In the vast majority of states that have a periodic/annual reporting requirement for entities formed or registered in the state, a company only needs to provide basic information, often including the names and addresses of the principals. The annual report serves the purpose of ensuring the state’s records are kept current.
However, in states like Arkansas, Alabama, Maryland and Texas where the annual report requirement is a part of a tax return filing for the company, more complex and detailed financial information must be provided to meet state reporting requirements.
Let’s take a closer look, beginning with Arkansas where filing rules are changing in 2021.
Previously, for-profit entities formed or registered in Arkansas filed an Annual Report with the Secretary of State that included a franchise tax payment. For corporations, the amount of tax was based on the authorized shares, issued shares and the assets of the corporation. For limited liability companies (LLCs) that do not issue shares, a flat rate of franchise tax applied. The report is due May 1st of each year.
Beginning on January 4th, 2021, the Secretary of State will no longer be the filing agency for annual reports for corporations and LLCs, which are due by May 1st, 2021. Nonprofit corporations, LPs, LLPs, and LLLPs, which do not file a franchise tax return, will continue to submit an annual report to the Secretary of State by May 1st.
Corporations and LLCs should instead file with the Department of Finance and Administration (DFA). Entities can file using the DFA’s online system, ATAP, or by submitting a paper return. The DFA will mail a paper return to all entities that have not previously filed electronically with DFA. More information regarding this change is available here.
Please note that the Arkansas Secretary of State will close at noon on December 30th in order to accomplish the transfer of records to the DFA.
The annual report due in Alabama for domestic and foreign corporations must be attached as a schedule to the Business Privilege Tax Return filed with the Department of Revenue. LLCs are not required to complete and submit the annual report schedule but must still submit a Business Privilege Tax Return. Entities file either Form CPT (for C corporations) or Form PPT (for pass-through entities, such as LLCs and S corporations). The tax for most entities is based on a computation of net worth, adjusted by various exclusions and deductions. The due date for the report and return are based on the company’s fiscal year end.
In Maryland, companies file an Annual Report and Personal Property Tax return with the Department of Assessments and Taxation, which is also the company registry in Maryland. If a company does not own, use or lease any personal property in Maryland, does not maintain any licenses, or have any gross sales, it may not need to complete the personal property tax return. The fee that accompanies the return is a flat fee of $300 for most entities. The tax on personal property is collected by local governments. The report and return are due by April 15th for most entity types.
In Texas, a Public Information Report (PIR) must accompany the company’s franchise tax return filed with the Texas Comptroller of Public Accounts. “No Tax Due” reports must be filed electronically. For entities with taxes due, short form and long form tax returns are available. The franchise tax is calculated based on the revenue of the company. Reports are due in Texas by May 15th, or the next business day if the 15th falls on a weekend or holiday.
When managing annual and periodic reporting for your company, it’s important to keep in mind where an annual report is more than just an annual report. In certain states, the annual report is not just a provision of basic information but is actually a tax return for the entity, requiring a greater level of knowledge of the entity’s finances to complete.
This content is provided for informational purposes only and should not be considered, or relied upon, as legal advice.