News and Insights

Texas Comptroller Grants Taxpayers Additional Time to File Annual Franchise Tax Reports and Extensions

Tax Development Apr 24, 2008

The Texas Comptroller of Public Accounts (“Comptroller”) announced today that businesses who are unable to file their annual franchise tax returns or extensions by the May 15, 2008 due date will have an additional 30 days to file the returns or extensions without penalty. The Comptroller’s office cited the complexity of the revised franchise tax and the newness of electronic reporting methods as reasons for granting the additional time.

In her press release, the Comptroller stated, “We want to make sure businesses and tax practitioners have adequate time to make sure they’re complying with the revised franchise tax. Because they’re dealing with new calculations and enhanced technology for filing reports, the one month penalty waiver will help taxpayers accurately complete their returns in the first year of this brand new tax.”

In a subsequent announcement, the Comptroller confirmed that the waiver of penalty for late-filed reports or extensions would not affect the statutory due dates of May 15, 2008 for annual reports and May 1, 2008 for initial reports. However, the Comptroller agreed that the filing of a Notice of Intent to preserve the temporary credit or of an extension within the 30-day period would be considered timely. By doing so, the agency should not be able to deny the future election of a temporary credit for want of a timely filed Notice or impose interest on tax underpayments as a result of the failure of a taxpayer to file a timely extension on May 15, 2008. We suggest that the Taxpayer file the Notice of Intent as soon as possible, but no later than two weeks before the report is filed, to ensure that the credit is properly recorded in the Comptroller’s system before the return is processed to avoid confusion.