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Currently, taxable entities that do not owe any franchise tax are required to file an information report (Sec. 171.204 of the Tax Code).
Senate Bill 1364 would require that this report be filed electronically. Failure to file this report electronically would expose taxable entities to a new, $50 penalty. A taxable entity could require and receive a waiver if the entity doesn't have access to the Internet.
According to the bill analysis of the author's office, the Comptroller's office has seen an increase in the number of business entities filing their franchise reports electronically, including the no-tax-due franchise reports (with about two-thirds of these reports filed electronically).
Senate Bill 1364 aims at making processing of franchise tax reports more efficient and cost-effective on the side of the Comptroller's office and has the potential of saving taxpayer money.
Because filing tax reports, even when no tax is due, costs time and money to businesses, it is reasonable to believe that most business entities are already choosing the most efficient and cost-effective way for them to file this report. Forcing the remaining one-third of businesses not currently filing this information report electronically adds to the burden of filing the report for these businesses, especially if they have to petition for a waiver if they do not have access to the Internet. If businesses have increasingly filed their reports electronically without being mandated to do so, the trend is likely to continue without the need for government to force them to.
Additionally, the $50 penalty for not filing the information report electronically does not replace, but comes on top, of the $50 penalty already existing for not filing a report (Sec. 171.362 (f) of the Tax code).
Businesses that do not owe any franchise tax are more likely to be small businesses. Small businesses do not need additional administrative hurdles that take time and money away from their business.
The goal of and result from Senate Bill 1364 may be to save taxpayers money, but it will be at the cost - that may not be seen, but that does exist - of additional administrative requirements for some businesses.
Due to a mix of potential good and bad consequences resulting from this bill, we will remain neutral.