LLC Tax ReturnFor Texas owners

Dallas, on a video screen

Steven Palmieri reads that second sheet from Dallas, the PDF open on a shared screen and the conversation on video. This practice keeps no second office in Houston, none in Austin, none along the Gulf, none in the Hill Country, and none up in the Panhandle. A caller who lives past Dallas and Fort Worth hears the same greeting we use at home, because we are all Texans, and the miles do not rewrite the form number or change which signature is still blank.

Carol M. Highsmith made the daylight photograph of the capitol dome and the front walk, and the Library of Congress holds that file in the public domain. The trees in the frame belong to the afternoon she exposed it. Nobody from this practice is waiting on that walk. You and we meet on the screen, with page one of the sheet already signed set beside page one of the sheet that is still blank.

The other pages at this address stay with the federal form number, and only the page you are on gives the state sheet a name. Bring both sheets. Ordinary relief shows up once each paper has been named, and the worry that a single pen closed both of them can sit down.

The pen you remember

A March signature on the federal return closes that federal return, and nothing further. Partnership returns and S company returns generally want that pen in March. A C company return, and the owner's own return, generally want it in April. None of those spring dates is the day the Texas franchise report wants its own pen. People tell us the year feels finished because they can still picture the signing. The picture in their hand is the federal file. The state file was still sitting in the drawer.

What gets signed in May is often the state report, an extension of that report, or a voucher, and it is rarely page one of the annual federal return. The national page about a May signature stays with federal dates and with whichever state the work is in. On this page the Texas paper receives a name of its own. When the May signing was only a page or two, read the form number out loud before you tell a lender that the franchise report went in.

Nothing on the owner's own return grows a Texas income line out of a K-1, because Texas leaves that personal income untaxed. The K-1 can still be a real federal figure, and the federal return can still show it. The franchise report is a third document, and its subject is the entity. That report does not lift a line off the owner's federal return merely because a K-1 was issued.

Who the publication still lists

What the Comptroller describes is a privilege tax, laid on a taxable entity formed in Texas or doing business in Texas, and Publication 98-806 is the walkthrough we open next to you. Corporations are on the publication's list. Limited liability companies are on it, a company with one member included, and a series company included. Banks are on it. S corporations are on it. Partnerships are on it, trusts are on it, professional associations are on it, and joint ventures are on it. Even where the federal return treats the company as disregarded, the single member limited liability company remains on that list.

A person who files as a sole proprietor and who never formed a company is usually absent from the list, unless the activity actually sits inside a single member limited liability company. A general partnership owned entirely by natural persons is usually absent as well, while a limited liability partnership is pulled back onto the list. An entity that Tax Code chapter 171 already treats as exempt stays off. A passive entity stays off only while the facts of that year match the label, and the initials printed on the certificate do not choose the label. For examples of what counts as doing business in Texas, the publication points you to Rule 3.586, and we lay each example beside this company's own facts.

Federal treatment and this state report are allowed to part ways. A company disregarded for federal income tax can still owe the Comptroller a sheet. That parting is why a calm letter accepting the federal return leaves the state file open beside the federal one.

Four margin paths on the long form

With the long form as the sheet in front of you, Publication 98-806 lays out four computations a signer can point at in order. Computation one applies seventy percent and stops there, using total revenue as the only input. Computation two is where cost of goods sold is subtracted from the revenue total on the long form, and that subtraction is not repeated in the other three. Computation three removes compensation from the revenue total. Computation four removes one million dollars from the revenue total, and the right to remove that one million dollars has been open since 1 January 2014. Where several entities report together, they share one way of computing margin, and that single choice covers the whole combined group.

The revenue total on this report begins from the federal amounts, after which the exclusions in Tax Code section 171.1011 come off. On this report, cost of goods sold points mainly at tangible personal property and at real property sold in the ordinary course of the business. A company whose work is services often has no cost of goods sold it can use, aside from industry exceptions written into section 171.1012. A goods figure invented to fill a service year will not be one we sign.

