Are you aware of the newest changes in the Texas Franchise Taxes? This article was found and reprinted from this link at The Houston Chronicle.
Jan. 2, 2008, 12:37PM
Margin tax will pack punch
State is likely to collect more than double the franchise levySan Antonio Express-news
When the new Texas margin tax kicks in this year, many businesses will get hit with a surprise tax bill costing them several thousand dollars.
Under a new state law that replaces the franchise tax with a margin tax, businesses will pay based on gross revenues. The number of companies paying taxes will rise to 900,000 in May 2008 from 700,000 in 2007. The amount of state business taxes paid is expected to more than double to $11.9 billion during the next two years versus $5.7 billion for the last two-year period under the outgoing franchise tax, according to the Texas Comptroller’s Office.
And a business could have to pay a margin tax even if it loses money, according to federal tax calculations.
“A lot of taxpayers will be caught off guard by their new tax liability,” said Clint Munsell, a certified public accountant at Sol Schwartz & Associates in San Antonio.
The franchise tax was levied on net income or capital and applied only to corporations and limited liability companies based in Texas. The franchise tax also allowed deductions for salaries, benefits, administrative costs and rents. As a result, less than 10 percent of all companies paid the tax.
The Texas Legislature created the margin tax during a special session in 2006 to close the loopholes and to generate revenue to cover a school funding deficit created by reducing local school property taxes.
Under the margin tax, most entities that were exempt will now have to pay Read the rest of this entry »
