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News Release from Comptroller Susan Combs

Contact: Allen Spelce or R.J. DeSilva
512-463-4070

For Immediate Release
October 12, 2007

Comptroller Susan Combs Introduces Taxpayers to the Revised Texas Franchise Tax


AUSTIN - The state Comptroller's office will host 10 free seminars throughout the state to introduce taxpayers to the revised Texas franchise tax and help them learn how to calculate the tax. The seminars will benefit current franchise taxpayers and the approximately 200,000 new entities that will file franchise tax reports for the first time, beginning with reports due on or after Jan. 1, 2008.

"The revised franchise tax, sometimes called the 'margin tax,' was passed by the Legislature in 2006 and modified earlier this year," Comptroller Susan Combs said. "After so much public discussion and debate, some taxpayers may be uncertain about exactly how the law will work. These free seminars are a great opportunity to answer taxpayers' questions."

Franchise tax seminars are scheduled in Midland/Odessa on Oct. 23, El Paso on Oct. 24, Lubbock on Oct. 25, Austin on Oct. 31, Waco on Nov. 1, Tyler on Nov. 5, Houston on Nov. 7, Harlingen on Nov. 8, Arlington on Nov. 13 and San Antonio on Nov. 14.

Web-based training may also take place to assist taxpayers unable to attend a seminar. For complete details about the scheduled seminars and any additional seminars or Web-based training that may be added to the schedule, see the Comptroller's Web site at www.window.state.tx.us/taxinfo/franchise/tour.html

The Comptroller's free franchise tax seminars may be applied to continuing professional education requirements for certified public accountants and continuing legal education for attorneys.

The Legislature revised the franchise tax by changing the tax base and the tax rate and extending coverage to most legal entities. All taxable entities with total revenue greater than $10 million must pay tax on their margin. Margin is the lesser of: total revenue minus cost of goods sold, total revenue minus compensation or total revenue times 70 percent. Total revenue is determined based on federal income tax reporting. Taxable entities with $10 million or less in total revenue may choose an E-Z filing option (i.e., 0.00575 x apportioned total revenue), or they may choose to pay tax on their margin.

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