CHAPTER TWENTY-THREE. PUBLIC UTILITIES. (Continued.) FRANCHISE TAX ON CORPORATIONS, OTHER THAN PUBLIC UTILITIES. SEC. 5495. Between the first day of May and the first day of July, 1911, and annually thereafter during the month of May, each corporation, organized under the laws of this state, for profit, shall make a report, in writing, to the commission, in such form as the commission may prescribe. (102 v. 224, § 106.) That a franchise tax on corporations is constitutional, see Gum Co. v. Laylin, 66 O. S. 578. This is a franchise or privilege tax, not a property tax. Franchise tax does not affect property tax, 196 U. S. 311. Incorporated in several states is a domestic in each, 6 N. P. (N. S.) 55. Receivers, assignees and trustees must file reports until dissolution and certificate as provided for by § 11975 is filed with secretary of state. See & 5520 G. C. An unorganized corporation is not liable for tax; it is not organized until ten per cent of its capital stock is subscribed and directors chosen. A. G. R. No. 5, 1903, p. 999; 49 O. S. 440; A. G. R. 1912, p. 530. A corporation which has not filed a certificate that ten per cent. of its capital stock has been subscribed is not authorized to exercise any of its corporate franchises; is not, in fact, a corporation, but has only secured authority to become a corporation, and may by suit in quo warranto be ousted from any attempt to exercise corporate franchises. Until such certificate has been filed and the directors elected, no corporate action can legally be taken. Such incomplete corporation is not required to file report under Section 5495; and in order to surrender its articles of incorporation it does not need to secure the certificate mentioned in Section 5521, G. C. Within the meaning of Section 5519, G. C., the date of incorporation is the date upon which a certificate is filed in the office of the secretary of state showing that ten per cent. of its capital stock has been subscribed. A. G. R. 1915, p. 1196. Railroad companies and other public utilities doing business in this state, which have no intrastate earnings, are not liable for the minimum excise tax of $10.00 or for any other tax. Such companies are liable, on the other hand, for the annual franchise tax under Sections 106-115 of the act of May 31, 1911. A. G. R. 1912, p. 2025. Under section 5495, General Code, all corporations for profit, are subject to the Willis franchise tax unless excepted therefrom by section 5519, General Code, and therefore, domestic freight line companies are liable for this tax. Foreign freight line companies, however, not being subject to compliance with the provisions of both sections 179 and 183, are not liable for the franchise tax. A. G. R. 1913, p. 611. Verification. SEC. 5496. Such report shall be signed and sworn to before an officer authorized to administer oaths, by the president, vice president, secretary or general manager of the corporation, and forwarded to the commission. (102 v. 224, § 107.) Report shall contain, what. SEC. 5497. Such report shall contain: 1. The name of the corporation. 2. The location of its principal office. 3. The names of the president, secretary, treasurer and members of the board of directors, with the postoffice address of each. 4. The date of the annual election of officers. 5. The amount of authorized capital stock and the par value of each share. 6. The amount of capital stock subscribed, the amount of capital stock issued and outstanding, and the amount of capital stock paid up. 7. The nature and kind of business in which the corporation is engaged and its place or places of business. 8. The change or changes, if any, in the above particulars, made since the last annual report. (102 v. 224, § 108.) Under item 7 a corporation not engaged in business is not relieved from making reports and paying taxes; see 13 N. P. (N. S.) 671. Amount of capital stock determined; certified to auditor of state; fee; minimum. SEC. 5498. Upon the filing of the report, provided for in the last three preceding sections, the commission, after finding such report to be correct, shall, on the first Monday of July, determine the amount of the subscribed or issued and outstanding capital stock of each such corporation. On the first Monday in August, the commission shall certify the amount so determined by it to the auditor of state, who shall charge for collection, on or before August fifteenth, as herein provided, from such corporation, a fee of threetwentieths of one per cent. upon its subscribed or issued and outstanding capital stock, which fee shall not be less than ten dollars in any case. Such fee shall be payable to the treasurer of state on or before the first day of the following October. (102 v. 224, § 109.) Referred to: Mannington v. Railway, 16 O. F. D. 552, 8 O. L. R. 451 [for opinion of common pleas, see Mannington v. Railway, 9 O. N. P. (N. S.) 641, 20 O. D. (N. F.) 468]. A corporation which exists as a domestic corporation in two states may be assessed for taxation under the law to the full extent of its capital stock subscribed, issued and outstanding, in the same manner as any other domestic corporation: Bridge Co. v. Mayer, 31 O. S. 317; State v. Bridge Co., 6 O. N. P. (N. S.), 55, 18 O. D. (N. P.) 273. This tax is for the privilege of exercising franchises for the ensuing year, and not for the preceding year: In matter of Emmerman v. Specialty Co., 14 O. F. D. 289; in re Bank v. Aultman, 14 O. F. D. 298. The fee is for the year next ensuing from the filing of annual report and not for past enjoyment. 