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Frequently Asked Questions - Entities - Special Session House Bill 1 FAQ

How does Special Session House Bill 1 of 2010 affect me?

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Interest and Dividends (I&D) Tax for Entities – 2010 Special Session House Bill 1

  • As a limited liability company (or partnership or association) with non-transferable shares, how does the passage of Special Session House Bill 1 affect me?
  • As a limited liability company subject to I&D Tax for taxable period ending December 31, 2010, will I be charged underpayment of estimate penalties for I&D Tax even though I was not subject to the I&D Tax during the last taxable period?

As a limited liability company (or partnership or association) with non-transferable shares, how does the passage of Special Session House Bill 1 affect me?

Under Special Session House Bill 1, limited liability companies with non-transferable shares (also partnerships and associations with non-transferable shares) that receive income from interest and dividends during taxable periods ending on or after December 31, 2010, are required to report and pay I&D Tax.  To further illustrate the effective date of the repeal in Special Session House Bill 1, we provide two examples:

  • If a limited liability company with non-transferable shares has a taxable period ending September 30, 2010 and receives dividend income during that taxable period, the limited liability company is not subject to I&D Tax. (The limited liability company's taxable period ends before December 31, 2010).
  • If, however, a limited liability company with non-transferable shares has a taxable period ending December 31, 2010 and receives dividend income during that taxable period, the limited liability company is subject to I&D Tax. (The limited liability company's taxable period ends on December 31, 2010).

As a limited liability company subject to I&D Tax for taxable period ending December 31, 2010, will I be charged underpayment of estimate penalties for I&D Tax even though I was not subject to the I&D Tax during the last taxable period?

No, since you were not required to file a tax return for income received from interest and dividends last tax period; this would be considered your first tax period.


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