case of additional taxes, if not paid within thirty days after notice of 16 FRANCHISE TAX ON BUSINESS CORPORATIONS such additional tax has been given as provided in section two hundred and nineteen-d of this chapter and such notice of additional tax is given subse- quent to the first day of December of the year for which such additional tax is imposed, the corpora- tion liable to such tax shall pay to the state tax commission , in addition to the amount of such tax, or additional tax, ten per centum of such amount, plus one per centum for each month the tax or ad- ditional tax remains unpaid, but the state tax com- mission upon submission to it of satisfactory proof that the failure to pay such taxes, or additional taxes, within the time prescribed in this article, was not wilful or evasive, may modify the exaction to not less than one per centum for each month following the due date of the tax. Each such tax or additional tax shall be a lien upon and bind- ing upon the real and personal property of the cor- poration liable to pay the same from the time when it is payable until the same is paid in full. (. Amended by Chapter 443, Laws of 1921, ap- proved April 30, 1921, effective July 1, 1921.) SEC. 219-d. Corrections and Changes. If the amount of the net income for any year of any cor- poration taxable under this article as returned to the United States treasury department is changed or corrected by the commissioner of internal revenue or other officer of the United States or other competent authority, such corporation, with- in ten days after receipt of notice of such change or correction, shall make return under oath or affirmation to the tax commission of such changed or corrected net income, and shall concede the ac- curacy of such determination or state wherein it is erroneous. Penalty for delay in payment — continued Tax a lien Notice of corrections and changes of income to commission 1 7 Reaudit by commission Review of proceedings of commission Credit for excess payment FRANCHISE TAX ON BUSINESS CORPORATIONS The tax commission shall ascertain, from such return and any other information in the possession of the commission, the entire net income of such corporation for the fiscal or calendar year for which such change or correction has been made by such commissioner of internal revenue or other of- ficer or authority. All the authority conferred on the tax commission by the provisions of section one hundred and ninety-five of this chapter is hereby granted to it in respect to the ascertainment of such entire net income. The tax commission shall thereupon reaudit and restate the account of such corporation for taxes based upon the entire net in- come for such fiscal or calendar year, such reaudit to be according to the entire net income so ascer- tained by the tax commission. The proceedings and determination of the tax commission in the making of such reassessment may be revised and readjusted and reviewed in the manner provided by sections two hundred and eighteen and two hundred and nineteen of this chapter, as in the case of an original assessment of the tax. If from such reassessment it appears that such corporation shall have paid under this article an excess of tax for the year for which such reassessment is made, the tax commission shall credit such corporation with such amount. Such credit may be assigned by the corporation in whose favor it is allowed to a cor- poration liable to pay taxes under this article, and the assignee of the whole or any part of such credit on filing with the commission such assignment shall thereupon be entitled to credit upon the books of the tax commission for the amount thereof on the current account for taxes of such assignee in the same way and with the same effect as though the 18 FRANCHISE TAX ON BUSINESS CORPORATIONS credit had originally been allowed in favor of such assignee. If from such reassessment it appears that an additional tax is due from such corporation for such year, such corporation shall, within thirty days after notice has been given as provided in sec- tion two hundred and nineteen-b of this chapter by the tax commission, pay such additional tax. {Amended by Chapter 443, Laws of 1921, ap- proved April 30, 1921, effective July 1, 1921.) SEC. 219-e. Warrant for the Collection of Taxes. If the tax imposed by this article be not paid within thirty days after the same becomes due, unless an appeal or other proceeding shall have been taken to review the same, the tax com- mission may issue a warrant under its official seal directed to the sheriff of any county of the state commanding him to levy upon and sell the real and personal property of the corporation owning the same, found within his county, for the payment of the amount thereof, with the added penalties, in- terest and the cost of executing the warrant, and to return such warrant to the tax commission and pay to it the money collected by virtue thereof by a time to be therein specified, not less than sixty days from the date of the warrant. Such warrant shall be a lien upon and shall bind the real and per- sonal property of the corporation against whom it is issued from the time an actual levy shall be made by virtue thereof. The sheriff to whom any such warrant shall be directed shall proceed upon the same in all respects, with like effect, and in the same manner as prescribed by law in respect to exe- cutions issued against property upon judgments of a court of record, and shall be entitled to the same fees for his services in executing the warrant, to be Notice of additional assessment Warrant for collection of taxes 