200608778L



August 23, 2006

To:  ************** 
**************

Dear **************:  

Thank you for your email regarding the revised franchise tax [based on margin] 
recently passed by the Texas Legislature, and I apologize for the delay in 
responding.  

The publication and calculator I mention below, as well as other related 
information, can be found at http://www.window.state.tx.us/m23taxes.html.

You have indicated you have several dormant/inactive Texas corporations, and 
you have asked if you will owe any tax under the new law.  

House Bill (HB) 3 was passed during the 79th 3rd Called Session of the Texas 
Legislature.  House Bill 3 amends Texas Tax Code Chapter 171 to revise the 
existing franchise tax by changing the tax base, lowering the rate, and 
extending coverage to active businesses receiving state law liability 
protection.  Changes made by HB3 are effective for franchise tax reports 
originally due on or after January 1, 2008.

Tax Code Sec. 171.002(d) provides that a taxable entity is not required to pay 
any tax if the amount of tax computed for the taxable entity is less than 
$1,000 or the amount of the taxable entity’s total revenue from its entire 
business is less than or equal to $300,000 for the 2008 report.  If a taxable 
entity meets either or those two criteria, then the taxable entity will be 
eligible to file a short form no tax due report and will not owe any tax.  So 
if the entities conduct no business, they will have a filing responsibility but 
will owe no tax.  

This agency’s publication, The Revised Franchise Tax Overview (98-806), 
provides a concise summary of the revised franchise tax.  The publication 
briefly addresses the entities subject to the tax, the calculation of the tax 
and other general information.  There is also a franchise tax calculator 
available on our website for you to estimate a tax liability under the new 
provisions if you operate a taxable entity. 

A copy of HB3 is available through the legislature's website, "Texas 
Legislature Online" at www.capitol.state.tx.us.  

This response is based on the facts presented and current law.  If there are 
different or additional facts, the response may change.  

Our goal is to provide you with prompt, professional service.  Please take a 
moment to complete our on-line survey at:  
http://aixtcp.cpa.state.tx.us/surveys/tpsurv2/index.html.

If you need any additional information, please feel free to contact me at 
1.800.531.5441, extension 34629.  

Sincerely,


Lowell Olsen Dunn
Tax Policy Division




ACCESSION NUMBER: 200608778L
SUPERSEDED: N
DOCUMENT TYPE: L
DATE: 08/23/2006
TAX TYPE: FRANCHISE