Income/Franchise: Texas Comptroller Addresses New Law

Income/Franchise:

Texas Comptroller Addresses New Law Increasing No-Tax-Due Total Revenue

Threshold and Eliminating Filing of Certain Franchise Tax Returns

Tax Policy News, Tex. Comptroller of Public Accounts (11/23). A recent Tax Policy Newsletter as issued by the

Texas Comptroller of Public Accounts (Comptroller) addresses that effective for Texas franchise tax reports

originally due on or after January 1, 2024 (i.e., Report Year 2024), new legislation [see S.B. 3 (2023), and State

Tax Matters, Issue 2023-30, for more details on this new law] increases the “no tax due” revenue threshold to

$2.47 million and prohibits the Comptroller’s office from requiring taxable entities whose annualized total

revenue is at or below the revenue threshold to file a “No Tax Due Report” – as well as explains how the

Comptroller intends to implement these law changes. In the context of combined reporting, the Comptroller

provides that a combined group must include all taxable entities in the combined group report even if any

member, on a separate entity basis, has annualized total revenue at or below the “no tax due” revenue

threshold; alternatively, if a combined group’s annualized total revenue is at or below the “no tax due”

revenue threshold, the combined group is no longer required to file a Texas franchise tax report, an Affiliate

Schedule (Form 05-166), or a Common Owner Information Report (Form 05-177) for that report year.

However, the Comptroller reiterates that each individual member of the combined group that is organized in

Texas or has nexus in Texas must file a Public Information Report (Form 05-102) or Ownership Information

Report (OIR) (Form 05-167). In addition, certain entities that historically have been required to file a “No Tax

Due” report (e.g., qualifying passive entities pursuant to Texas Tax Code s. 171.0003) may now be required to

file either a long form (Form 05-158-A and 05-158-B) or EZ Computation form (Form 05-169) and darken the

appropriate circle in the taxpayer information section at the top of the form. Please contact us with any

questions.

URL: https://comptroller.texas.gov/taxes/tax-policy-news/2023-november.php

URL: https://capitol.texas.gov/BillLookup/History.aspx?LegSess=882&Bill=sb3

URL: https://dhub.deloitte.com/Newsletters/Tax/2023/STM/230728_5.html

—

Robert Topp (Houston)

Managing Director

Deloitte Tax LLP

rtopp@deloitte.com

Grace Taylor (Houston)

Senior Manager

Deloitte Tax LLP

[email protected]

State Tax Matters

The power of knowing.

November 10

, 2023

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