| (a) Reports and due dates. (1) Each domestic and foreign corporation subject to the franchise tax levied by Tax Code, §171.001, must file an initial franchise tax report, and thereafter an annual franchise tax report, and at the same time must pay the franchise tax and any applicable penalties and interest due by the corporation. It is the responsibility of a receiver to file franchise tax reports and pay the franchise tax of a corporation in receivership. A debtor in possession or the appointed trustee or receiver of a corporation in reorganization or arrangement proceedings under the Bankruptcy Act is responsible for filing franchise tax reports and paying the franchise tax prior to confirming and consummating the plan of reorganization or arrangement. (A) "Beginning date" means: (i) for a corporation chartered in this state, the date on which the corporation's charter takes effect; and (ii) for a foreign corporation, the date on which the corporation begins doing business in this state. (B) Both the initial report and payment of the tax due, if any, are due no later than 89 days after the first anniversary date of the beginning date. The initial franchise tax report and payment are for the privilege periods beginning on the beginning date and ending on December 31 following the first anniversary of the beginning date. For example, if a Texas corporation is chartered on June 1, 2002, the payment due with the initial report will be for the privilege periods from June 1, 2002-December 31, 2003. In addition, when the first anniversary occurs during the period from October 4 through December 31, there must also be computed and paid with the initial report an additional year's tax for the privilege period beginning on January 1 following the first anniversary and ending on the following December 31. For example, if a Texas corporation is chartered on November 1, 2002, the payment due with the initial report will be for the privilege periods from November 1, 2002-December 31, 2004. The taxable capital component of the tax computed on the initial report is based on the financial condition as of the last accounting period ending date that is at least six months after the beginning date and at least 60 days before the original due date. If there is no such ending date, then the initial report is based on the financial condition on the last day of the calendar month nearest to the end of the corporation's first year of business. The earned surplus component of the tax computed on the initial report is based on the business done during the period beginning on the beginning date and ending on the last accounting period ending date for federal income tax purposes that is at least 60 days before the original due date of the initial report, or, if there is no such ending date, then ending on the day that is the last day of the calendar month nearest to the end of the corporation's first year of business. (C) The annual franchise tax report must be filed and the tax paid no later than May 15 of each year. The annual tax is paid for the privilege period of the calendar year in which the report is due. The taxable capital component of the tax computed on an annual report is based on the financial condition as of the last day of the last accounting period ending in the calendar year before the calendar year in which the tax is originally due. If there is no accounting period ending in the previous calendar year, then the taxable capital component should be based on the financial condition as of December 31 of the previous calendar year. The earned surplus component of the tax computed on an annual report is based on the business done during the period beginning with the day after the last date upon which the earned surplus component was based on a previous report, and ending with the last accounting period ending date for federal income tax purposes ending in the calendar year before the calendar year in which the report is originally due. For the 1992 annual report, the earned surplus component is based on the business done during the period beginning with the day after the date upon which the previous report was based, and ending with the last accounting period ending date for federal income tax purposes ending in 1991. A corporation that uses a 52-53 week accounting year end and has an accounting year ending the first four days of January of the year in which the annual report is originally due may use the preceding December 31 as the date through which taxable earned surplus is computed. (D) See §3.565 of this title (relating to Survivors of Mergers) for special rules concerning corporations that are survivors of mergers. (E) See §3.545 of this title (relating to Extensions) for extensions of time to file an annual report. (F) See §3.567 of this title (relating to Additional Tax on Earned Surplus) for information concerning the additional tax imposed by Tax Code, §171.0011. (G) See §3.572 of this title (relating to 1992 Transition) for transitional information concerning tax rates and privilege periods as a result of certain legislative changes. (2) The postmark date (or meter-mark if there is no postmark) on the envelope in which the report or payment is received determines the date of filing. (3) An information report must be filed, even if no tax is due. A corporation must file an initial report as the information report for the privilege periods covered by an initial report. A corporation must file an annual report as an information report for a regular annual privilege period not covered by an initial report. (4) For reports originally due on or after January 1, 2000, a corporation will not owe any tax if the gross receipts from its entire business for both taxable capital and taxable earned surplus are each less than $150,000 during the accounting period upon which the report is based. A corporation that does not owe any tax under this subsection must file an information report as authorized by subsection (a)(3) of this section. (A) For purposes of computing gross receipts from its entire business for taxable earned surplus under this subsection, a corporation must include any gross receipts that would otherwise be excluded from the apportionment factor under Tax Code, §171.1061, concerning the allocation of certain taxable earned surplus to this state. (B) A corporation whose gross receipts from its entire business for taxable capital are $150,000 or greater will be required to compute its tax on both tax base components as provided for under Tax Code, §171.002(b), even though its gross receipts from its entire business for taxable earned surplus are less than $150,000. For example, if a corporation's gross receipts from its entire business for taxable capital are $175,000 and its gross receipts from its entire business for taxable earned surplus are $125,000, the corporation must compute its tax on both taxable capital and taxable earned surplus. (C) A