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Franchise Tax
Frequently Asked Questions

Note: TTC means Texas Tax Code and IRC means Internal Revenue Code

Exemptions

Rule 3.583

1. How does a non-profit organization obtain an exemption from the Comptroller?
The organization must submit an application for exemption along with the appropriate documentation to the Exempt Organization Section of the Comptroller's Office. (Updated 4/23/08)
2. Do non-profit entities have to file?
Tax Code Chapter 171, Subchapter B, provides for certain exemptions from the franchise tax. Non-profit entities who have requested and been granted an exemption from the Comptroller's office do not have to file franchise tax reports, including the Public Information Report or Ownership Information Report. If the entity has not requested or been granted an exemption, the entity must file all reports.
3. If an entity has been granted exemption from the franchise tax but has unrelated business income for federal tax purposes, does the entity have to file a franchise tax report on the unrelated business income?
No, if an entity has been granted an exemption from the franchise tax, the entity is exempt regardless of whether it has unrelated business income.
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