What tax law does Coffee News follow?
Coffee_News Franchise · 2025 FDDAnswer from 2025 FDD Document
Coffee News USA, Inc. is an S corporation under provisions of the United States Internal Revenue Code. As such, its income for federal income tax purposes is taxed at the shareholder level, and no income taxes are provided for the Company. Federal and state returns for 2024, 2023, and 2022 are subject to examination by the IRS, generally for three years after they were filed.
Source: Item 23 — Receipts (FDD pages 36–118)
What This Means (2025 FDD)
According to the 2025 Coffee News FDD, Coffee News USA, Inc. operates as an S corporation under the United States Internal Revenue Code. This means that the company's income is taxed at the shareholder level for federal income tax purposes, and therefore, Coffee News USA, Inc. does not have to pay income taxes at the corporate level.
This structure has significant implications for both Coffee News as the franchisor and its franchisees. For Coffee News, it simplifies the tax process, as the company itself isn't directly liable for federal income taxes. Instead, the tax burden passes through to its shareholders. For a prospective franchisee, this information provides insight into the financial structure of the Coffee News organization.
Furthermore, the FDD states that the federal and state tax returns for the years 2024, 2023, and 2022 are subject to examination by the IRS, typically for a period of three years after they were filed. This is a standard practice, and it indicates that Coffee News's financial records are open to scrutiny by tax authorities, which is a normal part of doing business. Franchisees should be aware that while Coffee News's corporate taxes don't directly affect them, the overall financial health and compliance of the franchisor can impact the entire franchise system.