Texas Franchise Tax: New Sourcing Rule, COGS Calculations, Entity Issues, and Combined Reporting

Note: CLE credit is not offered on this program

Recording of a 110-minute CPE webinar with Q&A

This program is included with the Strafford CPE Pass. Click for more information.
This program is included with the Strafford CPE+ Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Tuesday, May 17, 2022

Recorded event now available

or call 1-800-926-7926
Course Materials

This course will provide a guide to various compliance requirements and planning opportunities related to the Texas Franchise Tax. The program will discuss options for calculating and reporting the most challenging aspects of the tax, including new sourcing regulations, identifying Texas cost of goods sold, apportioning margin to Texas, issues particular to partnerships and LLCs, combined reporting questions, and new considerations after the recent Sirius XM Radio decision.

Description

The Texas Franchise Tax remains one of the most complex and controversial state business taxes in the entire country. The tax is essentially based on gross receipts but is complicated by both entity identification and computational challenges. This margin calculation has routinely been the subject of numerous lawsuits, partially due to its complexity and structure.

Rules published in January 2021 create situational variances between revenue and gross receipts.These changes affect general services, telecommunications, advertising, internet hosting, investments, financial derivatives, the sale of single-member LLC interests, and other businesses doing business in Texas.

Most recently, the Texas Supreme Court ruled in favor of Sirius Radio in Sirius XM Radio, Inc. v. Hegar. The court determined that it is the location where a service is performed rather than received by the customer that determines whether a service is taxed in the state. SALT practitioners need to understand the impact of this decision on businesses providing services in Texas.

Listen as our panel identifies compliance challenges and planning opportunities related to the Texas Franchise Tax.

READ MORE

Outline

  1. Introduction
  2. January 2021 amendments to 34 Tex. Admin. Code Section 3.591
  3. Margin tax calculation options
  4. Issues in computing revenues
  5. 2021 changes to tax rates and structure
  6. Electing deductions
  7. Combined reporting and affiliated entities
  8. Other recent developments

Benefits

The panel will give guidance to deal with these and other key issues:

  • Industry-specific issues, particularly concerning the cost of goods sold calculation
  • Identifying affiliates and addressing combined reporting issues
  • How the Sirius XM Radio decision affects the taxation of companies doing business in Texas
  • Tax base alternatives: identifying the method that will result in the lowest tax bill for your company
  • Mining tax planning opportunities: the apportionment formula, passive entities, maximizing deductions, and other areas
  • Anticipating tough audits: where the state is likely to challenge your business on the tax calculation, a unitary filing declaration, etc.

Faculty

Bowden, Jamie
Jamie Bowden, JD, CPA

Senior Manager, Indirect Tax Services
Ernst & Young

Ms. Bowden is a senior manager in EY’s West Region Indirect (State and Local) Tax Practice where she serves...  |  Read More

Mondrik, Christina
Christina A. Mondrik, Esq., CPA

Attorney
Mondrik & Associates

Ms. Mondrik, focuses her practice on state and federal tax controversies and litigation. She is board certified in...  |  Read More

Crow, Bill
Bill Crow, JD

Managing Partner
Energy Tax Advisors

Mr. Crow is Co-Managing Partner, General Counsel, and Tax Practice Leader for both income/franchise and property taxes...  |  Read More

Access Anytime, Anywhere

CPE credit is not available on downloads.

CPE On-Demand

See NASBA details.

Download