Applying for state tax IDs & tax exemption certificates
Registering for corporate income and privilege tax accounts is a requirement for many businesses. Nonprofits that are tax-exempt on the federal level are often eligible to apply for exemption from these taxes. State tax authorities penalize companies that do not comply with the laws to register for and pay corporate income tax. This guide summarizes the key concepts involved in obtaining tax identification (ID) numbers, applying for exemption certificates, and maintaining corporate income tax compliance.
Introduction to Corporate Income & Privilege Tax
Corporate income tax is a tax on the net income of corporations. In most cases, only corporations are subject to this tax.
Privilege taxes are imposed on businesses for the right to conduct business in each state. Privilege taxes are usually based on the gross receipts or net worth of a business, but some are levied as a flat fee. States often use terms like franchise tax, business entity tax, or business and occupation tax to refer to their local privilege tax. Some states have privilege taxes that apply to very specific groups of businesses, such as banks or other financial institutions, but this guide does not cover those taxes.
Exemptions from corporate income and privilege tax are frequently available to nonprofits that are federally exempt from income tax. While in some jurisdictions your organization must expressly apply for an exemption, in others your organization is automatically exempt upon receiving the federal exemption.
Nexus is the technical term for when an entity is legally subject to certain taxes in each state. The definition varies by governing authority, but in general, it is a good idea to review corporate income and privilege tax nexus when:
- You set up your business.
- You open a physical location in a new state.
- You hire an employee or contractor in a new state.
- You partner with an affiliate in a new state.
- You store products, distribute products, or work with a drop-shipper in a new state.
- Your company changes its business structure (e.g. LLC to corporation)
Where Corporate Income & Privilege Tax is Levied
All states except for South Dakota and Wyoming subject businesses to a combination of corporate income and privilege taxes. Forty-four states and the District of Columbia currently impose corporate income taxes on corporations, while 17 states levy broadly applicable privilege taxes.
Not all corporate taxes are levied or administered by the state. Some cities and counties levy general business privilege taxes on entities located within their jurisdiction. This requirement is mostly applied to heavily populated cities or counties.
Registering to File Corporate Income and Privilege Taxes
The entity applies for a tax ID in each jurisdiction where registration is necessary, pays anticipated income taxes in accordance with the necessary schedule, and submits a corporate tax return at the conclusion of the tax year. Even though almost all states have a corporate income or privilege tax, only a small number of them demand registration before a return may be filed.
Only 20 states now need registration before a business submits its initial income tax return. Entities receive a department of revenue identification number following registration. However, Ohio and Pennsylvania provide a unique ID for the business income tax account. States that do not require registration only track enterprises using the EIN provided by the federal government.
Getting Corporate Income and Privilege Tax Exemption Certificates
After obtaining their IRS determination letter, organizations are frequently automatically free from corporate income and privilege taxes. However, to obtain an exemption, organizations must apply for supporting materials in 17 states and the District of Columbia.
Nonprofits should not assume they are free from paying corporate income and privilege taxes. Each state’s exemption application procedure is outlined in the chart below.
| State | Corporation | LLC |
|---|---|---|
| Alabama | Agency: Alabama Department of Revenue Form: Initial Business Privilege Tax Return Notes: File an initial business privilege tax return within 2.5 months after the date of incorporation or qualification to register for the privilege tax. | Agency: Alabama Department of Revenue Form: Initial Business Privilege Tax Return Notes: File an initial business privilege tax return within 2.5 months after the date of incorporation or qualification to register for the privilege tax. |
| Alaska NOT REQUIRED | There is no need to register before filing corporation income tax. More information: Alaska Department of Revenue | LLCs will typically file partnership income tax, but this depends on how the IRS classifies them. There is no need to register before filing partnership income tax. More information: Alaska Department of Revenue |
| Arizona NOT REQUIRED | There is no separate registration for corporate income tax. More information: Arizona Department of Revenue | LLCs will typically file partnership income tax, but this depends on how the IRS classifies them. There is no separate registration for partnership tax. More information: Arizona Department of Revenue |
| Arkansas NOT REQUIRED | There is no need to register before filing a corporate income tax return. The secretary of state-administered franchise tax also does not require registration. More information: Arkansas Department of Finance and Administration | Most LLCs do not file Corporate Income Tax returns. The secretary of state-administered franchise tax also does not require registration. More information: Arkansas Department of Finance and Administration |
| California NOT REQUIRED | There is no need to register with the Franchise Tax Board. More information: California Franchise Tax Board | More information: California Franchise Tax Board |
