Tax season can be a stressful time for business owners in Texas. Every year, the Texas Comptroller applies the Texas Franchise Tax to all taxable entities doing business in the state. This tax is based on the entity's margin and can be calculated in a number of different ways. To help business owners understand their obligations, this article will provide an overview of when Texas business taxes are due and how to file for an extension.
The Annual Franchise Tax Report is due on May 15th each year. If this date falls on a weekend or holiday, the due date will be the next business day. These extensions are automatic, so taxpayers don't need to take any specific action. However, if the IRS sends a notice of late payment or filing penalties to an affected taxpayer, they should contact the IRS at the appropriate number that will appear on the notice.
If you are unable to file your Texas Franchise Tax Report by the due date, you can request an extension by filing Texas Form 05-164, Texas Franchise Tax Extension Request. This will extend the due date to August 15th. Taxpayers must pay 90% of the tax due for the current year, or 100% of the declared tax due for the previous year, with the extension request. If you are unable to file your report by August 15th, you can request a second extension by re-filing Texas Form 05-064 by August 15th, which will extend your final filing deadline to November 15th.
It's important to note that filing Texas Form 05-164 only gives you an extension to file your annual Texas franchise tax report. If you have questions about relief available in other states where Texas taxpayers can file a return, contact your Cherry Bekaert advisor or Cathie Stanton, state and local tax leader. In addition to filing your Annual Franchise Tax Report, you must also submit any estimated taxes you must pay with Texas Form 05-164 by May 15th to avoid potential late payment penalties. The IRS automatically provides filing and payment relief to any taxpayer with a registered IRS address located in the disaster area.
If an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment, or deposit date that falls within the deferral period, they should contact their Cherry Bekaert advisor for help reducing fines. If you have any questions about tax deadlines, tax deductions, or navigating tax law updates, contact Lynn Butler, Doug Jones, Albert Lin, or your Husch Blackwell attorney. Additionally, sign up for news and ideas from Husch Blackwell for more information.