19 FRANCHISE TAX ON BUSINESS CORPORATIONS collected in the same manner. ( Amended by Chapter 443, Laws of 1921, approved April 30, 1921, effective July 1,1921.) Recovery of tax by suit Forfeiture of charter Deposit of taxes collected SEC. 219-f. Action for Recovery of Taxes; Forfeiture of Charter by Delinquent Corpora- tions. Actions may be brought at any time by the attorney-general at the instance of the tax commis- sion , in the name of the state, to recover the amount of any taxes, penalties and interest due under this article. If such taxes be not paid within one year after the same be due, and the tax commission is satisfied that the failure to pay the same is inten- tional it shall so report to the attorney-general, who shall immediately bring an action in the name of the people of the state, for the forfeiture of the charter or franchise of any corporation failing to make such payment, and if it be found that such failure was intentional, judgment shall be rendered in each action for the forfeiture of such charter and for its dissolution if a domestic corporation and if a foreign corporation for the annulment of its franchise to do business in this state. ( Amended by Chapter 443, Laws of 1921, approved April 30, 1921, effective July 1, 1921.) SEC. 219-g. Deposit of Revenues Collected. The state tax commission shall deposit daily to the credit of the state comptroller on account of the franchise tax all taxes, interest and penalties col- lected under this article in responsible banks, bank- ing houses or trust companies in the state to be designated by the state comptroller and which shall pay the highest rate of interest to the state for such deposit. And every such bank, banking house or trust company shall execute and file in the 20 FRANCHISE TAX ON BUSINESS CORPORATIONS office of the state comptroller an undertaking to the state, in the sum, and with such sureties, as are required and approved by the comptroller, for the safe keeping and prompt payment on legal demand therefor of all such moneys held by or on deposit in such bank, banking house or trust company, with interest thereon on daily balances at such rate as the comptroller may fix. Every such undertaking shall have indorsed thereon, or annexed thereto, the approval of the attorney-general as to its form. The state comptroller shall on the first day of each month make a verified return to the state treasurer of all revenues received by him under this article during the preceding month, stating by whom and when paid, and shall credit himself with all pay- ments made to county treasurers since his last pre- vious return pursuant to section two hundred and nineteen-h of this chapter. The tax commission shall in due time for the distribution thereof certify to the comptroller the apportionment to the various counties , towns , cities and other municipal subdivi- sions of the state the share of taxes received under this article to which they are entitled and upon verification and approval of such apportionment by him the comptroller shall distribute such share of the tax moneys in accordance with the provisions of this article . ( Amended by Chapter 443, Laws of 1921, approved April 30, 1921, effective July 1, 1921.) SEC. 219-h. Disposition of Revenues Col- lected. The state comptroller shall on or before the twenty-fifth day of each month pay into the state treasury to the credit of the general fund all in- terest and penalties and two-thirds of all taxes received by him under this article during the pre- Disposition of revenue and apportionment of distribution 21 Disposition of revenue — continued FRANCHISE TAX ON BUSINESS CORPORATIONS ceding calendar month. The balance of all taxes collected and received by him under this article from any corporation, as appears from the return made by him to the state treasurer, shall, on or before the twenty-fifth day of April, July, October and January, for the quarter ending with the last day of the preceding month, be distributed and paid by him to the treasurers of the several counties of the state and disposed of by such treasurers, in accordance with the following rules: ( Amended by Chapter 443, Laws of 1921, approved April 30, 1921, effective July 1, 1921.) (1) If the corporation has no tangible personal property within the state, such payment shall be made to the county treasurer of the county in which is located the office at which its principal financial concerns within the state are transacted ; (2) If the corporation has tangible personal property, as shown by its report pursuant to section two hundred and eleven, in but one city or town of the state, such payment shall be made to the county treasurer of the county in which such city or town is located ; (3) If the corporation has tangible personal property in more than one city or town of the state, as shown by its report pursuant to section two hun- dred and eleven, such payment shall be made to the county treasurers of the counties in which such cities or towns are located in the proportion that the average monthly value of the tangible personal property of such corporation in the cities and towns of such county bears to the average monthly value of all its tangible personal property within the state ; 22 FRANCHISE TAX ON BUSINESS CORPORATIONS (4) In making such payment to a county treas- urer, the state comptroller shall indicate the por- tion thereof to be credited to any city or town with- in the county on account of the location therein of its principal financial office or property as deter- mined by the preceding subdivisions, and if such principal financial