| Colorado NOT REQUIRED | There is no need to register for a Business Income tax account. More information: Colorado Department of Revenue | Most LLCs will file form 106, Business Income Tax Return for Pass-Through Entities, to confirm that income is taxed individually. There is no need to register for an Income tax account, you are automatically registered upon submitting a return for the first time. More information: Colorado Department of Revenue |
| Connecticut | Agency: Connecticut Department of Revenue Services Filing Method: Online Notes: Register using the relevant section of the business taxes registration application. Corporations must register for either the corporation business tax or business entity tax but not both. Generally, C Corporations file corporation business tax while S Corporations file business entity tax. | Agency: Connecticut Department of Revenue Services Filing Method: Online Notes: Register using the relevant section of the business taxes registration application. |
| Delaware NOT REQUIRED | There is no corporate income tax-specific registration, but most entities will need to file a combined registration application. There is no registration for the department of the state-administered franchise tax. More information: Delaware Department of Finance – Division of Revenue | Most LLC types do not file Corporate Income Tax returns. There is no registration for the department of the state-administered franchise tax. More information: Delaware Department of Finance – Division of Revenue |
| District of Columbia | Agency: District of Columbia Office of Tax and Revenue Form: FR-500: New Business Registration Notes: Register using the FR-500 application or online system. | Agency: Connecticut Department of Revenue Services Filing Method: FR-500: New Business Registration Notes: Register using the FR-500 application or online system. |
| Florida NOT REQUIRED | There is no need to register for a Business Income tax account. More information: Florida Department of Revenue | Some LLCs will need to file a partnership information return. There is no registration required before making this filing. More information: Florida Department of Revenue |
| Georgia NOT REQUIRED | No separate registration is required for corporate income or net worth tax, but entities may need to register before filing for other taxes. More information: Georgia Department of Revenue | LLCs will typically file partnership income tax, but this depends on how the IRS classifies them. There is no separate registration required for partnership income tax. More information: Georgia Department of Revenue |
| Hawaii NOT REQUIRED | There is no separate registration for corporate income tax or franchise tax, but entities will need to register for a tax ID before filing a return. Only banks and financial institutions are required to file franchise taxes. More information: Hawaii Department of Taxation | There is no separate registration for partnership income tax, but entities will need to register for a tax ID before filing a return. More information: Hawaii Department of Taxation |
| Idaho NOT REQUIRED | Entities are not subject to both franchise tax and corporate income tax. There is no separate registration required for corporate income or franchise tax. More information: Idaho State Tax Commission | LLCs will typically file partnership income tax, but this depends on how the IRS classifies them. There is no separate registration required for partnership income tax. More information: Idaho State Tax Commission |
| Illinois NOT REQUIRED | There is no separate registration required for business income tax, but firms should use the business registration application to register with the department. More information: Illinois Department of Revenue | LLCs will typically file a partnership income tax return, but this depends of how the IRS classifies them. There is no separate registration required for business income tax, but firms should use the business registration application to register with the department. More information: Illinois Department of Revenue |
| Indiana NOT REQUIRED | No separate registration is required for corporate income tax, but entities may need to register before filing for other taxes. More information: Indiana Department of Revenue | LLCs will typically file partnership income tax, but this depends on how the IRS classifies them. There is no separate registration required for partnership income tax. More information: Indiana Department of Revenue |
| Iowa NOT REQUIRED | There is no need to register for a Business Income tax account. More information: Iowa Department of Revenue | LLCs will typically file partnership income tax, but this depends on how the IRS classifies them. There is no separate registration required for partnership income tax. More information: Iowa Department of Revenue |
| Kansas | Agency: Kansas Department of Revenue Form: Form CR-16: Business Tax Application Notes: Register using form CR-16 and complete the required sections. | Agency: Kansas Department of Revenue Form: Form CR-16: Business Tax Application Notes: Register using form CR-16 and complete the required sections. LLCs will typically file partnership income tax, but this depends on how the IRS classifies them. |
| Kentucky | Agency: Kentucky Department of Revenue Form: Kentucky Tax Registration Application Notes: Register using the consolidated tax application or online. | Agency: Kentucky Department of Revenue Form: Kentucky Tax Registration Application Notes: Register using the consolidated tax application or online. |
| Louisiana | Agency: Louisiana Department of Revenue Filing Method: Online Notes: Register through the online system to set up tax accounts. | Agency: Louisiana Department of Revenue Filing Method: Online Notes: LLCs may be required to file a partnership return and should register through the online system. |
