Texas Franchise

[gman]

Trucking business 1,200,000.00 in income with minor expenses except for fuel. $900,000.00. Franchise shows they would owe approx 10,000.00 Comptrollers office stated fuel could not be taken as COGS. This company has a loss of form 1065, so it does not see right they would owe that much in tax. Any suggestions, comments or experience with Texas???

[Jiggers]

Very unfair tax

Trucking business 1,200,000.00 in income with minor expenses except for fuel. $900,000.00. Franchise shows they would owe approx 10,000.00 Comptrollers office stated fuel could not be taken as COGS. This company has a loss of form 1065, so it does not see right they would owe that much in tax. Any suggestions, comments or experience with Texas???

The Texas Franchise Tax is terrible.

Did you consider the EZ Computation? $1,200,000 X .575% = $6,900 tax.

What is the compensation? Did you consider that method?

[gman]

Compensation

is around 100,000. so it is not a lot, but they do have a large contract labor? Where might that be deducted on Franchise form ?

thanks for you help

[WhiteOleander]

No, unfortunately, contract labor cannot be used for compensation. Check on any benefits provided to the employees, including sep,etc. health ins. Also,check on workers's comp paid.

When they changed the franchise tax in texas 2 years ago, I was dumbfounded at how horrible it became. I couldn't believe that every lawyer in the state wasn't flooding the courthouse with lawsuits.

[Jiggers]

Texas Franchise Mess

When they changed the franchise tax in texas 2 years ago, I was dumbfounded at how horrible it became. I couldn't believe that every lawyer in the state wasn't flooding the courthouse with lawsuits.

The Comptroller's office in Texas doesn't even know how to properly calculate the tax. Did you get the notice that they are selecting 29,000 returns from last year for audit?

The lawyers aren't complaining, it doesn't affect them.

The state didn't even give us or our clients the instructions to properly calculate the returns. I had to download a notebook full of instructions and set up my own manual.

My fees increased considerably.

My short form, no tax due, was $70. Now $125.
My long form went from $100 to $175.
I also keep track of the time to do the returns and bill the higher fee.
I had two returns that were billed higher, because of the time it took. One was $475 and the other was $840.

And you do not get the forms in the mail. You have to have an internet connection to be able to do the returns or your tax software has to be able to do the return.

[WhiteOleander]

What I meant by the lawyers was that our clients would be hiring them to sue after they see how much they have to pay now and why.

I have one S-Corp that had about 150,000 loss carryover from previous years. (texas loss carryover, not federal). They are essentially losing that.

And as you said, it is impossible to get any clear response from the state about any particular issue. The instructions are vague and very short. If one were of the conspiracy frame of mind, one might begin to think they are doing this on purpose. Trying to trap the taxpayer, and us at the same time.

[Jiggers]

Texas Franchise Mess

I just completed my largest one. Used the COGS method.

But IRS COGS does not equal TEXAS COGS.

TEXAS COGS includes more items than the IRS COGS.

I had to print a detailed general ledger of all expenses and determine if each item could be considered as TEXAS COGS.

A real pain.

[WhiteOleander]

I just completed my largest one. Used the COGS method.

But IRS COGS does not equal TEXAS COGS.

TEXAS COGS includes more items than the IRS COGS.

I had to print a detailed general ledger of all expenses and determine if each item could be considered as TEXAS COGS.

A real pain.

It is incredibly difficult. And answers from the state are non-existent. I wonder how the DIY crowd is coping.

[taxxcpa]

Retailer rate

I did a franchise tax return for a retail clothing store and the Comptroller sent a notice that some form that I'd never heard of had not been filed and it had to be filed. I filed it with a zero amount and they sent another report.
Finally I called the Comptroller and got it straightened out. The problem turned out to be that I had used the wrong code. The code I had used was for a clothing store, but there was some other code that had to be used to get the ½ % rate for a retailer.

Somehow the use of the wrong code caused the Comptroller to think I was claiming some kind of credit for which a special form had to be filed.