CHAPTER 5
STATE REVENUE - FRANCHISE TAX
AN ACT to Amend Chapter 6 of the Revised Code of the State of Delaware relative to the State Revenue from Domestic Corporations.
Be it enacted by the Senate and House of Representatives of the State of Delaware in General Assembly met:
Sec. 1. That Section 64 of Chapter 6, being Section 101 of the Revised Code of the State of Delaware, be and the same hereby is repealed.
Sec. 2. That Section 65 of Chapter 6, being Section 102 of the Revised Code of the State of Delaware, be and the same hereby is amended by striking out said Section and inserting in lieu thereof the following:
102. Sec. 65. FRANCHISE TAXES; WHAT CORPORATIONS SUBJECT TO; PAYABLE ANNUALLY; COMPANIES AND SOCIETIES CHARTERED TO PAY SICK, FUNERAL, WIDOW OR ORPHAN BENEFITS NOT TO BE DEEMED LIFE INSURANCE COMPANIES: Every telegraph, telephone, cable or electric light company, or company organized for the distribution of electricity, heat, or power, or organized for the purpose of producing or distributing steam, heat or power, every express company, not owned by a railroad company and not otherwise taxed, every company organized for the purpose of the production, distribution, or sale of gas, every parlor, palace, or sleeping car company, every pipe line company, every life insurance company, every fire, marine, livestock, casualty or accident insurance company, except mutual fire insurance companies which do not issue policies on the stock plan, incorporated after the tenth day of March, A. D. 1899 under the laws of this State, shall pay an annual tax, for the use of the State, by way of license for its corporate franchise as hereinafter mentioned; provided, however, that no company or society shall be construed to be a life insurance company within the purview of sections sixty-five to eighty-three inclusive of this Chapter, which, by its certificate of incorporation, shall have for its object the assistance of sick, needy or disabled members, the defraying of funeral expenses of deceased members, or to provide for the wants of the widows and families of members after death.
Sec. 3. That Section 66 of Chapter 6, being Section 103 of the Revised Code of the State of Delaware, be and the same hereby is amended by striking out said Section and inserting in lieu thereof the following:
103. Section 66. Annually on or before the first Tuesday in January, it shall be the duty of the President, Treasurer or other proper officer, or any two directors, of any corporation now existing or hereafter to be incorporated under the provisions of the laws of this State of the character specified in the preceding section, to make report to the Secretary of State, stating specifically, (with the degree of particularity required by Paragraph 2, Section 1919, being Section 5 of Chapter 65 of the Revised Code of the State of Delaware), the location of its principal office in this State, and the name of the agent upon whom service of process against said corporation may be served, the location or locations (town or towns, city or cities, street or streets and number, if number there be) of the place or places of business of said corporation without this State; the names and addresses of all the directors and officers of the company and when the terms of each expire; the amount and the number of shares of each class of its authorized capital stock, if any, and the amount and the number of shares of each class actually issued; the date appointed for the next annual meeting of the stock holders for the election of directors.; as well also the following particulars, namely: Each telegraph, telephone, cable or express company, not owned by a railroad company and not otherwise taxed, shall state the gross amount of its receipts from business done in this State for the year preceding the making of such report; each gas company and electric light company shall state the amount of its receipts for light or power supplied within this State for the year preceding the making of such report, and the amount of dividends declared or paid during the same time; each company organized for the distribution of heat or power or organized for the purpose of producing or distributing steam, heat or power, shall state the amount of its receipts for the distribution of heat or power, or for the production or distribution of steam, heat or power within this State for the year preceding the making of such report, and the amount of dividends declared or paid during the same time ; each parlor, palace or sleeping car company shall state the gross amount of its receipts for fare or tolls for transportation of passengers within this State during the same time; each pipe line company engaged in the transportation of oil or crude petroleum shall state the gross amount of its receipts from the transportation of oil or petroleum through its pipes or in and by its tanks or cars in this State during the same time; each fire, marine, livestock, casualty or accident insurance company shall state the total amount of premiums received by it for insurance upon the lives of persons resident, or property located, within this State during the same time; each life insurance company shall state the total amount of premiums received by it for insurance upon the lives of persons resident within this State, during the same time.
