| (i) a tax rate of 1.0% of taxable margin applies to
most taxable entities; and
(ii) a tax rate of 0.5% of taxable margin applies to
taxable entities primarily engaged in retail or wholesale trade.
(B) For reports originally due on or after January
1, 2014, but before January 1, 2015:
(i) a tax rate of 0.975% of taxable margin applies
to most taxable entities; and
(ii) a tax rate of 0.4875% of taxable margin applies
to taxable entities primarily engaged in retail or wholesale trade.
(C) For reports originally due on or after January
1, 2015, but before January 1, 2016:
(i) a tax rate of 0.95% of taxable margin applies to
most taxable entities; and
(ii) a tax rate of 0.475% of taxable margin applies
to taxable entities primarily engaged in retail or wholesale trade.
(D) For reports originally due on or after January
1, 2016:
(i) a tax rate of 0.75% of taxable margin applies to
most taxable entities; and
(ii) a tax rate of 0.375% of taxable margin applies
to taxable entities primarily engaged in retail or wholesale trade.
(3) Annualized Total Revenue. When the accounting period
on which a report is based is more or less than 12 months, a taxable
entity must annualize its total revenue to determine its eligibility
for the no tax due threshold, discounts, and E-Z Computation. The
amount of total revenue used in the actual tax calculations will not
change as a result of annualizing revenue. To annualize total revenue,
an entity will divide total revenue by the number of days in the period
upon which the report is based, and then multiply the result by 365.
Examples are as follows:
(A) a taxable entity's 2010 franchise tax report is
based on the period September 15, 2009 through December 31, 2009 (108
days), and its total revenue for the period is $375,000. The taxable
entity's annualized total revenue is $1,267,361 ($375,000 divided
by 108 days multiplied by 365 days). Based on its annualized total
revenue, the taxable entity does not qualify for the $1,000,000 no
tax due threshold but is eligible to file using the E-Z computation.
The discounts do not apply in years when the no tax due threshold
is $1,000,000;
(B) a taxable entity's 2010 franchise tax report is
based on the period March 1, 2008 through December 31, 2009 (671 days),
and its total revenue for the period is $1,375,000. The taxable entity's
annualized total revenue is $747,951 ($1,375,000 divided by 671 days
multiplied by 365 days). Based on its annualized total revenue, the
taxable entity qualifies for the $1,000,000 no tax due threshold and
is eligible to file using the No Tax Due Information Report.
(4) No tax due. Effective September 1, 2015, No Tax
Due Reports are required to be filed electronically. See §3.587(c)(8)(C)
of this title (relating to Margin: Total Revenue) for the tiered partnership
exception to filing No Tax Due Reports.
(A) A taxable entity owes no tax and may file a No
Tax Due Report if its annualized total revenue is:
(i) for reports originally due on or after January
1, 2008, but before January 1, 2010, $300,000 or less;
(ii) for reports originally due on or after January
1, 2010, but before January 1, 2012, $1 million or less;
(iii) for reports originally due on or after January
1, 2012, but before January 1, 2014, $1,030,000 or less;
(iv) for reports originally due on or after January
1, 2014, but before January 1, 2016, $1,080,000 or less;
(v) for reports originally due on or after January
1, 2016, but before January 1, 2018, $1,110,000 or less; and
(vi) for reports originally due on or after January
1, 2018, the amount determined under Tax Code, §171.006 (Adjustment
of Eligibility for No Tax Due, Discounts, and Compensation Deduction).
(B) A taxable entity that has zero Texas receipts owes
no tax and may file a No Tax Due Report.
(C) A taxable entity that has tax due of less than
$1,000 owes no tax; however, the entity cannot file a No Tax Due Report
and must file a regular annual report or, if qualified, the E-Z Computation
Report.
(5) Discount. A taxable entity is entitled to a discount
of the tax imposed as follows.
(A) For reports originally due on or after January
1, 2008, but before January 1, 2010, if annualized total revenue is:
(i) greater than $300,000 and less than $400,000, the
discount is 80% of tax due;
(ii) greater than or equal to $400,000 and less than
$500,000, the discount is 60% of tax due;
(iii) greater than or equal to $500,000 and less than
$700,000, the discount is 40% of tax due;
(iv) greater than or equal to $700,000 and less than
$900,000, the discount is 20% of tax due.
(B) For reports originally due on or after January
1, 2010 there are no discounts.
(6) E-Z Computation.
(A) For reports originally due on or after January
1, 2008, and before January 1, 2016, a taxable entity with annualized
total revenue of $10 million or less may choose to pay the franchise
tax by using the E-Z Computation method. For this period, under the
E-Z Computation, a taxable entity's tax liability is computed by applying
a tax rate of 0.575% to apportioned total revenue and subtracting
any applicable discount as provided by paragraph (5) of this subsection.
(B) For reports originally due on or after January
1, 2016, a taxable entity with annualized total revenue of $20 million
or less may choose to pay the franchise tax by using the E-Z Computation
method. For this period, under the E-Z Computation, a taxable entity's
tax liability is computed by applying a tax rate of 0.331% to apportioned
total revenue.
(C) No deductions to compute margin, credits, or other
adjustments are allowed if a taxable entity chooses to compute its
tax liability under the E-Z Computation.
(7) Tiered partnership provision. See §3.587 of
this title for information concerning the tiered partnership provision.
(A) Eligibility for no tax due, discounts and the E-Z
Computation. For eligible entities choosing to file under the tiered
partnership provision, paragraphs (4), (5), and (6) of this subsection
do not apply to an upper or lower tier entity if, before the attribution
of total revenue by a lower tier entity to upper tier entities, the
lower tier entity does not meet the criteria.
