Before filing your return or extension for May 15th, make sure you verify if your entity meets the thresholds to file an "EZ report" or "No Tax Due Report."
If you are filing a combined report, verify which entities actually have nexus with Texas (remember, this can change from year to year).
Also, make sure that you file the correct public information report for each entity that has nexus, and attach the correct affiliate schedule to the extension (there is one form for extension purposes and another for return purposes).
If your company has any entities that qualify as a "passive entity," remember, passive entities are not included in a combined report and are nontaxable for Texas franchise tax purposes.
Here is a link to a recent Texas powerpoint presentation to provide some helpful info.
If you need any assistance in filing your extension or return this year, help in determining if your company has nexus in Texas, or help in determining if an entity qualifies as a "passive entity," please contact me at brian.strahle@bakertilly.com.
1 comment:
Topping my list of Texas watch items is ensuring the use of the 11-digit Texas Taxpayer Number ("TTN"), not the FEIN, on all forms and reports.
This can be especially tricky on the Affiliate List, where the form requests the "Affiliate taxpayer number (if none, use FEI number)." If an affiliate has a TTN, but uses the FEIN, the Texas system may not "count" the affiliate as part of a consolidated group. My client received a notice informing the affiliated entity that it had an outstanding franchise tax filing obligation, when in fact the entity was included in a combined report. To remedy, the client submitted an updated Affiliate List, replacing all FEINs with TTNs.
Substituting the FEIN on a Public Information Report ("PIR") can create issues as well. PIRs submitted with the FEIN instead of the TTN are not processed. The state does not attempt to pair the "orphaned" PIRs with entities that have not filed a PIR -- even when the name and address match. My client received a notice that it had not filed the PIR; again, the remedy was listing the TTN and resubmitting the form.
The Texas Comptroller's website has a Taxable Entity Search, which will list an entity's TTN and whether it is in good standing (e.g., current on franchise tax returns / extensions). The site is searchable by name, tax ID number, and Secretary of State file number. https://ourcpa.cpa.state.tx.us/coa/Index.html
Best of luck for a year without a single Texas notice!
Rebecca Flanagan
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