EDIT: As of July 5, 2020, the 2nd extension for the Texas Franchise Tax is Monday, August 17, 2020.
While the Comptroller moved the first deadline from May 15 to July 15 in reaction to the IRS moving their deadline, the Comptroller did not make any changes to the second deadline for the Texas Franchise Tax Report to be filed or extended a second time. Read more about the August 17, 2020 deadline here.
EDIT: Just a reminder that the 2019 due date for the 2nd extension is Thursday, August 15, 2019.
This is just your friendly reminder that some businesses in Texas, or with operations in Texas, might have an August 15, 2018 deadline to file their Texas Franchise Tax Report or to request a second extension.
I say “might have” a deadline because not every company has this requirement. If you remember, back in May I explained that the state breaks up business entities into large and small categories based on the Franchise Tax paid in the prior year. For the full discussion, see “Answers to Common Questions About the Texas Franchise Tax Report.”
Who has an August 15 deadline?
Businesses that paid $10,000 or more in franchise tax payments in the preceding state fiscal year (Sept 1 through August 31) are required to make their payments electronically. In addition, if your business falls into this category, your first extension that is filed on or before May 15 is only for 3 months. This means, if your payments in the prior year were $10,000 or more, and you filed for an extension on May 15, 2018, then you must file your actual return or file for an additional extension on or before August 15, 2018.
Should I make a payment with my additional extension?
The payment requirements for the second extension aren’t really complicated. For the first extension, you have the option of paying 100% of your prior year’s tax or 90% of the current year’s tax liability. Regardless of what option you chose back in May, you need to make up the difference between what you paid on the first extension and the full current year’s tax liability. So, if you paid 90% of the current year’s tax liability on your first extension, now you need to pay the remaining 10% with this extension.
Don’t forget to pay electronically
Remember, this payment for your second extension must be made electronically, regardless of the amount of the payment. I’ve heard stories of companies that thought they didn’t have to pay electronically because their payment was less than the $10,000 threshold. Unfortunately, the state doesn’t see it this way and if you fall into the bucket of taxpayers required to make electronic payments, then all of them must be electronic.
An additional thing to consider with electronic payments is that if you are using the TEXNET ACH Debit method of electronic payments, you must schedule the payment before 8 p.m.m CT the business day before the due date. So, if you’re trying to make an electronic payment on the actual due date, select a different method of electronic payment.
To be honest, I don’t see any resistance to this electronic payment requirement any more. When the rule first came into existence, there were still many companies that weren’t comfortable making electronic payments. These days, most of my clients prefer to pay electronically if they have that option.
By the way, you always have the option to pay electronically, even if you aren’t required to.
To make an electronic payment and file the second extension, the state has a website with multiple filing and electronic payment options. Get more information on these options at the Comptroller’s “File & Pay” website.
If you still have questions or need help calculating or making your extension payment, please use the “Contact Me” page to send me a message.