For Immediate Release
December 17, 2007
Comptroller Finalizes Rules for Revised Texas Franchise Tax,
Plans Webcasts to Inform Taxpayers
AUSTIN — The new rules affecting thousands of businesses that report Texas franchise tax have been filed with the Texas Register for adoption on Dec. 28, 2007, and will be effective on Jan. 1, 2008. A copy of the rules as filed is posted on Comptroller Susan Combs’ Web site at http://www.window.state.tx.us/taxinfo/franchise/ft_revised.html.
“Some of the proposed rules published in September have been modified as a result of suggestions we received during the public comment period and during taxpayer seminars across the state,” Combs said. “Taxpayers raised valid points and offered helpful suggestions. We made adjustments that are within our administrative authority.”
During October and November, the Comptroller’s office hosted 10 seminars around the state to explain the franchise tax revisions and respond to questions about how the tax will affect specific businesses. By the end of January 2008, the Comptroller’s office will offer online video presentations to inform taxpayers about the revised franchise tax. Viewers may choose a full-length video seminar or shorter videos covering specific sections of the law.
“We want to be certain that franchise taxpayers are well informed about the new law and understand how to calculate the tax,” Combs said. “In addition to our seminars and online information, our franchise tax experts are available by phone at (800) 252-1381.”
The Texas Legislature revised the franchise tax by changing the tax base and the tax rate and extending coverage to partnerships, corporations, limited liability companies, business trusts, professional associations, business associations, joint ventures and most other legal entities. About 200,000 new entities will be required to file franchise tax reports for the first time.
For franchise tax reports originally due on or after Jan. 1, 2008, taxable entities with $10 million or less in total revenue may choose an E-Z filing option or choose to pay tax on their margin. All taxable entities with total revenue greater than $10 million must pay tax on their margin. Margin is the least of three calculations: total revenue minus cost of goods sold, total revenue minus compensation or total revenue times 70 percent. Discounts ranging from 20 to 80 percent are available for taxable entities with less than $900,000 in total revenue.
The new tax rate is 1 percent for most entities and 0.5 percent for qualifying wholesalers and retailers.