EXPLANATION: CAPITALS INDICATE MATTER ADDE D TO EXISTING LAW .
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*hb0039*
HOUSE BILL 39
Q3 3lr0748
HB 330/21 – W&M (PRE–FILED)
By: Delegate Charkoudian
Requested: November 14, 2022
Introduced and read first time: January 11, 2023
Assigned to: Ways and Means
Committee Report: Favorable with amendments
House action: Adopted
Read second time: March 2, 2023
CHAPTER ______
AN ACT concerning 1
Effective Corporate Tax Rate Transparency Act of 2023 2
Corporate Income Tax Returns of Publicly Traded Corporations – Reporting 3
Requirement 4
FOR the purpose of requiring certain corporations to attach to their Maryland income tax 5
return a certain statement that includes certain information relating to the 6
corporations’ effective tax rate; requiring that the statement be made under oath and 7
signed in a certain manner, subject to audit by the Comptroller, and treated as 8
confidential taxpayer information requiring the Comptroller to submit a certain 9
report to the Governor and the General Assembly on or before a certain date each 10
year relating to certain publicly traded corporations that pay no State income taxes 11
for a certain taxable year; and generally relating to corporate income tax returns. 12
BY repealing and reenacting, with amendments, 13
Article – Tax – General 14
Section 10–804(e) 10–821 15
Annotated Code of Maryland 16
(2022 Replacement Volume) 17
BY adding to 18
Article – Tax – General 19
Section 10–804.2 20
Annotated Code of Maryland 21
(2022 Replacement Volume) 22 2 HOUSE BILL 39
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 1
That the Laws of Maryland read as follows: 2
Article – Tax – General 3
10–804. 4
(e) Each person required under this subtitle to file an income tax return or 5
estimated income tax declaration or return shall: 6
(1) comply with the regulations of the Comptroller; 7
(2) keep the records that the Comptroller requires; and 8
(3) attach to an income tax return or otherwise file with the Comptroller 9
any records or statements that the Comptroller requires, including: 10
(i) for an individual who has income tax withheld from salary, 11
wages, or other compensation for personal services, or other payments, a copy of the 12
statement from the person who withholds the tax that states: 13
1. the amount of salary, wages, or other compensation for 14
personal services paid and the income tax withheld; or 15
2. the amount of payments made and the income tax 16
withheld; 17
(ii) a copy of the federal income tax return: 18
1. for a corporation; and 19
2. if the Comptroller requests, for an individual; 20
(iii) for a corporation, the statements required under § 10–804.1 of 21
this subtitle; [and] 22
(IV) FOR A PUBLICLY TRADE D CORPORATION AND IT S 23
SUBSIDIARIES, THE STATEMENT REQUIR ED UNDER § 10–804.2 OF THIS SUBTITLE ; 24
AND 25
[(iv)] (V) if the Comptroller requests, for a corporation that is a 26
member of an affiliated group or controlled group under § 1504 or § 1563 of the Internal 27
Revenue Code, a statement of all intermember costs or expenses and all intermember sales, 28
exchanges, or other transactions involving tangible or intangible property for the taxable 29
year. 30
HOUSE BILL 39 3
10–804.2. 1
(A) (1) IN THIS SECTION THE F OLLOWING WORDS HAVE THE MEANINGS 2
INDICATED. 3
(2) “EFFECTIVE TAX RATE ” MEANS A PERCENTAGE T HAT EQUALS THE 4
QUOTIENT OF: 5
(I) THE STATE INCOME TAX LIABILITY OF A P UBLICLY TRADED 6
CORPORATION ; AND 7
(II) THE BOOK INCOME OF T HE CORPORATION : 8
1. DETERMINED IN ACCORD ANCE WITH GENERALLY 9
ACCEPTED ACCOUNTING PRINCIPLES; AND 10
2. AS ALLOCATED TO THE STATE USING A 11
THREE–FACTOR APPORTIONMENT FRACTION: 12
A. THE NUMERATOR OF WHI CH IS THE SUM OF THE 13
PROPERTY FACTOR , THE PAYROLL FACTOR , AND THE RECEIPTS FAC TOR, 14
CALCULATED IN ACCORD ANCE WITH THE MODEL MULTISTATE TAX COMPACT WITH 15
RECOMMENDED AMENDMENTS TO ARTICLE IV, AS PROMULGATED BY TH E 16
MULTISTATE TAX COMMISSION; AND 17
B. THE DENOMINATOR OF W HICH IS 3. 18
(3) “PUBLICLY TRADED CORPO RATION” INCLUDES ANY SUBSIDI ARY 19
OF THE CORPORATION . 20
(B) A PUBLICLY TRADED CORP ORATION THAT IS REQU IRED TO FILE AN 21
