May 18, 2006
FOR IMMEDIATE RELEASE
Texas Governor Signs House Bill 3.
Governor Rick Perry of Texas signed House Bill 3 into law today. House Bill 3 (“HB 3”)
will replace the current Texas franchise tax with an alternative margins tax,
beginning January 1, 2007. While the first alternative margin tax reports will
not be due until May 15, 2008, a key provision of HB 3 will affect many Texas
taxpayers much sooner.
Pursuant to this provision, the Texas Comptroller of Public Accounts (the “Comptroller”)
will notify certain taxpayers that they must complete and submit an information report to
the Comptroller by February 15, 2007. The Comptroller will identify and require the
following taxpayers to complete the information report:
- The 1,000 entities that paid or are required to pay the most franchise tax
for the reporting period ending December 31, 2005;
- The 1,000 entities doing business in this state that had the greatest amount
of gross receipts in 2005 for franchise tax purposes;
- The 1,000 entities doing business in this state with the greatest number of
employees in this state, according to records maintained by the Texas Workforce
Commission, in 2005; and
- The 1,000 entities doing business in this state with the greatest school
maintenance-and-operations property tax levy in this state in 2005.
The practical effect of the information report will be to require these taxpayers
to complete and file an alternative margins tax report as if the alternative margins
tax had been in effect on January 1, 2006. No tax will be due with the information
report and the Comptroller cannot grant any extension of the due date.
The Comptroller will provide the forms and instructions necessary to complete
these reports on or after November 15, 2006 but before December 2, 2006.
Taxpayers will have, at best, from November 15, 2005 until February 15, 2007
to complete the information report, and these months are often the busiest for
corporate tax departments due to year-end tax provisions, Christmas vacations,
etc. For more details related to the provisions of House Bill 3, see the prior release dated
May 4, 2006.
If you have any questions regarding the above information, or to receive assistance with a
tax return, please contact Mr. Eric L. Stein, Principal, of the Ryan & Company Austin office, at
512.476.0022 or Ms. Sarah Stroud, Manager, of the Ryan & Company Dallas office,
at 972.934.0022.
Mr. Stein and
Ms. Stroud can also be reached via e-mail.
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