Tax

New Texas Franchise Tax Filing Requirements

March 2016
Author:  Taylor Short

Taylor Short

Manager

Tax

2800 Post Oak Boulevard, Suite 3200
Houston, TX 77056-6167

Houston
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In addition to House Bill 32, which permanently reduced the Texas state franchise tax rate beginning January 1, 2016, the Texas legislature also passed two other bills affecting Texas franchise returns.

On June 19, 2015, Gov. Greg Abbott signed House Bill 2891. Effective January 1, 2016, this bill changes existing law to require limited partnerships and professional associations to file a Public Information Report. Before this bill, limited partnerships and professional associations were required to file Ownership Information Reports with their annual franchise tax return. The requirement to file a Public Information Report now encompasses corporations, limited liability companies, limited partnerships and professional associations.

House Bill 2891 clarifies a difference in the information to be provided by limited partnerships. Unlike the officer or director information provided by corporations and limited liability companies, the bill only requires the general partner information be provided.

By requiring limited partnerships and professional associations to file a Public Information Report, the bill has in effect removed the periodic report filings previously imposed on these entities by the Texas Secretary of State. Limited partnerships filing a Public Information Report no longer are required to file Form 804 every four years, and professional associations no longer are required to annually file Form 803. The associated fees required with these two forms also have been eliminated.

The Texas legislature also passed Senate Bill 1364, requiring electronic filing of Form 05-163, No Tax Due Information Report. The bill took effect September 1, 2015, but applies only to report years 2016 and beyond. For report year 2016 only, the Texas Comptroller is allowing taxpayers to elect paper filing. The annual Form 05-163, located on the Comptroller website, includes a statement that reads, “Filing this paper report means you are requesting, and we are granting, a waiver from the electronic reporting requirements for this report year ONLY.”

If you have questions about how these Texas tax law changes affect your organization, contact your local BKD advisor.

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