Economic & Community Development Initiatives summary, 2004

Governor Ehrlich’s • _ Legislative Initiatives Economic & Community Development Initiatives Office of the Comptroller - Tax Compliance - Holding Companies The Governor believes that corporations that do business in the State of Maryland should not be able to avoid taxation by shifting assets to an out-of-state holding company. This bill builds upon the recent court successes of the Comptroller and ensures that all corporations pay their fair share of Maryland taxes, by: • Authorizes the Comptroller to distribute, apportion or allocate tax liability between and among two or more businesses or organizations that are related members, within the meaning of the bill. • Requires that certain expenses related to intangible corporate property, such as patents, trade names, and copyrights, be added to the federal taxable income of a corporation to determine Maryland modified income under certain circumstances. • Provides for a tax credit under certain circumstances to eliminate the possibility of double taxation under this bill. • Establishes a schedule of estimated payments that will result in money being paid to the State by corporations during calendar year 2004. • Provides a process whereby corporations can demonstrate to the Comptroller that their tax liability should be less because their dealings with a holding company involve arm's length transactions. Makes the law effective for all taxable years starting in calendar year 2004.