All corporations formed in the State of Delaware are required to file a Franchise Tax Annual Report and to pay a franchise tax annually with the Secretary of State’s Division of Corporations on or before March 1st. This year’s filing due date is March 1, 2011.
The State of Delaware is requiring mandatory electronic filing. Click here to complete the online filing application.
There are two methods provided for calculating a corporation’s annual franchise tax: the lesser of the two calculations is payable. The first method (Authorized Shares Method) is based on the number of authorized shares of the corporation. The second method (Assumed Par Value Capital method) is based on the number of issued shares and total gross assets of the corporation. Although Delaware provides these two methods of computation, please be aware that Delaware initially completes a corporation’s tax form using the first method, which is generally significantly higher than the tax calculated using the second method. Therefore, you may want to recalculate the corporation’s tax obligation using the second method.
You are advised to consult with your accountant when using the second method since it is based, in part, on the corporation’s total gross assets. Total gross assets means those “total assets” reported on the U.S. Form 112, Schedule L (Federal Return) relative to the corporation’s fiscal year ending the calendar year of the report.
If you have any questions or need assistance, please feel free to call us at 781-622-5930.