Compensation on this report can take in W-2 wages, and it can take in cash paid to officers, to directors, to owners, to partners, and to employees. Net distributive income paid to a natural person can come in as well, held to the limit that applies for each person. Benefits the report lets you deduct can come in, workers compensation among them, and health coverage, and retirement contributions. Pay reported on Form 1099 is kept out of the compensation the margin computation can use. The employer share of payroll taxes stays outside it too. Once a margin is chosen, apportionment uses Texas gross receipts. No worked example on this page is drawn from a living return.

Two report years, two lines

Look at the 2026 report year, and look again at the 2027 report year. Annualized total revenue of 2,650,000 dollars is the line, in both of those years, where the franchise tax itself falls to zero and where the tax report stays unfiled. An information filing can still be sitting open. Public information belongs on Form 05-102. Ownership information, the kind that stays confidential, belongs on Form 05-167. If the skip list does not already carry the company's name, a signature still belongs on one of those two forms. A labeled example that is never a living owner's file can sit under that 2,650,000 dollar line in 2026 or in 2027 and still be the company that signs the information report.

The row for 2024 and the row for 2025 were different. Across 2024 and 2025 the line with no tax due was annualized total revenue of 2,470,000 dollars, and the compensation deduction stopped at 450,000 dollars in those same two years. Keep both of those figures inside 2024 and 2025. Carrying either one onto a 2026 report would hand you a threshold from a year you are not filing. The older report that existed only to say no tax was due was retired starting with report year 2024, so that older paper is not the filing now in your hand.

Retail margin on a 2026 report, and retail margin again on a 2027 report, is taxed at 0.375 percent, and wholesale margin carries that same 0.375 percent in both years. Margin that is neither retail nor wholesale is taxed at 0.75 percent on the 2026 report and on the 2027 report. The compensation deduction stops at 480,000 dollars in 2026 and stops at 480,000 dollars again in 2027. Annualized total revenue of 20 million dollars or less, on a 2026 or a 2027 report, opens the EZ computation, and the EZ rate in those years is 0.331 percent. Move to the EZ computation and the margin deductions stay behind on that report. Rise above that 20 million dollar line, or hold onto a margin deduction, and the long form is where the pen goes. The long form is also where the pen goes when you sit over the no tax line and you are not on EZ.

15 May, and the time after it

The franchise report wants a signature on 15 May. Should 15 May land on a Saturday, a Sunday, or a holiday the Comptroller observes, that signature moves to the following weekday. Show up with the report after that day and a penalty of 50 dollars attaches to the report itself, counted before anyone turns to the tax. Pay the tax during the first 30 days after that day and the bill grows by an extra 5 percent of the tax. Leave the tax open once those 30 days have passed and the growth becomes an extra 10 percent of the tax. Interest begins on day 61. Whatever percent the Comptroller is printing on the interest page for the year you are signing is the percent that applies, and this page leaves that percent on the live page.

More time begins only when a payment arrives by the original due day, or when the Comptroller's form arrives by that same day. Count the prior year tax and send all of it, the 100 percent route, or send 90 percent of the tax this filing year will actually owe. An entity sending its first annual report after it becomes subject to the tax has no path to the prior year payment choice. A payer who is not moving money by electronic funds transfer can still reach 15 November, either in Webfile or on Form 05-164.

An entity whose payments in the prior state fiscal year reached 10,000 dollars or more sends its money by electronic funds transfer. For that payer the first date an extension can reach is 15 August, and the second date is 15 November. Once those prior payments reach 500,000 dollars, more time is asked for by a TEXNET payment that arrives on time under payment code 13080, and Form 05-164 stays unfiled beside that payment. The hour that still treats a large TEXNET payment as on time lives on the instruction current in the year you sign. We open that instruction when the signature is in front of us. The hour does not get memorized.

