What is the Texas gross receipts tax?

The Texas gross receipts tax is not actually a "tax" per se, but rather a component of the state's franchise tax system.

Entities with zero Texas gross receipts are no longer required to file a "No Tax Due Report" starting in the 2024 report year.

Instead, they must file either a Long Form Report or an EZ Computation Report.

The no tax due threshold for the Texas franchise tax has been increased to $2.47 million in annualized total revenue for the 2024 report year.

Entities with zero Texas gross receipts must still file a Public Information Report or Ownership Information Report, even if they have no tax liability.

The Texas Comptroller's office has eliminated the requirement for certain entities to file the No Tax Due Report, streamlining the reporting process.

Combined groups, where multiple taxable entities are reported together, must include all members in the combined group report even if some have annualized total revenue below the no tax due threshold.

The changes to the no tax due reporting requirements are a result of legislative updates, specifically Senate Bill 3 passed in the 2023 Texas legislative session.

The EZ Computation Report and Long Form Report both require entities with zero Texas gross receipts to provide their total revenue and enter zero for their Texas gross receipts.

The industry classification codes used for the Texas franchise tax have remained largely unchanged, despite the updates to the no tax due reporting.

Entities that previously filed the No Tax Due Report may need to adjust their internal accounting and reporting processes to comply with the new filing requirements.

The Texas Comptroller's office has updated its online resources and forms to reflect the changes to the no tax due reporting for the 2024 report year.

While the no tax due threshold has increased, entities must still carefully track their annualized total revenue to ensure they meet the criteria for filing the appropriate franchise tax report.

The elimination of the No Tax Due Report is aimed at streamlining the reporting process for entities with no Texas gross receipts, reducing the administrative burden on both taxpayers and the Comptroller's office.

The changes to the no tax due reporting requirements do not affect the overall franchise tax rate or the calculation of the tax liability for entities with positive Texas gross receipts.

Entities must continue to file their Public Information Report or Ownership Information Report, regardless of their Texas gross receipts or franchise tax liability.

The Texas franchise tax system, including the gross receipts component, is designed to ensure that all businesses contribute to the state's tax revenue based on their economic activity within Texas.

The updated no tax due reporting requirements are part of the Texas Comptroller's ongoing efforts to modernize and streamline the state's tax administration processes.

While the changes may simplify the reporting process for some entities, it is crucial for all businesses subject to the Texas franchise tax to stay informed about the latest requirements and deadlines.

The Texas Comptroller's office provides comprehensive resources, including detailed instructions and examples, to help entities navigate the updated no tax due reporting requirements.

Accurate reporting of Texas gross receipts and total revenue is essential for entities to comply with the state's franchise tax laws and avoid potential penalties or audits.