Texas does not have a personal or corporate income tax; however, it is one of 4 states that has a “gross receipts tax” – known as the Texas Franchise Tax.
Texas has automatically extended the due date for 2020 Texas franchise tax reports to July 15, 2020 to be consistent with the Internal Revenue Service’s extension of the deadline for Federal tax filings.
It is worth noting that of the 46 states that have a personal income tax each has extended its April 15 due date (39 states with a July 15 deadline and 7 states with other deadlines). Texas is among the 39 states that has extended either a personal income tax or other tax filing and payment deadline from April 15, 2020 to July 15, 2020. Texas is one of 7 states that does not have a personal income tax.
For Non-EFT Texas Franchise Taxpayers:
Non-EFT Texas franchise taxpayers that cannot file by July 15, 2020 may file an extension request on or before July 15 and must pay 90% of the tax due for the current year, or 100% of the tax reported as due for the prior year with the extension request. Non-EFT Texas franchise taxpayers who request an extension have until January 15, 2021 to file a report and pay the remainder of the tax due. If the extension request does not meet the payment requirements when the report is filed, penalty and interest will apply to any part of the 90% of the tax not paid by July 15 and to any part of the 10% of the tax not paid by January 15, 2021.
For Mandatory EFT Texas Franchise Taxpayers:
On or before July 15, 2020, mandatory EFT Texas franchise taxpayers may request a first extension of time to file to August 15, 2020 and must pay 90% of the tax due for the current year or 100% of the tax reported as due for the prior year with the extension request. On or before August 15, 2020, mandatory EFT Texas franchise taxpayers may request a second extension of time to file their report and must pay the remainder of any tax due with their extension request. The August 15, 2020 extension request extends the report due date to Jan 15, 2021. Any payments made after August 15, 2020 will be subject to penalty and interest. The Texas Comptroller office has stated that it will grant an extension of time to file a franchise tax report upon receipt of a timely request. [The term “timely” means submitted or postmarked on or before the due date of the original report. Generally, for an extension to be valid, 100% of the tax paid in the prior year, or 90% of the tax that will be due with the current year’s report, must be paid on or before the original due date of the report.]
For Non-EFT and Mandatory EFT Texas Franchise Taxpayers who seek to Request and Extension, read more here.
Frank L. Leffingwell is a tax attorney in the firm’s Tax Planning & Controversy, Estate Planning, Probate & Trusts, and Real Estate sections.