I Wish the Grown-Ups Were In Charge in Annapolis
Posted by Jim Walsh on Monday, March 5, 2007
HB 1053 – ANNUAL BUSINESS ENTITY FILING FEE INCREASE
Sponsored by Delegates Hucker, Barve, Gutierrez, Hixson, Howard, Ivey, Kaiser, Lawton and Stukes
Currently every corporation, limited partnership and limited liability company doing business in the State of Maryland must pay an annual filing fee of $300. HB 1053 increases that fee to $1000. This fee was previously increased from $100, and imposed on limited partnerships and limited liability companies for the first time, in 2004.
The bill does provide for a nonrefundable credit of up to $500 againt the Maryland income tax, which cannot be carried forward. Most small businesses are organized as a “passthrough entity” (PTE in Comptroller jargon) , meaning that the businesses themselves do not pay tax on their income, but the owners add their share of the PTE’s income to their own taxable income and pay the additional income tax personally. The bill does not address if, or how, the credit is claimed by owners of PTEs. Regardless of whether or not a partial credit might be allowed (which can easily be taken away later), this fee increase really hurts. An extra $700 for the privilege of opening your door for business each January 1 is a significant burden to most businesses. For liability purposes, many if not most small businesses that operate at different locations, or along different lines of business, are organized as separate business entities. This means that the actual additional cost ends up being $700 per location or line. I doubt that any of the sponsors has any experience in running a small business; they exhibit the mentality that because a tax or fee is imposed on business it is just somehow “absorbed”. Killing the goose that lays golden eggs, each incremental increase in costs will drive more business out of Maryland.
A hearing on this bill is scheduled before the House Ways and Means Committee on Thursday, March 15 at 1:00 p.m.