14 O. F. D. 289. Fee is for entire year, not a fractional part; neither does it provide for the remitting part of the tax if corporation discontinues during year. A. G. R. 1904-5, p. 69; see A. G. R. 1912, pp. 617, 586, 67. Foreign corporations report. FOREIGN CORPORATIONS. SEC. 5499. Annually, during the month of July, each foreign corporation for profit doing business in this state, and owning or using a part or all of its capital or plant in this state, and subject to compliance with all other provisions of law, and in addition to all other statements required by law, shall make a report in writing to the commission ir such form as the commission may prescribe. (102 v. 224, § 111.) Verification. SEC. 5500. Such report shall be signed and sworn to before an officer, authorized to administer oaths, by the president, vice-president, secretary, superintendent or managing agent in this state, and forwarded to the commission. (102 v. 224, § 111.) Contents. SEC. 5501. Such report shall contain: 1. The name of the corporation and under the laws of what state or country organized. 2. The location of its principal office. 3. The names of the president, secretary, treasurer and members of the board of directors, with the postoffice address of each. 4. The date of the annual election of officers. 5. The amount of authorized capital stock, and the par value of each share. 6. The amount of capital stock subscribed, the amount of capital stock issued, and the amount of capital stock paid up. 7. The nature and kind of business in which the company is engaged and its place or places of business, both within and without the state. 8. The name and location of its office or offices in this state, and the name and address of the officers or agents of the corporation in charge of its business in this state. 9. The value of the property owned and used by the company in this state, where situated, and the value of the property owned and used outside of this state, and where situated. 10. The change or changes, if any, in the above particulars, made since the last annual report. (102 v. 224, § 112.) Valuation certified to auditor of state. SEC. 5502. Upon the filing of the report, provided for in the last three preceding sections, the commission, from the facts thus reported and any other facts coming to its knowledge bearing upon the question, shall, on the first Monday in September, determine the proportion of the authorized capital stock of the company represented by its property and business in this state. On the first Monday of October, the commission shall certify the amount of the proportion of the authorized capital stock of each such company represented by its property and business in this state, as determined by it, to the auditor of state. (102 v. 224, § 113.) This fee is computed upon the basis that the total of the Ohio property and business bears to the total property and business. This result gives the percentage of property and business in Ohio. The authorized capital stock, when multiplied by this percentage represents the proportion of the authorized capital stock, represented by property owned and used and business transacted in Ohio. Property in Ohio. Business in Ohio. Total $200,000 authorized capital stock. $200,000 .50 $100,000, proportion employed in Ohio, A company organized in two or more states is a domestic corporation in each state. An acceptance of the reports of a foreign corporation, does not bar the state from a collection of the proper tax. A foreign corporation which neither owned nor used property in the state, by error, in complying with § 178 et seq., reported its entire capital stock as used in the state, may upon consent of commission file an amended report and then accept the minimum annual fee and cance! balance. A. G. R. 1909-10, p. 84. The tax commission is an administrative body, being required to determine the tax "upon the proportion of the authorized capital stock of the corporation represented by the property owned and used and business transacted in this state." (Section 5502.) Its function is to follow the letter of the statute and make the mathematical computation according to the intent thereof. State v. Coal Company, O. L. R. 000. Decided November, 1914. The word "business" as used in section 5502, G. C., is synonymous with the same word as used in sections 5499 and 183, G. C. Sales of a foreign corporation to customers in Ohio solicited by traveling salesmen or by mail and necessitating the interstate transportation of the articles sold, are not to be regarded as representing "business" of such a corporation in Ohio under section 5502, G. C., although the corporation also carries on other activities in Ohio which do constitute Ohio business. But if a stock of goods of foreign manufacture is maintained in Ohio and sales are made in this state from that stock, or are made wherever negotiated to an Ohio customer from such stock, the business is "Ohio business" within the meaning of said section. The operation of a factory in Ohio by a foreign corporation having its principal place of business in another state constitutes "doing business" in Ohio, regardless of where the products of such factory are sold or transported; and it is reasonable and lawful under section 5502 to measure the volume of such business by sales of manufactured articles, whether such sales otherwise represent interstate commerce or not. A. G. R. 1915, p. 