When Is the Franchise Tax Due in Texas?

The Texas Franchise Tax is a business privilege tax imposed on entities formed or organized in Texas, or those doing business within the state. This tax applies to a wide range of business structures, including most corporations, limited liability companies, and partnerships. Even entities that do not owe any tax may still be required to file a report annually, ensuring compliance with state regulations.

Annual Filing Deadline

The annual due date for the Texas Franchise Tax report is May 15th. This deadline applies to the report covering the business’s prior accounting period, which for most taxpayers aligns with the calendar year. Should May 15th fall on a weekend or a state-recognized holiday, the filing and payment deadline automatically shifts to the next business day. Taxable entities with total revenue at or below a specified threshold may not owe tax but must still file an information report by this date.

Initial Filing Requirements

For newly formed or registered entities in Texas, the filing requirements differ from the standard annual report. New businesses must file their first Public Information Report (PIR) or Ownership Information Report (OIR) by May 15th of the year following their formation or registration date in Texas. This initial information report establishes the entity’s presence and provides necessary details to the state, even if no franchise tax is due.

Obtaining an Extension

Businesses requiring additional time to file their Texas Franchise Tax report can request an extension. The initial extension shifts the filing deadline to November 15th. This extension request can be submitted electronically through the Comptroller’s Webfile system or by mail using Form 05-164, “Texas Franchise Tax Extension Request.” Obtaining an extension to file the report does not extend the deadline for paying any tax due. Any estimated tax liability must still be paid by the original May 15th due date to avoid interest and penalties.

Submitting Your Report and Payment

Submitting the Texas Franchise Tax report and payment offers several methods. The Comptroller’s Webfile system is the preferred method for electronic filing and payment. This system allows for secure submission of the report and facilitates electronic funds transfers (EFT) or credit card payments. Businesses can also file by mail, sending completed forms and payment via check or money order, to the Texas Comptroller of Public Accounts. When mailing a payment, include the entity’s taxpayer number and reporting year on the check for proper crediting.

Addressing Late Filings and Payments

Failure to file the Texas Franchise Tax report or remit payment by the established due dates, including any valid extensions, results in consequences. A late filing penalty of $50 is assessed for each report submitted after the deadline. Interest begins to accrue on any unpaid tax amounts starting 61 days after the original due date. If tax is paid between 1 and 30 days late, a 5% penalty applies to the tax due, increasing to a 10% penalty if the payment is more than 30 days overdue. Delinquency may result in an entity’s right to transact business in Texas being forfeited, which can lead to loss of corporate protections and potential personal liability for business owners.