Imágenes de páginas
PDF
EPUB

ANNUAL STATE FRANCHISE TAX

LAWS OF 1884, CHAPTER 159.

Being "An Act to provide for the imposition of state taxes upon certain corporations and for the collection thereof," approved April 18, 1884, including the amendments and supplements to the end of the legislative session of 1909.

150.* State taxation of business corporations; report to state board of assessors.

All corporations incorporated under the laws of this state, other than those which are subject to the payment of a state franchise tax assessed upon the basis of gross receipts, shall make annual return to the State Board of Assessors on or before the first Tuesday of May in each year, and shall state therein the amount of the capital stock of such corporation issued and outstanding on the first day of January preceding the making of said return, together with such other information as may be required by said board to carry out the provisions of this act, and shall pay an annual license fee or franchise tax of one-tenth of one per centum on all amounts of capital stock issued and outstanding up to and including the sum of three mil

*Arbitrary section number; see footnote, p. 247,

lion dollars; on all sums of capital stock issued and outstanding in excess of three million dollars and not exceeding five million dollars, an annual license fee or franchise tax of one-twentieth of one per centum, and the further sum of fifty dollars per annum per one million dollars, or any part thereof, on all ́amounts of capital stock issued and outstanding in excess of five million dollars; and any shares of stock either fully paid or partially paid in cash or by property purchased whether issued or otherwise shall be deemed to be shares of stock issued and outstanding until such shares or any substitute therefor shall have been retired and actually cancelled; provided, that this act shall not apply to railway, canal or banking corporations, or to savings banks, cemeteries or religious corporations, or purely charitable or purely educational associations not conducted for profit, or manufacturing or mining corporations at least fifty per centum of whose capital stock issued and outstanding is invested in mining or manufacturing carried on within this state, and which mining or manufacturing corporations shall have stated in the annual return to the State Board of Assessors where the mine or manufacturing establishment of such corporation or corporations is or are located, the character of the ores mined or the goods manufactured, the total amount of its capital stock embarked in the business of mining or manufacturing and the amount of capital stock actually employed in New Jersey in carrying on such mining or manufacturing business. If any manufacturing or mining company carrying on business in this state shall have less than fifty per centum of its capital stock, issued and outstanding, invested in business carried on within this state, such company shall pay the annual license fee or franchise tax herein provided for companies not carrying on business in this

state, but shall be entitled, in the computation of such tax, to a deduction from the amount of its capital stock issued and outstanding of the assessed value of its real and personal estate so used in manufacturing or mining.

(Sections 1, 2 and 4 of the Act of April 18, 1884; P. L. 1884, pp. 232, 233, 234; as amended by P. L. 1891, p. 150; P. L. 1892, pp. 136, 137; P. L. 1901, p. 31; P. L. 1906, p. 31.)

This act is in effect an amendment of Section 4 of "An Act to provide for the imposition of state taxes upon certain corporations and for the collection thereof," approved April 18, 1884.

The purpose of the act is to correct a practical defect in the Corporation Tax Act of 1884. That act requires business corporations to report annually to the State Board of Assessors, but does not definitely fix the time for making the report, or the time as of which the report shall be made. It was the practice of the State Board of Assessors to require such corporations to make their reports on or before the first Tuesday of May, stating the amount of capital stock issued and outstanding on the first day of January preceding. In December, 1900, the Supreme Court, in the case of Brewing Improvement Company v. Assessors, 65 N. J. Law, 466, decided that the 18th day of April in each year was the date on which the capital stock was to form the basis for computing the annual tax, the Tax Act having taken effect on the 18th day of April, 1884. The State Board of Assessors then secured the passage of this act, which gives companies more time for making their reports, viz., from the first day of January to the first Tuesday of May.

This act also requires all manufacturing corporations to make annual reports, showing that they are entitled to exemption. The Supreme Court, in Newark Brass Works v. Assessors, 63 N. J. Law, 500, had held that such companies were not required to make such reports.

The jurisdiction of the State Board of Assessors to assess companies who have failed or refused to make a return is limited to the ascertainment of and making an assessment upon the capital stock issued and outstanding. The remedy of the company for excessive assessments is by writ of certiorari. Trenton Heat & Power Co. v. Assessors, 73 N. J. Law, 370. Nor are such companies precluded by failure to file their returns from having their assessments reviewed and exemptions ascertained by the courts. Newark Brass Works v. Assessors, supra; New Jersey Zine Co. v. Hancock, Id., 506; People's Investment Co. v. Assessors, 66 N. J. Law, 175.

See Hardin v. Morgan, 70 N. J. Law, 484; aff'd 71 Id., 342; King v. American Electric Vehicle Co., 70 N. J. Eq., 568.

