7903L0159D10
      INTEROFFICE                                 BOB BULLOCK
      MEMORANDUM                                  COMPTROLLER OF
                                                  PUBLIC ACCOUNTS
      
DATE:    March 9, 1979
      
      TO:      Business Tax Division
      
      FROM:    Eleanor
      
      SUBJECT: Professional Corporations
               Professional Associations
      
      
      We frequently get questions as to why professional corporations are sub- 
      ject to franchise tax and professional associations are not.
      
      I. Basic Rule
      
      The franchise tax applies to:
      	
      ". . . every domestic and foreign corporation . . 
      chartered or authorized to do business in Texas . . ."
      
      The tax is not limited to corporations chartered or authorized under the 
Business Corporation Act or Non-Profit Corporation Act. The important question 
is whether the entity is a corporation.
      
      II. Professional Corporations
      
      Professional corporations are formed under Art. 1528e of Vernons 
Annotated Texas Statutes. A copy of that law is attached. Under the P. C. act, 
"one or more individuals . . may incorporate a professional corporation . . ." 
P. C.'s are therefore subject to the tax. Lawyers, architects and other 
professionals, except doctors, may form a P.C. Charter numbers begin with a 9.
      
      III. Professional Associations
      
      Professional associations are formed under Art. 1528f. That law refers to 
". . . a professional association, as distinguished from either a partner- ship 
or a corporation . . ."  Although a P.A. has many of the character- istics of a 
corporation, the law has been consistently interpreted by this office to mean 
that a P.A. is not a corporation and therefore not subject to the franchise 
tax. Doctors may form P.A.'s but not P.C.'s. "Charter" numbers on the S.O.S. 
terminal begin with an 8.
      
ACCESSION NUMBER: 7903L0159D10 
SUPERSEDED: N 
DOCUMENT TYPE: L 
DATE: 03/01/1979
TAX TYPE: FRANCHISE