Every other corporation shall file with the Secretary of State on or before the first Tuesday in January in each year an annual report which shall state, (with the degree of particularity required by Paragraph 2, Section 1919, being Section 5 of Chapter 65 of the Revised Code of the State of Delaware), the location of its principal office in this State, and the name of the agent upon whom service of process against said company may be served ; the location or locations (town or towns, city or cities, stating the streets and numbers, if numbers there be) of the place or places of business of said company without this State; the names and addresses of all the directors and officers of the company, and when the terms of each expire; the date appointed for the next annual meeting of stockholders for the election of directors; the amount and the number of shares of each class of its authorized capital, the amount and the number of shares of each class actually issued, the amount invested in real estate, the tax annually thereon, and the amount invested in manufacturing or mining in this State, or both; and, if exempt from taxation under the provisions of Sections 68, 72 and 83 of this Chapter, the specific facts entitling such corporation to exemption from taxation aforesaid, provided, that no 'part of this section shall apply to corporations which are by law under the supervision of the Insurance Commissioner; if such report is not so made and so filed the corporation shall forfeit to the State the sum of two hundred dollars, to be recovered with costs in an action of debt, to be prosecuted by the Attorney-General, who shall prosecute such actions whenever it shall appear that this section has been violated; and provided further, if such report shall not be so made and filed, all the directors of any such corporation, who shall willfully refuse to comply with the provisions thereof and who shall be in office during the default, shall at the time appointed for the next election, and for a period of one year thereafter, be thereby rendered ineligible for election or appointment to any office in the company as directors or otherwise; no director shall be thus disqualified for the failure to make and file such report, if he shall file with the Secretary of State before the time appointed for holding the next election of directors after such default a certificate stating that he has endeavored to have such report made and filed, but that the officers have neglected to make and file the same, and shall report the items required to be stated in such annual report so far as they are within his knowledge, or are obtainable from sources of such information open to him, verified by him to be true to the best of his knowledge, information and belief; the Secretary of State shall upon application, furnish blanks in proper form and shall safely keep in his office all such reports, which shall be open to the inspection of all persons at proper hours.
In case any such corporation shall fail to file such report within the time required by this section, and in case the agent in charge of the principal office of such company upon whom process against such company may be served shall die, or shall resign, or shall remove from the State, or such agent cannot with due diligence be found, it shall be lawful while such default continues, to serve process against such corporation upon the Secretary of State, and such service shall be as effectual to all intents and purposes as if made upon the president or head officers of such corporation, and within two days after such service upon the Secretary of State as aforesaid, it shall be the duty of the Secretary of State to notify such corporation thereof by letter directed to such corporation at its registered office, in which letter shall be enclosed a copy of the process or paper served; and it shall be the duty of the plaintiff in any action in which said process shall be issued to pay to the Secretary of State, for the use of the State, the sum of three dollars, which said sum shall be taxed as a part of the costs in said suit if the plaintiff shall prevail therein; the Secretary of State shall keep a book to be called the "process book", in which shall be entered alphabetically, by the name of the plaintiff and defendant therein, the title of all causes in which processes have been served upon him, the text of the process so served, the return day thereof, and the day and hour when the service was made.
All companies incorporated under the General Corporation Law of this State, accepting the provisions of the Constitution of Delaware and coming under the supervision of said law, shall file an annual report with the Secretary of State as hereinbefore provided in this section, provided further, however, that in the discretion of the Secretary of State the filing fee may be remitted in the case of a charitable or beneficial organization, carried on without profit, or a corporation that is required to file a report with the Insurance Commissioner for which a fee is collected.
Sec. 4 That Sections 68 and 68 A of Chapter 6, being Sections 105 and 105 A, respectively, of the Revised Code of the State of Delaware, be and the same hereby are amended by striking out said Sections and inserting in lieu thereof, the following Sections:
105. Sec. 68. RATES OF FRANCHISE TAXES:-All corporations incorporated under the laws of this State after the Tenth day of March, A. D. 1899, shall pay an annual license fee or franchise tax to the State School Tax Department, as follows:
Where the amount of the authorized capital stock does not exceed two hundred and fifty shares, Five Dollars; where the amount of the authorized capital stock exceeds two hundred and fifty shares but is not more than one thousand shares, Ten Dollars; where the authorized capital stock exceeds one thousand shares but is not more than three thousand shares, Twenty Dollars ; where the authorized capital stock exceeds three thousand shares but is not more than five thousand shares, Twenty-five. Dollars; where the authorized capital stock exceeds five thousand shares but is not more than ten thousand shares, Fifty Dollars : and the further sum of Twenty-five Dollars per year on each ten thousand shares or part thereof in excess of ten thousand shares; provided, however, that any such corporation shall be required to pay only one-half of the amount of taxes scheduled above if the corporation shall show in its annual report that it is not engaged in any business, but in no case shall the amount of tax be less than Five Dollars for any year ; and provided further than any number of shares having par value but having a total par value of less than or equal to One Hundred Dollars shall be counted as only one share.
