by Margaret Eisler
The Texas Comptroller of Public Accounts has provided notice of the discontinuation of the No Tax Due Report for the 2024 report year and beyond. (Texas Tax Policy News No. 11/01/2023, 11/01/2023.)
No tax due threshold; removal of filing requirements.
Effective for reports originally due on or after January 1, 2024, L. 2023, S3 (2nd S.S.) increases the no tax due revenue threshold to $2.47 million. The bill also prohibits the Comptroller’s office from requiring taxable entities whose annualized total revenue is at or below the revenue threshold to file a No Tax Due Report (Form 05-163), and repeals the requirement that a new veteran-owned business file a No Tax Due Report during its initial 5-year exemption period.
2024 and after reporting.
Because of the above legislative changes, the No Tax Due Report is discontinued for the 2024 report year and beyond. The form will not be available for any new reporting periods. The entities that can currently file a No Tax Due Report will report, or not report, as follows, beginning with the 2024 report.
Taxable entities whose annualized total revenue is at or below the no tax threshold do not owe any tax and are not required to file a franchise tax report. However, they are still required to file a Public Information Report (PIR) or Ownership Information Report (OIR).
Qualifying new veteran-owned businesses are not required to file a franchise tax report for the initial five-year period that they qualify as a new veteran-owned business. For new veteran-owned businesses, no PIR or OIR is required during the initial five-year period.
Entities that qualify as passive entities must file either the long form or the EZ Computation form. Both forms are being updated with a circle to darken, which is in the taxpayer information section at the top of the form. Other than signing the report, passive entities need not provide information in any other section of the report and no PIR or OIR is required.
Qualifying real estate investment trusts (REITs) must file either a long form or EZ Computation form and darken the appropriate circle in the taxpayer information section at the top of the form. Other than signing the report, REITs need not provide information in any other section of the report. REITs must continue to file a PIR or OIR.
Taxable entities with zero Texas gross receipts must file either a long form or EZ Computation form and complete specific line items on the form to compute the entity’s total revenue and report zero on the Texas gross receipts line. Entities with zero Texas gross receipts must continue to file a PIR or OIR.
Combined groups.
A combined group must include all taxable entities in the combined group report even if any member, on a separate entity basis, has annualized total revenue at or below the no tax due revenue threshold. If a combined group’s annualized total revenue is at or below the no tax due revenue threshold, the combined group is no longer required to file a franchise tax report, an Affiliate Schedule (Form 05-166), and a Common Owner Information Report (Form 05-177) for that report year. Each individual member of the combined group that is organized in Texas or has nexus in Texas must file a PIR or OIR.
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