(B) Tiered Partnership Report. The lower tier entity
must submit a report to the comptroller indicating its total revenue
before attribution and the amount of total revenue that each upper
tier entity must include with the upper tier entity's own total revenue.
Each upper tier entity must submit a report to the comptroller indicating
the lower tier entity's total revenue before attribution and the amount
of the lower tier entity's total revenue that was passed to the upper
tier entity and is included in the total revenue of the upper tier
entity.
(e) Penalty and interest on delinquent taxes.
(1) Tax Code, §171.362 (Penalty for Failure to
Pay Tax or File Report), imposes a 5.0% penalty on the amount of franchise
tax due by a taxable entity that fails to report or pay the tax when
due. If any part of the tax is not reported or paid within 30 days
after the due date, an additional 5.0% penalty is imposed on the amount
of tax unpaid. There is a minimum penalty of $1.00. Delinquent taxes
accrue interest beginning 60 days after the due date. For example,
if payment is made on the 61st day after the due date, one day's interest
is due. The annual rate of interest on delinquent taxes is the prime
rate plus one percent, as published in The Wall Street Journal on
the first day of each calendar year that is not a Saturday, Sunday,
or legal holiday.
(2) When a taxable entity is issued an audit assessment
or other underpayment notice based on a deficiency, penalties under
Tax Code, §171.362, and interest are applied as of the date that
the underpaid tax was originally due, including any extensions, not
from the date of the deficiency determination or date the deficiency
determination is final.
(3) A deficiency determination is final 60 days after
the date the notice of the determination is issued.
(A) The amount of a determination is due and payable
10 days after it becomes final. If the amount of the determination
is not paid within 10 days after the day it became final, a penalty
under Tax Code, §111.0081 (When Payment is Required), of 10%
of the tax assessed will be added. For example, if a deficiency determination
is made in the amount of $1,000 tax (plus the initial penalty and
interest), but the total amount of the deficiency is not paid until
the 71st day after the deficiency notice is issued, $1,200 plus interest
would be due (i.e., $1,000 tax, $100 initial penalty for not paying
when originally due, $100 penalty for not paying deficiency determination
within 10 days after it became final, plus interest accrued to the
date of payment at the applicable statutory rate).
(B) A petition for redetermination must be filed within
60 days after the date the notice of determination is issued, or the
redetermination is barred.
(C) A decision on a petition for redetermination becomes
final at the time a decision in a contested case is final under Government
Code, Chapter 2001. The amount of a determination is due and payable
20 days after the decision is final. If the amount of the determination
is not paid within 20 days after the day the decision becomes final,
a penalty under Tax Code, §111.0081, of 10% of the tax assessed
will be added. Using the previous example, on the 21st day after the
decision is final, $1,200 plus interest would be due (i.e., $1,000
tax, $100 initial penalty, $100 additional penalty and the applicable
accrued interest).
(4) A jeopardy determination is final 20 days after
the date on which the service of the notice is completed unless a
petition for redetermination is filed before the determination becomes
final. Service by mail is complete when the notice is deposited with
the United States Postal Service. The amount of the determination
is due and payable immediately. If the amount determined is not paid
within 20 days from the date of service, a penalty, under Tax Code, §111.022
(Jeopardy Determination), of 10% of the amount of tax and interest
assessed will be added.
(5) If the comptroller determines that a taxable entity
exercised reasonable diligence to comply with the statutory filing
or payment requirements, the comptroller may waive penalties or interest
for the late filing of a report or for a late payment. The taxable
entity requesting waiver must furnish a detailed description of the
circumstances that caused the late filing or late payment and the
diligence exercised by the taxable entity in attempting to comply
with the statutory requirements. See §3.5 of this title (relating
to Waiver of Penalty or Interest) for additional information.
(6) If a taxable entity fails to comply with Tax Code, §171.212
(Report of Changes to Federal Income Tax Return), the taxable entity
is liable for a penalty of 10% of the tax that should have been reported
and had not previously been reported to the comptroller under Tax
Code, §171.212. This penalty is in addition to any other penalty
provided by law.
(f) Amended reports. In filing an amended report, the
taxable entity must type or print on the top of the report the phrase
"Amended Report." The report should be forwarded with a cover letter
of explanation, with enclosures necessary to support the amendment.
Applicable penalties and interest must be reported and paid along
with any additional amount of tax shown to be due on the amended report.
(1) A taxable entity may file an amended report for
the purpose of correcting a mathematical or other error in a report,
for the purpose of supporting a claim for refund, or to change its
method of computing margin or, if qualified, to use the E-Z Computation.
(2) A taxable entity that has been audited by the Internal
Revenue Service must file an amended franchise tax report within 120
days after the Revenue Agent's Report (RAR) is final, if the RAR results
in changes to taxable margin reported for franchise tax purposes.
An RAR is final when all administrative appeals with the Internal
Revenue Service have been exhausted or waived. An administrative appeal
with the Internal Revenue Service does not include an action or proceeding
in the United States Tax Court or any other federal court.
(3) A taxable entity whose taxable margin is changed
as a result of an audit or other adjustment by a competent authority
other than the Internal Revenue Service must file an amended franchise
tax report within 120 days after the adjustment is final. An adjustment
is final when all administrative or other appeals have been exhausted
or waived. For the purposes of this section, a competent authority
includes, but is not limited to, the United States Tax Court, United
States District Courts, United States Courts of Appeals, and United
States Supreme Court.
(4) A taxable entity must file an amended franchise
tax report within 120 days after the taxable entity files an amended
federal income tax return that changes the taxable entity's taxable
margin. A taxable entity is considered to have filed an amended federal
income tax return if the taxable entity is a member of an affiliated
group during a period in which an amended consolidated federal income
tax return is filed.
Cont'd... |