A last report, and an unsigned sheet

Inside 60 days after the entity no longer has sufficient nexus, the final report is due. Where the payment rules for an extension are already met, extra time on a final report runs 45 days past the original due day of that final report. Whether the company closes, or the tie to Texas ends, remains your decision. Completing that ending takes the final report together with a certificate of account status from the Secretary of State. We read the close instructions that are current before any sentence from us says which paper comes first. An order carried in memory from an older year would only be a guess, and a guess is not something we put a signature on.

Leave the information report unfiled and the warning is written in Tax Code sections 171.251, 171.2515, 171.252, and 171.255. What can sit at risk is the right to sue in a Texas court and the right to defend in one. Officers and directors can face personal liability for certain debts those sections name, and so can partners, members, and owners. When the entity is a bank or another financial institution, the sections to open are 171.259 and 171.260, and the four sections named above stay with everyone else. The section numbers get said out loud with you. They do not get smoothed into a slogan.

Officer names remain until the following year's annual report, except an amendment that corrects an error or that answers a critical need which cannot wait. The registered agent moves on a filing of its own at the Secretary of State, and the agent name is not something these franchise reports are for typing. Names that Publication 98-806 leaves off Form 05-102 and off Form 05-167 make up the skip list. An entity the statute already treats as exempt sits on the skip list, and for that reason it does not sign Form 05-102 or Form 05-167. So is a company not organized in Texas and holding no nexus. So are passive entities. So is a qualifying new veteran owned business, through that business's first five years. Each member of a combined group, when the member is organized in Texas or the member has nexus, files a Form 05-102 or a Form 05-167 of its own.

What this pen will not pretend to be

Rules for the research credit on the franchise report changed for periods that begin on 1 January 2026. Keeping up with that change means the franchise home page on the Comptroller site, the one maintained there. Your file gets whatever that live page says in the year the file arrives. A summary of the credit, frozen on this page, is something we will not write.

An audit, a review, or a compilation, any report that attests to the statements, stays with a firm the law allows to sign that kind of paper. Signing the franchise report is a different job from signing that attesting paper. An appearance at an IRS exam sits outside this shop. Sorting the particular records a notice names can stay here. A protest over the state tax stays with the lawyer, and a suit that needs a lawyer stays there too. Name the letter that arrived and the pile it belongs to gets named back. Working the other pile would mean taking up a title this practice does not hold, so that pile stays with the person who holds it.

Where the revenue figures on the franchise report begin is the federal return you already have. A dispute with that federal return over the revenue is representation, and filing the dispute is work this address does not do. What we can still do is sit with the two sheets and say which signature is already there and which line is still blank.

The sales pen has its own day

Before a city, a county, or a transit agency adds anything, a taxable sale sets 6.25 percent aside for the state. The city slice, the county slice, and any transit slice share a cap of 2 percent. On one sale, state and local together stop at 8.25 percent. The rate is the one that belongs to the address of that sale, and it gets looked up on the day the sale happened. No city rate is kept in memory here, and no city rate is printed on this page.

After the permit is approved, you learn monthly or quarterly from the letter the Comptroller sends, and that letter is the one that governs. Thresholds sitting behind the letter are left off this page on purpose. A sales report filed every month comes due on the 20th day of the month after the month you are reporting. The April quarterly sales report comes due on 20 April. The July quarterly sales report comes due on 20 July. The October quarterly sales report comes due on 20 October. A yearly sales report, and the January quarterly sales report, come due on 20 January. Should one of those dates land on a Saturday, a Sunday, or a holiday, the report moves to the following weekday.

File the sales report and pay it on time, and you may keep a discount of one half of one percent. Pay ahead of time and a further 1.25 percent is added to what you keep. A sales report that comes in late carries a charge of 50 dollars by itself. Sales tax paid inside the 30 days after its own due day grows by 5 percent of the tax. Once that window has closed, the growth is 10 percent of the tax. On a past due sales balance, interest begins on day 61, and the rate for it stays on the Comptroller interest page where the Comptroller prints it. Acceptance of the federal return does not put the sales return in the file. That sales return still wants a signature on a day of its own, and neither pen can stand where the other pen belongs.

Which state paper is still unsigned