84th Legislature: Franchise Tax changes

Although there were almost 100 franchise tax bills filed during the session, only six were passed.  The headlines were about HB 32 by Rep. Dennis Bonnen (R-Angleton) which reduced the franchise tax rate by 25% and the EZ tax rate was dropped from .575 percent to .331 percent, while expanding the threshold limit for EZ tax qualification from $10 million to $20 million.  HB 32 was a major tax relief package for Texas business.  The legislature majored on this significant cut among calls to eliminate the franchise tax completely.  A number of bills eliminating or phasing out the franchise tax were filed.  As one legislator pointed out, if the rate is reduced 25% every session, it will be history  soon.

Because of this major tax relief emphasis, most of the other franchise tax bills, which were attempting to clarify, simplify or make the tax more consistent among taxpayers were never seriously considered.

One bill that did pass was HB 2891 by CPA and TSCPA member Rep. John Otto (R-Dayton).  This bill was suggested by TSCPA.  The bill eliminates certain reporting requirements with the Secretary of State  by limited partnerships and professional associations  adding the necessary information to the entity’s public information report riled with the franchise tax return.  The bill not only simplified reporting for taxpayers and the state, it also reduced filing fees by about $2.4 million per year.

Other franchise tax bills that passed were explained very will in the Texas Taxpayers and Research Association’s 84th Legislative Session Wrap-up as quoted below:

HB 2896 by Rep. Tan Parker (R-Flower Mound) clarifies that certain broadcaster receipts by apportioned based on the legal domicile of the payor – consistent with the state’s policy of sourcing intangible revenue.

HB 3230 by Rep. Justin Rodriguez (D-Victoria) expands the types of costs eligible for the tax credit for the rehabilitation of historic structures under subchapter E.

SB 1049 by Sen. Donna Campbell (R-New Braunfels) offers a temporary, five year franchise tax exemption as well as an exemption from certain business filing fees for newly-started businesses entirely owned by veterans.

SB 1364 by Sen. Lois Kolkhorst (R-Brenham) requires taxpayers to file their “no tax due” reports electronically.

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One Response to 84th Legislature: Franchise Tax changes

  1. Pingback: 84th Legislature: Sales Tax Changes | TSCPA at the Capitol

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