| Maine NOT REQUIRED | There is no need to register before filing corporate income tax. Other tax types may require registration. More information: Maine Revenue Services | There is no need to register before filing corporate income tax. Other tax types may require registration. More information: Maine Revenue Services |
| Maryland NOT REQUIRED | There is no need to register before filing corporate income tax. Other tax types may require registration. More information: Comptroller of Maryland | There is no need to register before filing corporate income tax. Other tax types may require registration. LLCs may be required to file a pass-through entity return. More information: Comptroller of Maryland |
| Massachusetts NOT REQUIRED | There is no separate registration for corporate excise tax, but corporations may need to register for other taxes. More information: Massachusetts Department of Revenue | Most LLC types do not file Corporate Excise Tax returns. More information: Massachusetts Department of Revenue |
| Michigan | Agency: Michigan Department of Treasury Form: Form 518: Michigan Business Taxes Registration Filing Method: Online Notes: Corporations must register for Corporate Income Tax using either form 518 or the online system to register. | NOT REQUIRED Most LLC types do not file Corporate Income Tax returns, but this depends on their IRS classification. More information: Michigan Department of Treasury |
| Minnesota | Agency: Minnesota Department of Revenue Form: Form ABR: Application for Business Registration Filing Method: Online Notes: Corporations must register before filing corporate franchise tax returns. | NOT REQUIRED Most LLC types do not file Corporate Franchise Tax returns, but this depends on their IRS classification. LLCs may also be required to pay the Minimum Fee. If either of these taxes applies, the LLC will need to register. More information: Minnesota Department of Revenue |
| Mississippi | Agency: Mississippi Department of Revenue Filing Method: Online Notes: Corporations must register before filing corporate income and franchise tax returns. | NOT REQUIRED Most LLC types do not file Corporate Income or Franchise Tax returns, but this depends on their IRS classification. If either of these taxes applies, the LLC will need to register. More information: Mississippi Department of Revenue |
| Missouri | Agency: Missouri Department of Revenue Form: Form 2643: Tax Registration Application Notes: Corporations must register before filing corporate income and franchise tax returns. | NOT REQUIRED Most LLC types do not file Corporate Income, Franchise Tax, or Partnership Tax returns, but this depends on their IRS classification. If any of these taxes apply, the LLC will need to register. More information: Missouri Department of Revenue |
| Montana NOT REQUIRED | There is no need to register before filing corporate income tax. Other tax types may require registration. More information: Montana Department of Revenue | Most LLC types do not file Corporate Income Tax returns. More information: Montana Department of Revenue |
| Nebraska | Agency: Nebraska Department of Revenue Form: Form 20: Nebraska Tax Application Notes: Corporations must register before filing corporate income tax returns. | NOT REQUIRED Most LLC types do not file Corporate Income, Franchise Tax, or Partnership Tax returns, but this depends on their IRS classification. If any of these taxes apply, the LLC will need to register. More information: Nebraska Department of Revenue |
| Nevada NOT REQUIRED | Entities that file with the Secretary of State are automatically registered for commerce taxes. More information: Nevada Department of Taxation | Entities that file with the Secretary of State are automatically registered for commerce taxes. LLCs are liable to pay commerce tax. More information: Nevada Department of Taxation |
| New Hampshire NOT REQUIRED | There is no need to register for a Business Income tax account, this happens automatically upon filing the first return. Business entities are generally required to file both Business Entity Taxes and Business Profit Taxes. More information: New Hampshire Department of Revenue Administration | There is no need to register for a Business Income tax account, this happens automatically upon filing the first return. Business entities are generally required to file both Business Entity Taxes and Business Profit Taxes. More information: New Hampshire Department of Revenue Administration |
| New Jersey | Agency: New Jersey Department of the Treasury – Division of Taxation Filing Method: Online Notes: Corporations must register before filing corporation business tax returns. | NOT REQUIRED Most LLC types do not file Corporate Business Tax returns but may need to register for other tax types. More information: New Jersey Department of the Treasury – Division of Taxation |
| New Mexico | Agency: New Mexico Taxation and Revenue Department Form: ACD-31015: Application for Business Tax Identification Number | Agency: Nebraska Department of Revenue Form: ACD-31015: Application for Business Tax Identification Number Notes: Most LLCs will file a pass-through entity return, but they must first register for a tax ID. |
| New York NOT REQUIRED | There is no need to register before filing a franchise tax return. Other tax types may require registration. More information: New York State Department of Taxation and Finance | Depending on IRS classification, LLCs may not be included in this tax. There is no registration required for Franchise Tax. More information: New York State Department of Taxation and Finance |
| North Carolina NOT REQUIRED | No need to register for a Business Income tax account. An account is created after you file a return for the first time. More information: North Carolina Department of Revenue | Most LLC types do not file Corporate Income Tax or Franchise Tax. More information: North Carolina Department of Revenue |
