For what tax years do Benihana's state and local tax filings remain subject to examination?
Benihana Franchise · 2024 FDDAnswer from 2024 FDD Document
The Company is subject to income taxes in the U.S. federal jurisdiction, and the various states and local jurisdictions in which it operates. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. The Company's federal tax filings remain subject to examination for federal tax years 2020 through 2022. The Company's state and local tax filings remain subject to examination for tax years 2019 through 2022. NOL carryforwards are subject to examination regardless of whether the tax year in which they are generated has been closed by statute. The amount subject to disallowance is limited to the NOL utilized. Accordingly, the Company may be subject to examination for prior NOLs generated as such NOLs are utilized.
Source: Item 22 — CONTRACTS (FDD pages 73–74)
What This Means (2024 FDD)
According to Benihana's 2024 Franchise Disclosure Document, the company's state and local tax filings are subject to examination for tax years 2019 through 2022. This means that state and local tax authorities can review Benihana's tax filings for these years to ensure compliance with tax laws and regulations.
Additionally, the FDD notes that Net Operating Loss (NOL) carryforwards are subject to examination regardless of whether the tax year in which they were generated has been closed by statute. The amount subject to disallowance is limited to the NOL utilized. This implies that even if the tax years 2019-2022 are closed, prior NOLs generated by Benihana could still be examined as such NOLs are utilized in future tax filings.
This information is relevant to a prospective franchisee because it provides insight into Benihana's tax compliance and potential liabilities. While the franchisee is not directly responsible for Benihana's past tax filings, understanding the company's tax situation can offer a more complete picture of its financial health and risk profile. Franchisees may want to inquire about any ongoing or potential tax audits and their possible impact on the business.