office or property is located in a village shall indicate the village in which it is located; if such principal financial office or prop- erty is located in a city or in a town outside of a village, the whole of such portion shall be paid to such city or town as hereinafter provided; if such principal financial office or property is located in a village, there shall be paid to such village as hereinafter provided such a part of the entire amount credited to the town as the entire amount of taxes raised by said village, or portion thereof in said town, during the preceding calendar year for village and town purposes bears to the aggre- gate amount so raised by the town and village dur- ing the preceding calendar year for town and vil- lage purposes. (5) As to any county wholly included within a city such payment shall be made to the chamber- lain or other chief fiscal officer of such city and be paid into the general fund for city purposes; (6) As to any county not wholly included with- in a city the county treasurer shall within ten days after the receipt thereof pay to the chief fiscal of- ficer of a city or to the chief fiscal officer of a vil- lage or to the supervisor of a town the portion of money received by him from the state comptroller to which such city, village or town is entitled, which shall be credited by such officer to general Disposition of revenue — continued 23 Disposition of revenue — continued Secrecy required of officials FRANCHISE TAX ON BUSINESS CORPORATIONS city, village or town purposes. The sum so paid to the supervisor of a town shall he further dis- tributed by him as provided in subdivision seven following. (7) Upon the distribution of such revenues as hereinbefore provided the entire allotment of any town paid to the supervisor thereof shall be further distributed by him as follows: One-third thereof shall be apportioned among the several school dis- tricts in such town in the proportions that the total amount of the assessed valuation of all the real prop- erty of such corporations in each of said school dis- tricts, respectively , or part thereof in such town, bears to the aggregate assessed valuation of all the real property of such corporations in the entire town, as the same appears upon the last preceding town assessment-roll. The balance thereof shall be retained by him and credited to general town purposes. ( Subdivision (6) amended and (7) added by Chapter 447, Laws of 1921, approved April 30, 1921, effective immediately.) SEC. 219-i. Secrecy Required of Officials; Pen- alty for Violation. ( 1 ) Except in accordance with proper judicial order or as otherwise provided by law, it shall be unlawful for any tax commissioner, agent, clerk or other officer or employee to divulge or make known in any manner the amount of in- come or any particulars set forth or disclosed in any report under this article. Nothing herein shall be construed to prohibit the publication of statistics so classified as to prevent the identifica- tion of particular reports and the items thereof, or the publication of delinquent lists showing the names of taxpayers who have failed to pay their 24 FRANCHISE TAX ON BUSINESS CORPORATIONS taxes at the time and in the manner provided by section two hundred and nineteen-c together with any relevant information which in the opinion of the tax commission may assist in the collection of such delinquent taxes; or the inspection by the attorney-general or other legal representatives of the state of the report of any corporation which shall bring action to set aside or review the tax based thereon, or against whom an action or pro- ceeding has been instituted in accordance with the provisions of sections two hundred and sixteen or two hundred and nineteen-f of this article. Reports shall be preserved for three years, and thereafter until the state tax commission orders them to be destroyed. (2) Any offense against the foregoing provi- sion shall be punished by a fine not exceeding one thousand dollars or by imprisonment not exceed- ing one year, or both, at the discretion of the court and if the offender be an officer or employee of the state he shall be dismissed from office and be incapable of holding any public office in this state for a period of five years thereafter. ( Amended by Chapter 443, Laws of 1921, approved April 30, 1921, effective July 1, 1921.) SEC. 219-j. Exemption from Certain Other Taxation. After this article takes effect, corpora- tions taxable thereunder shall not be assessed on any personal property, or on capital stock as pro- vided for in section twelve of this chapter. SEC. 219-k. Limitation of Time. The pro- visions of the code of civil procedure relative to the limitation of time of enforcing a civil remedy shall not apply to any proceeding or action taken Penalties Exemption from other taxation Time limit for collection of tax 25 “Personal property” defined FRANCHISE TAX ON BUSINESS CORPORATIONS to levy, appraise, assess, determine or enforce the collection of any tax or penalty prescribed by this article. SEC. 219-I. Personal Property Defined. The term “personal property,” for the purposes of the exemption from assessment and taxation thereon locally as granted by section two hundred and nineteen-j of this chapter, shall include any mova- ble machinery and equipment used for trade or manufacture and not essential for the support of the building, structure or superstructure, and re- movable without material injury thereto. The term “personal property,” as used in such section, shall not include boilers, ventilating apparatus, eleva- tors, plumbing, heating, lighting and power gen- erating apparatus, shafting other than counter- shafting, equipment for the distribution of heat, light, power, gases and liquids, nor any equipment consisting of structures or erections to the opera- tion of which machinery is not essential. An owner of a building is entitled to the same exemption under this section as a lessee. As amended by Chapter 443, Laws of 1921, approved April 30, 1921, effective July 1, 1921 ; by Chapter 447, Laws of 1921, approved April 30, 1921, effective immediately; and by Chapter 705, Laws of 1921, approved May 12, 1921, effective imme- diately. Chapter 443 amends sections 216, 218, 219, 219-a, 219-c, 219-d, 219-e, 219-f, 219-g, 219-h and 219-i. Chapter 447 amends subdivision 6 of section 219-h, and adds subdivision 7. Chapter 705 amends section 214. 