In response to the COVID-19 pandemic and to provide Texas businesses relief, Texas Comptroller Glenn Hegar announced recently that his agency is automatically extending the due date for 2020 franchise tax reports to July 15 to be consistent with the Internal Revenue Service (IRS).
The due date extension applies to all franchise taxpayers. It is automatic, and taxpayers do not need to file any additional forms.
“We recognize that the information aggregated from taxpayers’ federal tax returns comprises the building blocks for their Texas franchise tax returns,” Hegar said. “In addition to coping with the unprecedented impacts of the growing pandemic, we understand the difficulty Texas businesses will face in filing franchise tax returns now that the federal deadline has moved, and so we thought it appropriate to align the state’s franchise tax deadline with the IRS deadline.”
The Texas franchise tax is a tax imposed on each taxable entity formed or organized in Texas or doing business in Texas. Unlike the sales and use tax, the franchise tax is not collected from the consumers of those taxable entities.
Franchise taxpayers who need an extension beyond the July 15 date have these options:
Non-electronic funds transfer (non-EFT) taxpayers who cannot file by July 15 may file an extension request on or before July 15 and must pay 90 percent of the tax due for the current year, or 100 percent of the tax reported as due for the prior year with the extension request. Non-EFT taxpayers who request an extension have until Jan. 15 to file their report and pay the remainder of the tax due.
On or before July 15, taxpayers who are mandatory EFT payers may request an extension of time to file to Aug. 15 and must pay 90 percent of the tax due for the current year or 100 percent of the tax reported as due for the prior year with the extension request. On or before Aug. 15, EFT 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 Aug. 15 extension request extends the report due date to Jan. 15. Any payments made after Aug. 15 will be subject to penalty and interest.