In its November 2023 Policy News Alert, the Texas Comptroller of Public Accounts (the Comptroller) discussed Senate Bill 3 (SB3) and the bill’s impact on Texas franchise tax filings due on or after January 1, 2024. SB3 increased the no tax due revenue threshold from $1.23 million to $2.47 million and removed the No Tax Due filing requirement for taxable entities whose annualized total revenue is at or below the revenue threshold. SB3 also repealed a requirement for new veteran-owned businesses to file a No Tax Due Report during a business’s first five-year exemption period.
Prior to SB3’s enactment, the following taxpayers were required to file a No Tax Due Report:
- Taxable entities whose annualized total revenue is at or below the no tax threshold;
- Qualifying new veteran-owned businesses;
- Qualifying passive entities;
- Qualifying real estate investment trusts; and
- Taxable entities with zero Texas gross receipts.
In light of the changes, the Comptroller is discontinuing the No Tax Due Report for 2024 and future reporting years. Since discontinuing the form, the Comptroller clarified each entity’s reporting requirements, beginning with the 2024 report.
While taxable entities with annualized total revenue below the no tax due revenue threshold are no longer required to file a No Tax Due Report, the entity will still be required to file a Public Information Report or Ownership Information Report.
Passive entities, real estate investment trusts (REITs), and taxable entities with zero Texas receipts are required to file either a long form or EZ Computation form. Both REITs and entities with zero Texas receipts are also required to file a Public Information Report or Ownership Information Report.
New veteran-owned businesses are not required to file a Public Information Report or Ownership Information Report during the five-year exemption period.
For combined reporting, if a member of a combined group is under the new revenue threshold, the combined group still includes the entity in reporting. However, if the combined group’s total annualized revenue is at or below the threshold, then the combined group is no longer required to file a franchise tax report, affiliate schedule, and a common owner information report for that reporting year. Each individual member of the reporting group that has a nexus with Texas must still file a Public Information Report or Ownership Information Report.
If you have any questions or need assistance, please reach out to a professional at FORVIS.