460. See A. G. R. 1915, page 2411, for discussion of rule for determining relative volume of business of foreign corporations. Collection; fee; minimum. SEC. 5503. On or before October fifteenth, the auditor of state shall charge for collection, as herein provided, annually, from such company, in addition to the initial fees otherwise provided for by law, for the privilege of exercising its franchise in this state, a fee of three-twentieths of one per cent. upon the proportion of the authorized capital stock of the corporation represented by the property owned and used and business transacted in this state, which fee shall not be less than ten dollars in any case. Such fee shall be payable to the treasurer of state on or before the first day of the following December. (102 v. 224, § 114.). Where a foreign corporation, other than a transportation company, transacts business and has property in Ohio, so as to make it subject to the annual tax on foreign corporations, all the business so transacted in Ohio, together with the property so owned and used, may be taken into consideration in determining that proportion of the authorized capital stock of the corporation on which the computation of the franchise tax may be based. A. G. R. 1918, p. 679. Domestic corporations; hearing; corrections. SEC. 5504. Between the dates herein fixed for the determination of the amount of the subscribed or issued and outstanding capital stock of a domestic corporation and the proportion of the authorized capital stock of a foreign corporation, represented by property owned and used and business transacted by it in this state, and the dates herein fixed for the certification to the auditor of state of such amount or proportion, the commission may, on the application of any person or company interested, or on its own motion, review and correct its findings. (102 v. 224, § 115.) Liabilities of foreign corporations; insurance companies not included in this act. SEC. 5508. All foreign corporations, and the officers and agents thereof, doing business in this state, shall be subjected to all the liabilities and restrictions that are, or may be imposed upon corporations of like character, organized under the laws of this state, and shall have no other or greater powers. Every contract made by or on behalf of any such foreign corporation, affecting the liability thereof or relating to its property within this state, before it shall have complied with the provisions of section one hundred and seventy-eight of the General Code, shall be wholly void on its behalf and on behalf of its assigns, but shall be enforceable against it or them. Nothing contained in this section shall be held or construed to apply to insurance corporations, fraternal beneficiary associations, or building and loan associations, required by law to report to the superintendent of insurance, nor to repeal, change or modify the provisions of section one hundred and eighty-eight of the General Code. (102 v. 224, § 119.) See § 178. Effect on contracts of non-compliance with § 178 G. C. Certified list of new corporations each month by secretary of state to commission. SEC. 5514. The secretary of state shall prepare and keep a correct list of all corporations, subject to the provisions of this act, engaged in business within this state. Each month he shall file with the commission a certified report showing all the new corporations, the increase or decrease of the capital stock, or the dissolution of existing corporations, and such other information as the commission requires. For the purpose of obtaining the necessary information, the secretary of state or the commission, shall have access to the records of the offices of the county auditors of the state. (102 v. 224, § 125.) Information by county auditors. SEC. 5515. Upon request of the secretary of state or the commission, any county auditor shall furnish such information as is shown by the records of his office concerning corporations located within his county, and subject to the provisions of this act. (102 v. 224, § 126.) Fees; power of commission as to. SEC. 5516. For the purpose of determining the amount of fees due from any such corporation, the commission may investigate and determine the facts showing the proportion of the authorized capital stock of the company represented by its property and business in this state. (102 v. 224, § 127.) Certain corporations exempted. SEC. 5518. An incorporated company, whether foreign or domestic, owning or operating a public utility in this state, and as such required by law to file reports, with the tax commission and to pay an excise tax upon its gross receipts or gross earnings as provided in this act, and insurance, fraternal beneficial, building and loan, bond investment and other corporations, required by law to file annual reports with the superintendent of insurance, shall not be subject to the provisions of sections one hundred and six to one hundred and fifteen, inclusive, of this act. (102 v. 224, § 129.) A steam railroad corporation which has leased its entire line and equipment and is not operating within the state of Ohio, is not required to pay an assessment under the Willis law upon its issued and outstanding capital stock. Railway v. State, O. C. C. (N. S.) 20, 61. Section 5518, General Code, excepts from the Willis law franchise tax provisions such insurance companies as are required by law to file "annual reports with the superintendent of insurance." Such exceptions