Application of the act.

"The scheme of this particular taxing act (Act of April 18, 1884) seems to be to impose taxes on three classes of corporations-certain specified corporations doing business in the state wherever chartered, those not doing business in this state, but holding their charters under state authority, and a class of unspecified corporations, which must be few in number, holding charters under and performing their functions in this state.

"In the former class different provisions for taxation as amongst themselves are adopted, and in the second and third classes named a franchise tax is imposed based upon the amount of their capital stock.'' Standard Underground Cable Co. v. Attorney-General, 46 N. J. Eq., 270.

As to the first class, both domestic and foreign corporations are included. Pipe Line Co. v. Berry, 52 N. J. Law, 308; aff'd 53 Id., 212.

Where a corporation merely contracts with another corporation for the manufacture and sale of machinery, the control of the business being entirely in the hands of the latter, it is not entitled to the exemption from the state franchise tax allowed to corporations whose capital stock to the extent of 50 per cent. is invested in manufactures within the state. Buffalo Refrigerating Machine Co. v. Assessors, 72 N. J. Law, 127; distinguishing Phonograph Co. v. Assessors, 54 N. J. Law, 430, in which the Phonograph Company controlled the manufacture of the articles.

In re Faure Electric Light Co., 43 N. J. Eq., 411, it is held that, by this act, the Legislature did not intend to assess the mere right or franchise independently of the business.

Nature of the tax.

The tax imposed by this act is a license or franchise tax. It is not a tax on property and this section is not a violation of the clause of the state constitution which provides that "property shall be assessed for taxes under general rules, and by uniform rules, according to its true value." Standard Underground Cable Co. v. Attorney-General, 46 N. J. Eq., 270; Const., Art. IV, §7, Par. 12. taxing property has not been superseded by this Act. this act was designed to provide revenue for the state. the Act of 1866 is a local tax. Pipe Line Co. v. Berry, 52 N. J. Law, 308; aff'd 53 Id., 212.

The Act of 1866

Taxation under
Taxation under

The tax imposed by the Act of 1884 is not a property tax, and is not subject to diminution because some of the corporation's capital is invested in letters patent of the United States. Marsden Co. v. Assessors, 61 N. J. Law, 461.

Such tax may be exacted by the state from which the right is derived, without reference to the nature of the business the corporation may be authorized to carry on, and is constitutional even as against a

domestic corporation created for the purpose of engaging in commerce with an adjoining state. The right of corporate existence is in itself indivisible, and the fee therefor must necessarily be an entirety, no matter where the property of the company is situated or how its capital is invested or employed. State v. Assessors, 16 N. J. L. J., 210. See also Honduras Commercial Co. v. Assessors, 54 N. J. Law, 278.

Basis of the tax.

The tax is computed upon the basis of the capital stock issued and outstanding, and it is held that stock is issued when the company has received and accepted subscriptions for the same, whether paid for or not. American Pig Iron Storage Co. v. Assessors, 56 N. J. Law, 389.

In Storage Battery Co. v. Assessors, 60 N. J. Law, 66, at page 69, affirmed 61 Id., 289, it was held that the basis of the tax was "the amount of capital stock issued and outstanding as a fixed factor, without regard to the purpose for which the capital stock was issued or whether it was issued for value or not."

"Stock once issued is and remains outstanding until retired and cancelled by the method provided by statute for the retirement and cancellation of capital stock'; and the transfer of stock to the treasury of the company as "treasury stock" does not remove such stock from the category of stock "issued and outstanding" within the purview of the Act. Knickerbocker Importation Co. v. Assessors, 74 N. J. Law, 583, at page 590.

"The words 'retirement' and 'cancellation' must be interpreted to mean permanent retirement and actual cancellation in the method and in full compliance with the provisions of the statute." Id.

Continuance of tax.

As long as the corporation exists it is liable for this franchise tax. It continues after a receiver is appointed and until the dissolution of the company. Kirkpatrick v. Assessors, 57 N. J. Law, 53.

The question whether an insolvent corporation whose affairs have been placed in the hands of a receiver, is subject to the payment of the franchise tax, has been settled by the decision of the Court of Errors and Appeals In re United States Car Co., 60 N. J. Eq., 514, decided July 7, 1899. The court said: "The sole test in determining its liability to comply with those conditions [the provisions of the statute imposing the license fee] so long as they remain unrevoked, is the existence or non-existence of the corporation"; and it was accordingly held that the license fee assessed against the corporation was entitled to priority in payment out of the assets in the hands of the receiver, notwithstanding the fact that such license fee was imposed upon the corporation subsequent to the appointment of the receiver, and that the latter had not since his appointment exercised any of the corporate franchises.

« AnteriorContinuar »