200609760L





September 6, 2006

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

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

Thank you for your email regarding the Texas franchise tax.

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 that your initial franchise tax report will be due on March 
28, 2007, and you have asked if this report will be based on the new margin 
calculation under House Bill 3, or if it will be based on the current franchise 
tax calculation.  You have also asked what information will be reported on your 
2008 annual franchise tax report.     

Your initial report due March 28, 2007 will be based on the current calculation 
of Texas franchise tax with the two components, taxable capital and earned 
surplus.  Without further information, I cannot give your the precise dates you 
will include on this report.  

House Bill 3 applies to reports originally due on or after January 1, 2008.  
Therefore, your first annual report due on May 15, 2008 will be based on the 
new margin calculation.  This report will be based on the day after the last 
accounting period ending date you used for taxable earned surplus under the 
current franchise tax on the initial report and end with the last accounting 
period the entity had for federal income tax purposes that ends in 2007.

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: 200609760L
SUPERSEDED: N
DOCUMENT TYPE: L
DATE: 09/06/2006
TAX TYPE: FRANCHISE