Tax News

CCH (cch.taxgroup.com) reports:

Guidance is issued regarding Texas franchise taxes and the transition to a business margin calculation. Specifically, the Office of the Comptroller provides guidance covering the filing requirements for entities that either started or stopped doing business in Texas during 2007.
All corporations and limited liability companies (LLCs) formed before October 4, 2006, that are (1) subject to the earned surplus component, and (2) not part of a combined group and that cease doing business in Texas (whether by withdrawal, dissolution, merger, etc.) at any time before November 2, 2007, must file a final franchise tax report using Form 05-139 based on the earned surplus component.
Corporations or LLCs that are a part of a combined group must include the final report information in the combined report. The corporation or LLC must file a final franchise tax report using Form 05-139 to identify the name and taxpayer number of the reporting entity for the combined group.
A newly taxable partnership that was doing business in Texas after June 30, 2007, and is not doing business in this state on January 1, 2008, must file a final report using Form 05-171 based on the margin calculation. The tax reported on the final report is based on the period beginning on the later of January 1, 2007, or the date the entity was organized in this state or began doing business in Texas and ending on the date the entity became no longer subject to the tax.
Corporations and LLCs that were formed on or after October 4, 2006, will have an initial report due on or after January 1, 2008, based on the margin calculation. If the corporation or LLC wishes to end its existence at any time prior to January 1, 2008, the entity must file a "premature" initial franchise tax report using Form 05-168 based on the margin calculation. Instead of using an accounting year end date on this report, the initial filer in this category will use the last day the entity is doing business in Texas. The entity will not be required to file a final report.
The guidance is available at the Comptroller's Web site at http://www.window.state.tx.us/taxinfo/taxpnw/tpn2007/tpn708.html#issue1.
Tax Policy News, Vol. XVII, Issue 8 , Texas Comptroller of Public Accounts, August 2007.