| margin is computed.
If the period used to compute business done for purposes of the annual
report differs from the taxable entity's last accounting period for
federal income tax purposes, then the taxable entity's total revenue
for purposes of the annual report shall be computed as if the taxable
entity had reported its federal taxable income on an Internal Revenue
Service form covering the period used to compute business done for
purposes of the annual report. The privilege period for an annual
report is January 1 through December 31 of the year in which the annual
report is originally due.
(4) Final report. A final tax report and payment of
the additional tax are due within 60 days after the taxable entity
no longer has sufficient nexus with Texas to be subject to the franchise
tax. See §3.592 of this title (relating to Margin: Additional
Tax) for further information concerning the additional tax imposed
by Tax Code, §171.0011.
(5) Extensions.
(A) Annual report. See §3.585 of this title (relating
to Margin: Annual Report Extension), for extensions of time to file
an annual report, including the first annual report.
(B) Final report. A taxable entity will be granted
a 45-day extension of time to file a final report, if the taxable
entity:
(i) requests the extension on or before the filing
date;
(ii) requests the extension on a form provided by the
comptroller; and
(iii) remits 90% or more of the tax reported as due
on the final report.
(6) Nontaxable entities. See §3.581 of this title
(relating to Margin: Taxable and Nontaxable Entities) for information
concerning nontaxable entities. Except for passive entities (see §3.582
of this title (relating to Margin: Passive Entities)), a nontaxable
entity that has not notified the comptroller or the secretary of state
that it is doing business in Texas, or that has previously notified
the comptroller that it is not taxable, must notify the comptroller
in writing only when the entity no longer qualifies as a nontaxable
entity. If an entity receives notification in writing from the comptroller
asking for information to determine if the entity is a taxable entity,
the entity must reply to the comptroller within 30 days of the notice.
(7) Passive entities. See §3.582 of this title,
for information concerning the reporting requirements for a passive
entity.
(8) Combined reporting. Taxable entities that are part
of an affiliated group engaged in a unitary business must file a combined
group report in lieu of individual reports, except that a public information
report or ownership information report must be filed for each member
of the combined group with nexus. See §3.590 of this title for
rules on filing a combined report.
(9) New veteran-owned businesses. See §3.574 of
this title for information concerning the reporting requirements for
a qualifying new veteran-owned business.
(10) Date of filing. See §3.13 (relating to Postmarks,
Timely Filing of Reports, and Timely Payment of Taxes and Fees) for
information concerning the requirements for timely filing.
(11) Receivership. It is the responsibility of a receiver
to file franchise tax reports and pay the franchise tax of a taxable
entity in receivership. A debtor in possession or the appointed trustee
or receiver of a taxable entity in reorganization or arrangement proceedings
under the Bankruptcy Act is responsible for filing franchise tax reports
and paying the franchise tax pursuant to the plan of reorganization
or arrangement.
(d) Calculation of tax.
(1) Margin computation. A taxable entity's margin equals
the least of the following calculations, if eligible:
(A) For reports originally due on or after January
1, 2008, and before January 1, 2014:
(i) total revenue minus cost of goods sold;
(ii) total revenue minus compensation; or
(iii) 70% of total revenue.
(B) For reports originally due on or after January
1, 2014:
(i) total revenue minus cost of goods sold;
(ii) total revenue minus compensation;
(iii) 70% of total revenue; or
(iv) total revenue minus $1 million.
(2) Rate. Except as provided by paragraph (6) of this
subsection:
(A) For reports originally due on or after January
1, 2008, but before January 1, 2014:
(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:
Cont'd... |