This Section shall not apply to railroad, railway, canal or banking corporations, or to savings banks, cemeteries or religious corporations, or to charitable or educational associations, or to telegraph, telephone, cable or express corporations or to corporations organized for the distribution of electricity, heat or power or organized for the purpose of producing or distributing steam, heat or power or organized for the purpose of the production, distribution or sale of gas, or to pipe line, parlor, palace or sleeping car corporations, or to insurance companies, or to any corporations at least fifty per centum of whose capital stock issued and outstanding is invested in business carried on within this State; but if any corporation not excluded from the application of this Section shall have less than fifty per centum of its capital stock issued and outstanding invested in business carried on within this State such corporation shall pay the annual license fee or franchise tax herein provided, but in the computation of the number of its shares and of such tax, such corporation shall be entitled to a deduction from the amount of its authorized capital stock of the assessed value of its real and personal property within this State.
105 A. Sec. 68 A. RATES OF FRANCHISE TAXES; DUTIES OF INSURANCE COM MISSIONER:- Each telegraph, telephone, cable and express corporation carrying on business within this State shall pay to the State School Tax Department an annual license fee or franchise tax at the rate of one per centum upon the gross amount of its receipts so returned or ascertained.
Each corporation organized for the distribution of electricity, heat or power, or organized for the purpose of producing or distributing steam, heat or power, or organized for the purpose of the production, distribution or sale of gas, and carrying on business within this State shall pay to the State School Tax Department an annual license fee or franchise tax at the rate of two-fifths of one per centum upon the gross amount of its receipts so returned or ascertained, and four per centum upon the dividends in excess of four per centum so paid or declared by any such corporation.
Each pipe line corporation carrying on business within this State shall pay to the State School Tax Department an annual license fee or franchise tax at the rate of three-fifths of one per centum upon the gross amount of its receipts so returned or ascertained, but if any pipe line corporation has part of its transportation line in this State and part thereof in another State or other States, such corporation shall return a statement of its gross receipts for transportation of oil or petroleum over its whole line, together with a statement of the whole length of its line, and the length of its line in this State, and such corporation shall pay an annual license fee or franchise tax to the State School Tax Department, at the aforesaid rate, upon such proportion of its said gross receipts as the length of its line in this State bears to the whole length of its line.
Each parlor, palace, or sleeping car corporation carrying on business within this State shall pay to the State School Tax Department an annual license fee or franchise tax at the rate of one and one-half per centum upon the gross amount of its receipts so returned or ascertained.
In addition to all other taxes, fees and charges now required by law, each insurance company other than life carrying on business within this State shall pay to the State School Tax Department an annual license fee or franchise tax at the rate of three-fourths of one per centum upon the gross amount of its premiums so returned or ascertained ; and each life insurance company carrying on business within this State shall pay to the State School Tax Department an annual license fee or franchise tax of two per centum upon the gross amount of the premiums so returned or ascertained. In computing the gross amount of premiums received and assessments collected deductions for dividends paid to policy holders shall be permitted. The insurance commissioner of this State shall ascertain and report to the State School Tax Department all facts necessary to enable the said Department to determine and fix the amount of taxation to be paid by life insurance companies under this Section and shall also certify to each of said companies the amount of such taxation under this Section.
106. Sec. 69. FRANCHISE TAX ACCOUNTS; CERTIFIED BY SECRETARY OF STATE TO STATE SCHOOL TAX DEPARTMENT; NOTICE TO TAXAELE; TO BEAR INTEREST WHEN; SECRETARY OF STATE MAY INVESTIGATE REPORTS FILED UNDER SECTIONS 66 to 82: The Secretary of State shall certify and report to the State School Tax Department on or before the first day of April in each year, a statement of the basis of the annual license fee or franchise tax determined from the annual report filed by each corporation as hereinbefore required, and the amount of tax due thereon respectively at the rate fixed by Section 68 and Section 68 A of this Chapter; such tax shall thereafter become due and payable and it shall be the duty of the State School Tax Department to immediately notify all of said corporations of the amount of such license fee or franchise tax due and payable by them to the said School Tax Department and to receive such license fee or franchise tax. Four-fifths of all license fees or franchise taxes received by the State School Tax Department under the provisions of Section 68 and Section 68 A of this Chapter shall be paid over to the State Treasurer by the State School Tax Department, to be used by the State Board of Education for the support and maintenance of the free public schools of this State and the remainder of such license fees or franchise taxes shall be paid over to the State Treasurer by the State School Tax Department and shall become a part of the general funds of the State. If the tax of any corporation or company remains unpaid on the first day of July after the same becomes due, the same shall henceforth bear interest at the rate of one percentum for each month until paid ; the Secretary of State shall have power to inquire into the truth or falsity of every report required to be filed by Sections 66 to 82 of this Chapter as may be necessary to carry out the provisions hereof; and may require the production of the books of any such corporation and may swear or affirm and examine witnesses in relation thereto.
Sec. 6. That all acts or parts of acts inconsistent with this Act be and they are hereby repealed to the extent of such inconsistency only.
Approved March 2, A. D., 1927.