Does ANYONE really KNOW?
 

I have been preparing the Franchise tax form for my club that needs to be submitted to the State of Texas. As part of the various ways to increase state income, there is a new tax (one of several) that corporations get to pay. The new tax is on insurance gotten outside the state of Texas from companies not licensed to do business in the State of Texas.

I have called Carl, and his message says to call his assistant who is out on emergency and leaves yet another contact. I am not at all sure that this 3rd person would have a clue as to the answer or be able to find it in any timely manner.

By the way, the State says taxes are on membership fees and insurance premiums so I really need to know. So far my research efforts have been fruitless.

If you KNOW for sure and can point me to where I can provide proof of it before I sign my name to the official report, I would appreciate it.

RE: Does ANYONE really KNOW?
 

I'm not an accountant but aren't non profit corps exempt from that stuff?

RE: Does ANYONE really KNOW?
 

Hi Jim

First, you need to know that the correct name of the insurance company is Westchester Surplus Lines Insurance Company.

The next step is to contact the state insurance commissioner, or insurance department, and determine if Westchester is licensed in your state. If Westchester is licensed, your problem is resolved.

I doubt that anyone at headquarters is going to be able to help on a tax question, but, I could be wrong. If Westchester is not licensed or certified (wording varies from state to state) I would contact the EVP, Doug Holland and ask his opinion.

The issue of whether your club corporation is a not-for-profit, or not, may or may not have relevance. It will be interesting to see what you find out.

Your question underscores the fact that the AMA, itself, is not an insurance company. If it were, it would have to be licensed or certifed in every state it does business in.

RE: Does ANYONE really KNOW?
 

Where to start.

Well here is a good place. The insurance company's status with the state of Texas is 'eligible' rather than 'active'. I suspect that means they did not pay the premium tax due by March 1.

In frustration and after talking to another modeler, I called an expert who happens to be an AMA volunteer I have great respect for. He and I agreed that the tax status of my club's corporation is not the question, but the status of this premium tax and it's impact on Texas AMA Chartered Club is important. After some research, he called back to tell me that the subject is being carefully reviewed by another involved party with access and that an answer I can file with the state should be given by close of business tomorrow.

In the interim I got return calls from AMA HQ. No answers were readily available, but all have agreed the issue does need resolution and is being watched.

That means there will be time to spread the correct information around.

Aren't greedy state governments terrible?

Aren't expert volunteers great?

RE: Does ANYONE really KNOW?
 

Hi Jim -

Yes and yes to your questions.

I don't have answers. but sounds like you're in good hands for that. Do have questions, which I hope you can pass back answers to when they are forthcoming:

A portion of the AMA club charter fee is for insurance. Did you get a dollar figure on that, so as to know how much franchise tax is due, if any?

Re taxes on membership fees, is the state taxing your club on gross income regardless of expenses?

Abel

RE: Does ANYONE really KNOW?
 

Abel,
First question won't be answered until the definitive answer is gotten from my expert volunteer's appointed respondent.

The second question may vary from state to state, but dues are not income. We do not generate any income, so there is no tax. However the State of Texas is or has passed a law taxing all franchised corporations something like 1% of their payroll. We have no payroll.

RE: Does ANYONE really KNOW?
 

They're raising taxes in Texas? Surely I'm reading wrong. Next you'll be telling me they've abolished the death penalty in that state!

RE: Does ANYONE really KNOW?
 

ROFLOL!

No, I did NOT say they are raising the taxes. What I said is that they are looking at new ways to raise INCOME. In this case they have found a way to make sure they get more of the taxes collected by other parties (corporations).

RE: Does ANYONE really KNOW?
 

Hey Mike,

It is a nasty rumor that Texas doesn't have high taxes. The property taxes here are outrageous, like 6k on my house !!! That and 8 1/4 sales tax on everything else. I suppose they need it to fight all of the appeals on death row.

RE: Does ANYONE really KNOW?
 

Funny, I thought that when governments raised "INCOME" it was called taxes.

RE: Does ANYONE really KNOW?
 

Ki-B, that is what happens to those that wish to live in all those congested "additions" where a Home-Owner's Association tells one which hand to wipe with.
Now, do not forget that the TEXAS sales tax is 6.25% and the additional ST is added by the towns and such. In addition all basic food stuffs are NOT TAXED. In MI where I spend my most of my summer, even the meat and potatoes are taxed. [&o]

Now if one chooses to live in the country, it is again a different story. I have a small house, 3br, 2 b, 3 car garage, covered and open patios, in-ground pool, 2 acres, 40 X 60 steel barn on slab, on paved road. My total property taxes (county and school) are less than $1500 per year. All property taxes are local as there is NO state property tax.

THERE IS NO STATE INCOME TAX IN TX. :D

Now if you want to lessen your tax burden, plus increase your freedoms, then I can arrange for you to own 10 acres adjoining the great Jetero RC Club, Inc. (You are a member). You can place 9 of those acres under agriculture exemption, with a tax burden less than $100 per year. The home you build is of course your choice.

As for the "death penalty" IMO it is a tax saver. Get rid of 'em. Otherwise they will be turned loose on society to do same again and cost more to retry all over. :eek:

A few years ago, there was this guy in a bar and he stated that Clinton was raising taxes. A few stools down, a big burly got up and proceeded to pound on the first guy. First guy yelled, "What's wrong, I was just talking about the new Clinton taxes that was on TV."

Big Burly picked up first guy and started apologizing. He said, "I am so sorry, really, I thought you said, Clinton was raised in Texas."

Oh Gee, here comes Big Burly. Hey this does relate to RC. Wanna' buy some property adjoining a great RC field?? :)

edit: burly vice burley

RE: Does ANYONE really KNOW?
 

More often than not your assertion is correct, however in this case the state is just adding to the collection effort. That is being done by making the collectors of the existing tax the user under very specific conditions (the insurance company is not licensed to do business in the State of Texas).

RE: Does ANYONE really KNOW?
 

Here is a status report of what the search for the correct answer has led to.


My AMA expert volunteer, Doug Holland, and others (including the insurance broker himself) have reached the conclusion that they do not know the answer as of Friday afternoon. However, all have promised me an answer as soon as they can get it and resources are being directed to getting the issue resolved.

Larry Johnson (sp?) is pretty sure that the insurance company paid premium tax in Indiana, since that is where the policy is issued, However he does but agree that the state form is unclear as Texas may be doing something new and different which is probable since this is the first time I have ever seen the form involved. He was going to call the state and track it down and get back to me. That was Friday's call. Knowing how insurance commissions and state comptrollers offices work, I suspect that it may take up to a week to get the final correct answer.

Today I was out at a business meeting and Doug Holland called. The message that was left for me was that he is going to call me every 2 or 3 days until a solution is found. He is concerned, as I am, that the right information gets out to Texas clubs that are incorporated.

RE: Does ANYONE really KNOW?
 

The answer came in about 30 minutes ago and is posted under another thread titiled "New tax problems for Texas Clubs"