INCOME TAX RETURN UN DER THIS TITLE SHALL ATTACH TO THE INCOME TAX 22
RETURN A STATEMENT T HAT: 23
(1) IDENTIFIES THE CORPO RATION’S EFFECTIVE TAX RATE ; 24
(2) PROVIDES AN ITEMIZED EXPLANATION OF HOW T HE 25
CORPORATION ’S EFFECTIVE TAX RATE WAS CALCULATED , INCLUDING THE VALUE 26
OF ANY CREDITS , DEDUCTIONS , SUBTRACTION MODIFICATIONS , NET OPERATING 27
LOSSES CARRIED FORWA RD OR BACKWARD , OR OTHER ADJUSTMENTS APPLIED TO 28
DETERMINE THE STATE INCOME TAX LIAB ILITY OF THE CORPORA TION; AND 29
4 HOUSE BILL 39
(3) INCLUDES A COMPARISO N OF THE EFFECTIVE T AX RATE OF THE 1
CORPORATION BOTH BEF ORE AND AFTER THE APPLICATIO N OF ANY CREDITS , 2
DEDUCTIONS , SUBTRACTION MODIFICA TIONS, OR OTHER ADJUSTMENTS . 3
(C) THE STATEMENT REQUIRE D UNDER SUBSECTION (B) OF THIS SECTION: 4
(1) SHALL BE: 5
(I) MADE UNDER OATH AND SIGNED IN THE SAME M ANNER AS 6
REQUIRED FOR INC OME TAX RETURNS UNDE R § 10–804 OF THIS SUBTITLE; AND 7
(II) SUBJECT TO AUDIT BY THE COMPTROLLER IN THE CO URSE 8
OF AND UNDER THE NOR MAL PROCEDURES APPLI CABLE TO CORPORATE I NCOME 9
TAX RETURN AUDITS ; AND 10
(2) NOTWITHSTANDING ANY OTHER PROVISION OF L AW, SHALL BE 11
TREATED AS CONFIDENT IAL TAXPAYER INFORMA TION SUBJECT TO TITLE 13, 12
SUBTITLE 2 OF THIS ARTICLE. 13
(D) (1) THE COMPTROLLER SHALL : 14
(I) COLLECT AND COMPILE THE INFORMATION SUBM ITTED 15
UNDER THIS SECTION ; AND 16
(II) ON OR BEFORE MARCH 1 EACH YEAR, SUBMIT A REPORT TO 17
THE GOVERNOR AND , IN ACCORDANCE WITH § 2–1257 OF THE STATE GOVERNMENT 18
ARTICLE, THE GENERAL ASSEMBLY THAT IDENTIF IES THE AVERAGE EFFE CTIVE 19
TAX RATE FOR ALL PUB LICLY TRADED CORPORA TIONS REQUIRED TO FI LE THE 20
STATEMENT UNDER SUBS ECTION (B) OF THIS SECTION. 21
(2) THE REPORT REQUIRED U NDER PARAGRAPH (1)(II) OF THIS 22
SUBSECTION SHALL INC LUDE: 23
(I) THE AVERAGE EFFECTIV E TAX RATE OF PUBLIC LY TRADED 24
CORPORATIONS , SORTED BY: 25
1. TYPES OF BUSINESS , ITEMIZED BY THE NORTH 26
AMERICAN INDUSTRIAL CLASSIFICATION SYSTEM CODE REPORTED ON EACH 27
CORPORATION ’S INCOME TAX RETURN UNDER THIS TITLE ; 28
2. EFFECTIVE TAX RATE ; AND 29
3. VARIOUS MEASURES OF SIZE, SUCH AS INCOME , 30
PAYROLL, AND GROSS RECEIPTS ; AND 31 HOUSE BILL 39 5
(II) AN ANALYSIS IDENTIFY ING AND COMPARING POTENTIAL 1
CAUSES FOR REDUCED E FFECTIVE TAX RATES , WHICH MAY INCLUDE FE DERAL OR 2
STATE TAX LOOPHOLES , TREATMENT OF OPERATI NG LOSSES, CREDITS AND 3
DEDUCTIONS , OR THE APPORTIONMENT FORMULA. 4
10–821. 5
(a) (1) A corporation required under Part II of this subtitle to file a return for 6
a taxable year shall complete and file with the Comptroller an income tax return: 7
(i) on or before the April 15 that follows that taxable year; or 8
(ii) if income tax is computed for a fiscal year, on or before the 15th 9
day of the 4th month after the end of that year. 10
(2) Within 60 days after a corporation loses or surrenders its charter in the 11
State, is dissolved or liquidated, or voluntarily or involuntarily withdraws from the State, 12
the corporation shall complete and file with the Comptroller an income tax return. 13
(b) A corporation required under § 10–816 of this subtitle to file a declaration of 14
estimated income tax for a taxable year shall complete and file with the Comptroller a 15
quarterly estimated tax return on or before the 15th day of the 4th, 6th, 9th, and 12th 16
months of that year. 17
(C) (1) IN THIS SUBSECTION , “PUBLICLY TRADED CORP ORATION” 18
INCLUDES ANY SUBSIDI ARY OF THE CORPORATI ON. 19
(2) ON OR BEFORE DECEMBER 31, 2023, AND EACH DECEMBER 31 20
THEREAFTER , THE COMPTROLLER SHALL SUB MIT A REPORT TO THE GOVERNOR 21
AND, IN ACCORDANCE WITH § 2–1257 OF THE STATE GOVERNMENT ARTICLE, THE 22
GENERAL ASSEMBLY THAT IDENTIF IES FOR THE IMMEDIAT ELY PRECEDING 23
TAXABLE YEAR : 24
(I) THE NUMBER OF PUBLIC LY TRADED CORPORATIO NS 25
CONDUCTI NG A TRADE OR BUSINE SS IN ANOTHER STATE THAT ARE REQUIRED TO 26
FILE AN INCOME TAX R ETURN UNDER THIS SUB TITLE; AND 27
(II) THE NUMBER OF PUBLIC LY TRADED CORPORATIO NS 28
IDENTIFIED UNDER ITE M (I) OF THIS PARAGRAPH TH AT PAID NO AMOUNT OF STATE 29
INCOME TAX. 30
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 31
1, 2023, and shall be applicable to all taxable years beginning after December 31, 2022. 32