Texas grants Franchise Tax extension of time to file

Texas Comptroller grants extra time to file 2020 Texas Franchise Tax Reports
Texas Comptroller grants extra time to file 2020 Texas Franchise Tax Reports

The Texas Comptroller of Public Accounts has granted an extension of time to file and pay the 2020 Franchise Tax Reports. The extra time gives you until July 15, 2020 to be consistent with the Internal Revenue Service.

I didn’t see this reported in the news and didn’t know about this extra time until someone pointed it out on Twitter. This is current as of 4/8/2020, but is subject to change without notice by the Comptroller.

Which reports are covered?

The 2020 reports are for all tax years that ended DURING 2019. So, this is going to coincide with the 2020 report year and covers the accounting period ending on or before December 31, 2019. If you heaven’t read my earlier post about the difference between the report year and accounting period, you can find it here.

This extra time will apply to calendar year 2019 taxpayers that are filing their 2019 tax returns. The extra time will also apply to entities on a fiscal-year that ended before 12/31/2019. Typically, this time period is going to coincide with the 2018 federal tax year. Remember, federal tax years are based on the date the year begins and Texas report years are based on the calendar year after the fiscal period ends.

How does the extension of time work?

The Comptroller is being really generous with this extension. In general, the extension is moves the deadline back 2 months and the extension period back 2 months. So, instead of May 15, 2020, the return is due on July 15, 2020. In addition, they’re giving you the full extension period, so it goes until January 15, 2021.

Texas has two types of Franchise Taxpayers because certain taxpayers are required to pay their Franchise Tax using Electronic Funds Transfer (EFT) and the rest of the taxpayers aren’t required to use EFT. To make it complicated, EFT Franchise Taxpayers have accelerated payment schedules, so the extensions will vary depending on which category the entity falls into. I go into detail on these two types of taxpayers in this post.

Non-EFT Franchise Taxpayers

Non-electronic funds transfer (non-EFT) franchise taxpayers that cannot file by July 15 may file an extension request on or before July 15 and must pay 90 percent of the tax due for the current year, or 100 percent of the tax reported as due for the prior year with the extension request. Non-EFT franchise taxpayers who request an extension have until Jan. 15 to file their report and pay the remainder of the tax due.

If the extension request does not meet the payment requirements when the report is filed, penalty and interest will apply to any part of the 90 percent of the tax not paid by July 15 and to any part of the 10 percent of the tax not paid by Jan. 15, 2021.

EFT Franchise Taxpayers

On or before July 15, franchise taxpayers that are mandatory EFT payers may request an extension of time to file to Aug. 15 and must pay 90 percent of the tax due for the current year or 100 percent of the tax reported as due for the prior year with the extension request. On or before Aug. 15, EFT franchise taxpayers may request a second extension of time to file their report and must pay the remainder of any tax due with their extension request. The Aug. 15 extension request extends the report due date to Jan 15.

Any payments made after Aug. 15 will be subject to penalty and interest.

More information:

Keep an eye on the Comptroller’s website to watch for changes. Here’s the main page to watch: Franchise Tax Extensions of Time to File.

The Comptroller has also setup a page for COVID-19 related news. This page might help you out for other taxes that the Comptroller collects.