| North Dakota NOT REQUIRED | There is no need to register before filing corporate income tax. Other tax types may require registration. More information: North Dakota Office of State Tax Commissioner | Depending on IRS classification, LLCs may not be included in this tax. There is no registration required for Corporate Income Tax. More information: North Dakota Office of State Tax Commissioner |
| Ohio | Agency: Ohio Department of Taxation Form: Form CAT-1: Commercial Activity Tax Registration Notes: The Commercial Activity Tax applies to most business entities in the state of Ohio. You must register first before filing a return. There is no registration for corporation franchise tax. | Agency: Ohio Department of Taxation Form: Form CAT-1: Commercial Activity Tax Registration Notes: The Commercial Activity Tax applies to most business entities in the state of Ohio. You must register first before filing a return. |
| Oklahoma NOT REQUIRED | There is no need to register before filing corporate income tax or franchise tax. Other tax types may require registration. More information: Oklahoma Tax Commission | Depending on IRS classification, LLCs may not be included in this tax. There is no registration required for Corporate Income Tax or Franchise Tax. More information: Oklahoma Tax Commission |
| Oregon NOT REQUIRED | No need to register for a Business Excise tax account. More information: Oregon Department of Revenue | Most LLC types do not file Corporate Excise Tax or Corporation Income Tax, but some are liable for the Partnership Minimum Tax. More information: Oregon Department of Revenue |
| Pennsylvania NOT REQUIRED | No need to register for a Corporate Net Income tax account. An account is created after you file with the Secretary of State. More information: Pennsylvania Department of Revenue | Most LLC types do not file Corporate Net Income Tax. More information: Pennsylvania Department of Revenue |
| Rhode Island NOT REQUIRED | There is no need to register before filing business corporation tax. Other tax types may require registration. More information: Rhode Island Department of Revenue – Division of Taxation | Depending on IRS classification, LLCs may not be included in this tax. More information: Rhode Island Department of Revenue – Division of Taxation |
| South Carolina | Agency: South Carolina Department of Revenue Form: SCDOR-111: Business Tax Application Notes: Register before filing. | Agency: South Carolina Department of Revenue Form: SCDOR-111: Business Tax Application Notes: Depending on IRS classification, LLCs may not be included in this tax. |
| South Dakota NOT REQUIRED | South Dakota does not have a corporate income tax. More information: South Dakota Department of Revenue | South Dakota does not have a corporate income tax. More information: South Dakota Department of Revenue |
| Tennessee | Agency: Tennessee Department of Revenue Filing Method: Online Notes: FEIN, Department of Revenue Account Number | Agency: Tennessee Department of Revenue Filing Method: Online Notes: FEIN, Department of Revenue Account Number |
| Texas NOT REQUIRED | There is no need to register for franchise tax as this takes place during the incorporation or foreign qualification process. More information: Texas Comptroller | There is no need to register for franchise tax as this takes place during the formation or foreign qualification process. More information: Texas Comptroller |
| Utah | Agency: Utah State Tax Commission Notes: There is no corporate income tax-specific registration, but the department uses the business and tax registration application to set up the account. | NOT REQUIRED Depending on IRS classification, LLCs may not be included in this tax. More information: Utah State Tax Commission |
| Vermont NOT REQUIRED | There is no need to register before filing a business entity or corporate income tax. Other tax types may require registration. More information: Vermont Department of Taxes | There is no need to register before filing a business entity or corporate income tax. Other tax types may require registration. More information: Vermont Department of Taxes |
| Virginia | Agency: Virginia Department of Taxation Form: Form R-1: Business Registration Application Notes: Corporations can register for Corporate Income Tax using form R-1. | NOT REQUIRED Most LLC types do not file Corporate Income Tax. More information: Virginia Department of Taxation |
| Washington | Agency: Washington Department of Revenue Form: Business License Application Filing Method: Online Notes: Register before filing. Washington does not have a corporate income tax. | Agency: Washington Department of Revenue Form: Business License Application Notes: Register before filing. Washington does not have a corporate income tax. |
| West Virginia | Agency: West Virginia State Tax Department Form: WV/BUS-APP Filing Method: Online Agency Fee: $30 registration fee unless the applicant is a nonprofit, foreign retailer, government agency, or only applying for a withholding account or agricultural/farming account. Notes: Register before filing. Only public service companies need to file business and occupation taxes. | Agency: West Virginia State Tax Department Form: WV/BUS-APP Filing Method: Online Agency Fee: $30 registration fee unless the applicant is a nonprofit, foreign retailer, government agency, or only applying for a withholding account or agricultural/farming account. Notes: LLCs may need to file depending on their IRS classification. |
| Wisconsin | Agency: Wisconsin Department of Revenue Form: Online Notes: Register before filing. | NOT REQUIRED LLCs may need to file depending on their IRS classification. More information: Wisconsin Department of Revenue |
| Wyoming NOT REQUIRED | Wyoming does not have a corporate income tax. More information: Wyoming Department of Revenue | Wyoming does not have a corporate income tax. More information: Wyoming Department of Revenue |
This guide is part of Taxation & Accounting in our Launch Guide.