26 FRANCHISE TAX ON BUSINESS CORPORATIONS Personal Service Corporations Chapter 625, Laws of 1921, approved May 6, 1921, and effective immediately, adds a new paragraph (h) to sub-division (2) of section 359 of the Income Tax Law relating to individuals exempting certain income as follows: “Income received during the taxable year as divi- dends from a corporation on which such corporation has already paid or is liable by assessment to pay a tax pursuant to article nine-a of this chapter; provided that such corporation has not more than five stockholders, that its capital stock is not a material income-produc- ing factor, but that its income is to be ascribed pri- marily to the activities of the principal stockholders who are themselves regularly engaged in the active conduct of the affairs of the corporation and that the total sum paid by it to elected officers is not more than fifteen per centum of its entire net income as deter- mined pursuant to said article nine-a; provided the taxpayer in his return shows the facts with respect to the nature of the corporation and its liability under article nine-a of this chapter.” It is advisable, therefore, that such a corporation file with its report an affidavit showing that it is clearly within the provisions above set forth. 27 Index Page Accounts and bills receivable, to be averaged 5 > 9> 10 Exception n When omitted 7 Additional assessment and notice of 1 7 > I 9 Apportionment of net income within and without state .... 9 Of tax to districts i5> Assessment, notice of 16 Additional, notice of 19 Association considered a corporation 2 Audit by tax commission 15 Re-audit by commission 18 Average value to be shown, of property 5, 6, 9, 10 Of bills and accounts receivable 5, 9, 10 Of stock owned 6, 10 Basis of tax 3 Bills and accounts receivable 5, 9 Omitted when 7 Certiorari, writ of, to review commission 14 Charter, forfeited when 20 Claims for inaccuracies in U. S. returns 5 Collection of taxes 16, 19 Computation of tax 9 Consent to be taxed on entire net income relieves of certain statements 7 Consolidated returns 7, 11, 12 Contents of returns or reports 4-8 Corporations defined 2 Exempt 3 Subject to tax 3 May forfeit charter if delinquent 20 Corrections and changes in return 17 Notice of, to commissioner 17 Re-audit for 18 Credit for excess payment of tax 18 Deductions for losses 5 Definitions % . 2 Deposit of taxes collected 20 28 INDEX Page Disposition of revenues 21 Dividends of certain personal service corporations 27 Domestic corporations doing business in state 3, 11 Entire net income defined 2 To be returned as in U. S. return, when 3, 4 Excess payment of tax, credit for 18 Exempt corporations 3 Exemptions from certain other taxation 25 Extension of time for filing returns 13 Filing of returns 4 Fiscal year returns 8 Foreign resident corporations, tax on 3, n Forms for reports and returns 9 Holding companies, taxation of 7,11, 12 Joint stock company a corporation 2 Lien for tax 17 Limitation on time for recovery of tax (none) 25 Location of principal places of business 6 Losses 5 Mergers and reorganizations, taxation in case of 7, 11, 12 Minimum tax II, 12 Net income, defined 2 Proportion within and without the state 9 Tax based on 3, 5 Payment of tax 16 Penalty for delay in payment 16 For disclosure of facts by official 25 For failure to report 13 Personal property defined 26 Shown at actual value 1 1 Personal service corporations 27 Powers of tax commission 13 Principal place of business in state 6 Proceedings of tax commission, review of 14, 18 Property, real and personal, in state, report of 5, 9 In each city 5 Wherever located 5, 10 Proportionment of net income within and without the state . 9 Rate of tax Minimum 11,12 29 INDEX Page Real property to be shown at actual value 1 1 Re-audit by tax commission 1 8 Reorganization and mergers 7, 11, 12 Reports or returns due 4 Returns due 4 Contents of 4-8 Extension of time 13 For fiscal year 8 Penalty for failure to report 13 Similar to federal return 3 To be sworn to 8 Review of tax commission by writ of certiorari 14 Revision of accounts by tax commission 14 Secrecy of officials required 24 Penalty for violation 25 Stock owned to be reported 6 Of no par value, valuation of stock 12 Stocks of other corporations owned to be shown. . . .6, 7, io, 11 Tangible personal property defined 2 To be taken at actual value 1 1 Tax: based on net income 3, 5 A lien 17 Collection of 16, 19 Computation of 9 Minimum 11,12 Notice of assessment 16, 17, 19 Payable 16 Penalty 16 Rate of 13 Suit to recover tax 20 Warrant for collection of 19 Tax commission, powers of 13 Review of, by certiorari 14 Revision of accounts by 14 Verification of reports or returns 8 Warrant for collection of taxes 19 Writ of certiorari to review findings of tax commission .... 14 30