cannot be construed therefore to include an insurance company organized for profit, which has not yet disposed of all its shares of capital stock, as required by law and has not yet been licensed to do business by the superintendent of insurance, and therefore, is not required to file reports with that official. The franchise tax is a tax upon the privilege of being a corporation rather than a tax upon doing business. A. G. R. 1912, p. 633. The franchise tax is a tax upon the privilege of being a corporation during the month of May, when the report is due and this tax is not intended in any way to relate to prior or subsequent existence or activities. The excise tax is a tax upon the privilege of doing a public utility business during the year period preceding June 30th. Each tax is assessed for the same year and the funds received for each is appropriated for public purposes for the same period of time. cor In accordance with the intention of section 5518, General Code, therefore, that a poration should not be subject to both taxes for the same year, no corporation can be required to file a private corporation for profit report in May, and at the same time be required to file a public utilities report in September. A. G. R. 1913, p. 585. Report not required until lapse of six months from date of incorporation. SEC. 5519. A corporation shall not be required to file its first annual report under sections one hundred and six to one hundred and fifteen, [G. C. § 5495 to § 5504] inclusive, of this act, until the proper month, hereinbefore provided, for the filing of such report, next following the expiration of six months from the date of its incorporation or admission to do business in this state. (102 v. 224, § 130.) A consolidated corporation need not file a report until after 6 months following the filing of its certificates of consolidation. A. G. R. 1908 p. 83. Dissolution no exemption from payment or filing report. SEC. 5520. The mere retirement from business or voluntary dissolution of a domestic or foreign corporation, without filing the certificate, provided for in sections eleven thousand nine hundred and seventy-four, eleven thousand nine hundred and seventy-five and eleven thousand nine hundred and seventy-six of the General Code, shall not exempt it from the requirements to make reports and pay fees or taxes in accordance with the provisions of this act. (102 v. 224, § 131.) See also G. C. § § 11978, 11975, 5498. Receivers, trustees, etc., must file reports until certificate is filed with Secretary of State under 11975. See 5521 G. C. A. G. R. 1911-12, p. 699. A. G. R. 1904-5, p. 68. A. G. R. 1912, p. 17, also p. 844. A corporation in the hands of a receiver, assignee or trustee for the benefit of creditors and stockholders, must, through such receiver, assignee or trustee, file the reports and pay the fee prescribed by the Willis law (102 O. L. 249) until the corporation is dissolved or its charter revoked by a court of competent jurisdiction and the certificate of dissolution provided by Section 11975, has been received and filed by the secretary of state. A. G. R. 1911-1912, p. 699. When certificate of dissolution may be filed. SEC. 5521. In case of dissolution or revocation of its charter, on the part of a domestic corporation, or of the retirement from business in this state, on the part of a foreign corporation, the secretary of state shall not permit a certificate of such action to be filed with him unless the commission shall certify that all reports, required to be made to it, have been filed in pursuance of law, and that all taxes or fees and penalties thereon due from such corporation have been paid. (102 v. 224, § 132.) The annual franchise fee of a domestic corporation is not due until August 15, within the meaning of Section 5521, G. C.; and the tax commission may until that date furnish the certificate mentioned in said section even though the taxes for the current year have not been paid. For foreign corporations said annual tax is not due until October 15th of each year, within the meaning of Section 5521, G. C. A. G. R. 1915, p. 1196. Certificate of secretary of state as to foreign corporation doing business without compliance with laws; prosecution. SEC. 5523. When the secretary of state has knowledge that a foreign corporation, organized for profit, and owning or using a part or all of its capital and plant in this state, is doing business in this state without having complied with the laws thereof, he shall certify such fact to the commission. The commission, when it ascertains from such certificate of the secretary of state, or otherwise, that any such foreign corporation is doing business in this state without having complied with the laws thereof, shall certify the same to the attorney general, with the request that he prosecute an action against such foreign corporation for the penalties provided by law. in the court of common pleas of Franklin county, or in any county in which the corporation has an office or place of business. It shall be the duty of the attorney general, upon receipt of such request, to commence and prosecute such an action. On good cause shown, the commission may remit the penalty. or part thereof, incurred by a foreign corporation under the provision of Chapter 2, of Division 1, Title III, Part First, General Code. (102 v. 224, § 134.) For a section analogous to the section bearing this number in the original General Code, see § 5497. See § 182, 186 and 191 G. C. |