corporation whose gross receipts from its entire business for taxable earned surplus are $150,000 or greater will be required to compute its tax on both tax base components as provided for under Tax Code, §171.002(b), even though its gross receipts from its entire business for taxable capital are less than $150,000. For example, if a corporation's gross receipts from its entire business for taxable earned surplus are $175,000 and its gross receipts from its entire business for taxable capital are $125,000, the corporation must compute its tax on both taxable capital and taxable earned surplus. (b) Penalty and interest on delinquent taxes. (1) Tax Code, §171.362, imposes a 5.0% penalty on the amount of franchise tax due by a corporation that fails to report or pay the tax when due. If any part of the tax is not reported or paid within 30 days after the due date, an additional 5.0% penalty is imposed on the amount of tax unpaid. There is a minimum penalty of $1.00. Delinquent taxes accrue interest beginning 60 days after the due date. For example, if payment is made on the 61st day after the due date, one day's interest is due. (A) For reports originally due on or before December 31, 1999, the following rates of interest are in effect as indicated. Simple interest accrues at an annual rate of 6.0% through March 31, 1980; at an annual rate of 7.0% from April 1, 1980-December 31, 1981; and, beginning January 1, 1982, at 10% per annum, for taxes due before September 1, 1991. For taxes due on or after September 1, 1991, simple interest accrues at an annual rate of 12% on all delinquent taxes. (B) For reports originally due on or after January 1, 2000, the annual rate of interest on delinquent taxes is the prime rate plus one percent, as published in The Wall Street Journal on the first day of each calendar year that is not a Saturday, Sunday, or legal holiday. (2) When a corporation is issued an audit assessment or other underpayment notice based on a deficiency, penalties under Tax Code, §171.362, and interest are applied as of the date that the underpaid tax was originally due, including any extensions, not from the date of the deficiency determination or date the deficiency determination is final. (3) A deficiency determination is final 30 days after the date on which the service of the notice of the determination is completed. Service by mail is complete when the notice is deposited with the United States Postal Service. (A) The amount of a determination is due and payable 10 days after it becomes final. If the amount of the determination is not paid within 10 days after the day it became final, a penalty under Tax Code, §111.0081, of 10% of the tax assessed will be added. For example, if a deficiency determination is made in the amount of $1,000 tax (plus the initial penalty and interest), but the total amount of the deficiency is not paid until the 41st day after the deficiency notice is served, $1,200 plus interest would be due (i.e., $1,000 tax, $100 initial penalty for not paying when originally due, $100 penalty for not paying deficiency determination within 10 days after it became final, plus interest accrued to the date of payment at the applicable statutory rate). (B) A petition for redetermination must be filed within 30 days after the date on which the service of the notice of determination is completed, or the redetermination is barred. (C) A decision of the comptroller on a petition for redetermination becomes final 20 days after service on the petitioner of the notice of the decision. The amount of a determination is due and payable 20 days after a comptroller's decision is final. If the amount of the determination is not paid within 20 days after the day the decision becomes final, a penalty under Tax Code, §111.0081 of 10% of the tax assessed will be added. Using the previous example, on the 41st day after service of the comptroller's decision, $1,200 plus interest would be due (i.e., $1,000 tax, $100 initial penalty, $100 additional penalty and the applicable accrued interest). (4) A jeopardy determination is final 20 days after the date on which the service of the notice is completed unless a petition for redetermination is filed before the determination becomes final. Service by mail is complete when the notice is deposited with the United States Postal Service. The amount of the determination is due and payable immediately. If the amount determined is not paid within 20 days from the date of service, a penalty, under Tax Code, §111.022, of 10% of the amount of tax and interest assessed will be added. (5) If the comptroller determines that a corporation exercised reasonable diligence to comply with the statutory filing or payment requirements, the comptroller may waive penalties or interest for the late filing of a report or for a late payment. The corporation requesting waiver must furnish a detailed description of the circumstances that caused the late filing or late payment and the diligence exercised by the corporation in attempting to comply with the statutory requirements. See §3.5 of this title (relating to Waiver of Penalty or Interest) for additional information. (6) If a corporation fails to comply with Tax Code, §171.212, the corporation is liable for a penalty of 10% of the tax that should have been reported and had not previously been reported to the comptroller under §171.212. This penalty is in addition to any other penalty provided by law and is effective for audits or other adjustments by the Internal Revenue Service or a competent authority other than the Internal Revenue Service that became final on or after June 20, 1997. (c) Consolidated reporting. A consolidated or combined report is not allowed. (d) Amended reports. In filing an amended report, the corporation must type or print on the report, immediately above the corporation name, the phrase "Amended Report." The report should be forwarded with a cover letter of explanation, with enclosures necessary to support the amendment. Applicable penalties and interest must be reported and paid along with any additional amount of tax shown to be due on the amended report. See subsection (i) of this section for information concerning the statute of limitations. (1) A corporation may file an amended report for the purpose of correcting a mathematical or other error in a report or for the purpose of supporting a claim for refund. (2) A corporation that has been audited by the Internal Revenue Service must file an amended franchise tax report within 120 days after the Revenue Agent's Report (RAR) is final, if the RAR results in changes to earned surplus amounts reported for franchise tax purposes. An RAR is final when all administrative appeals with the Internal Revenue Service have been exhausted or waived. An administrative appeal with the Internal Revenue Service does not include an action or proceeding in the United States Tax Court or any other federal court. Cont'd... |
