The Texas Margins Tax
The new Texas Margins Tax is a tax aimed at businesses to help the state to raise money to fund various projects. The tax was implemented for many reasons; one of them being that politicians want to continue to say the state doesn’t actually have an income tax on either individuals or businesses. The state still needed money so to fund various projects this time, they decided on a margins tax just like when they needed money for education they made lotteries legal. The tax, much like the lotto, was designed to help correct problems in public school funding. The final reason given for the margins tax was that the state’s franchise tax needed to be re-worked since there were so many loopholes.
The Texas Margins tax was signed by Governor Rick Perry on March 18, 2006. The first taxable period started January 1st of 2007. The first returns with this tax added in are due in May of 2008. As with any other tax, there are ways to pay less. Consulting a lawyer that is certified in business law can be helpful in this area.
As a general rule, any company that does business in Texas and is organized in a way that provides limited liability protection is required to pay the margin tax. This group includes corporations, limited partnerships (LPs), limited liability companies (LLCs), limited liability partnerships (LLPs), banks, savings and loans groups, and some joint ventures. Those that are exempt from this tax are entities that are always tax-exempt, general partnerships owned by natural persons, estates, escrows, insurance companies, and non profits.
If you have any questions, contact an attorney or lawyer that specializes in areas of business formation.
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