So, you’ve filed or extended your federal business returns and now you need to focus on the Texas Franchise Tax Report. This annual report is due on May 15 each year, regardless of when your accounting year ends.
Right now, our focus is on the 2023 Texas Franchise Tax Report. This report is generally for calendar year 2022 activity and for fiscal years that ended during 2022. Let’s take a closer look at the Report Year and the Accounting Period to make sure you are reporting the correct information on the correct tax form.
What is my Report Year?
Your report year is the year in which the franchise tax report is due. For the 2023 annual Texas Franchise Tax Report, this is the franchise tax report due on May 15, 2023.
Note that this 2023 report year will never include a tax period that ends in 2022, unless it’s a final tax report. The best way to remember this is that the report year is the calendar year which comes after the year in which your accounting period ends. Which means that now we need to look at the accounting period.
If you’re preparing a final tax report, it’s a completely different animal that I’ll cover is a different post.
What is the Accounting Period that you’re filing?
The accounting period is typically the federal accounting period unless you are filing your first or last Texas Franchise Tax Report. So, assuming this isn’t either your first or your last report, then look at the ending date of the accounting period that you usd for your federal tax return. The report year is the year after your accounting period ends.
This is pretty straight forward for calendar year taxpayers. For a calendar year end of December, 31, 2022, your accounting period beginning date will be January 1, 2022 and your accounting period ending date will be December 31, 2022. The next calendar year is 2023, so the next annual franchise tax report for Texas will be the report year 2023. The 2023 Texas Franchise Tax Report is due on May 15, 2023.
Simple, right? Well, what about fiscal-year returns? Let’s look at a fiscal year corporation with a year end on March 31. This one confuses even seasoned tax professionals. The Report Year for a fiscal year ending on March 31 will be the following calendar year.
For the 2023 Texas Franchise Tax Report, you will use the accounting period that ended during calendar year 2022, so, your accounting period will be April 1, 2021 through March 31, 2022. It’s helpful to remember that this actually corresponds to your 2021 federal tax return. In this case, you would have filed your 2021 return months earlier, for corporations, this corresponds to the original deadline of July 15, 2022 and the extended deadline of January 15, 2023.
You were probably not even able to file this 2023 Texas Franchise Tax Report when you filed your federal tax return because the state hadn’t released the forms yet. Now it’s time to file the return or request an extension.
Extensions are available
You can extend your tax return to give you extra time to prepare and file the return. The easiest way is to use the Comptroller’s webfile system. You can also use most professional tax software for this. Remember that this is just an extension to file and you should pay the tax due. Also, pay attention to the extension time frame. Mandatory EFT filers get an initial extension through August 15, 2023 and then can request a second extension that goes through November 15, 2023. If you’re not a mandatory EFT filer, your extension is good through November 15, 2023.
If you’re in doubt, you can always reach out to the Texas Comptroller of Public Accounts to determine the correct accounting period and report year.
For more information on the Texas Franchise Tax Report, checkout my Answers to common questions about the Texas Franchise Tax Report. You can also get in touch with me for help using my Contact Me page.