NYS "foreign" corp doing business in NYS

[schirallicpa]

ATX has continued to improve its product. On a NYS corp return you must indicate what state the corp is incorporated in. And if it is not NYS, you must indicate when you started doing business in NYS. (This I think is a new error popping up on NYS corp return.)

Anyway - new client. doing business in NYS since 1997. The state of incorp is Delaware. They have a very small oil extraction outfit. I have no idea why they are incorp'd in DE. In fact, i don't think I have ever come across a corp in NY that wasn't incorporated in NY, so I had not stumbled across this before.

There is a $300 fee for a "foreign" (non-nY) corp doing business in NY. Otherwise, the fee would be $25. But the $300 fee doesn't come up until I put in the date started business in NY. The thing is - they have always disclosed on the cT-3 that they were Delaware corp. And it is blantantly obvious in reviewing the return and 1099 that they are doing business here. They have never paid the $300 fee. In fact, last year, they inadvertantly paid $100, when they otherwise should have paid $25 (well - if a NY corp) and got a refund. So someone in Albany must have looked at something, but no one has noticed.

my question? I don't know....I just don't want to tell them that they have to pay this. Let alone they should have been paying it all along, and maybe they should amend, or maybe they will get caught.

Am I understanding this right? Any thoughts out there.

[kcjenkins]

Many corps around the country incorporate in Delaware because they have the most friendly corp laws in the US. Nevada is the second most popular.

Delaware’s large body of business laws helps a company plan carefully to avoid a lawsuit.

Delaware’s Chancery Court oversees matters involving Delaware’s General Corporate Law and has a reputation as one of the finest courts in the country.

Chancery Court issues decisions without jury trials, so their decisions are written, well thought-out and easy to follow.

Legal textbooks rely heavily upon Delaware corporate case law to teach law students because of the well written opinions from the Delaware Judiciary, so most American corporate attorneys have studied Delaware corporate law.

The Delaware Division of Corporations generates a considerable amount of revenue for the State, so they have invested in state-of-the-art imaging equipment, and process new filings very quickly.

Delaware has a separate Court of Chancery, a business court. The Court does not use juries and the judges are appointed on merit, not elected. Because there are no juries, decisions from the Chancery Court are issued as written opinions. Because of that, Delaware has a large body of written legal precedent to rely upon.

Delaware’s General Corporation Laws make it the friendliest state in America for corporations.

All of this means you have a stable legal platform upon which to operate. In other words, you know the rules going in. In many states, the courts can change the rules on a popular whim, with little regard for the effect on business. Chancery Court practitioners recognize that “outside the takeover process... most Delaware corporations do not find themselves in litigation. The process of decision in the litigated cases has so refined the law that business planners may usually order their affairs to avoid law suits.” According to the Wilmington News Journal, some Delaware corporate attorneys have complained that they have worked themselves right out of a job.

[kcjenkins]

Just one other thing. I'm not that up on NY state law, but some states, if all the activity and income is in that state they treat the 'foreign' corp the same as if it was incorporated in that state. That MIGHT be the reason for the in-state fee. Don't know, but I'd check that out. Maybe you can call the Sec of State office Monday and ask the question without giving a name, just a general question. What form does that fee show up on, anyway?

[kcjenkins]

Here's a bit more interesting info about Delaware corps. My link

Two thirds of the Fortune 500 use Delaware to cut down on their state taxes, the Times says. And so we wondered: does New York's mayor get in on that action too?

It turns out that thirty-seven companies tied to Mike Bloomberg -- including his flagships Bloomberg Inc. and Bloomberg L.P. -- were incorporated in 'The First State.'

Most of the Bloomberg entities, including Bloomberg Cayman Islands LLC, are registered at 2711 Centerville Road, Suite 400, in Wilmington, Delaware, an address that also houses thousands of other businesses including Boeing, UBS, and Lexis Nexis. Bloomberg L.P. has a Cayman Island affiliate so it can "sell its products and services there," spokeswoman Judith Czelusniak says. (The company "developed a fully electronic listing and trading service" for the Cayman Stock Exchange, according to the islands' chamber of commerce.)