RSS
|
Mobile
|
Daily Emails
|
We Twitter
| Make us your home page
The federal tax deadline may be a distant memory for most, but local business owners are gearing up for an even bigger tax day.
The Texas Comptroller's Office has extended the filing deadline for the franchise tax (also called the margin tax) to June 15. And some business owners in the area are saying they fear that they will end up owing more this year.
"Our clients are very confused about it. We're confused about it. The Comptroller's Office is changing the rules daily," said April Eyeington, an accountant with Bryan-based Brewer, Eyeington, Patout & Co.
Eyeington said one of her local grocery store clients paid $1,600 under the franchise tax law in 2006. This year, the same client -- whom Eyeington declined to identify -- will pay $11,000.
The Texas Legislature passed sweeping changes to the franchise tax in 2006, casting a wider net to include entities not liable under previous rules. This year, out-of-state partnerships, investment partnerships, law firms, doctors groups, joint ventures and others making more than $300,000 per year will funnel thousands of dollars into state coffers.
Tax liability is based on a business's gross margin, which can be calculated three ways under the new law: total revenue multiplied by 70 percent, total revenue minus the cost of goods sold or total revenue minus compensation. A company's gross margin indicates how profitable it is at the most fundamental level.
But Eyeington said many businesses that suffered a loss on their balance sheets will pay tax this year, anyway.
"It doesn't matter if you have a loss, since the tax is based on a percentage of your growth," she said.
Larry Isham, president of Aerofit, said he spent months researching the tax in an effort to determine his firm's liability. He recently paid $11,387 toward the margin tax -- an increase of more than 1,200 percent over the amount he paid in 2006.
"When this was first introduced in the Legislature, they made much of the fact that there would be property tax relief," Isham said.
But while Aerofit saw a $5,900 decrease in property taxes on its two gyms in Bryan and College Station, Isham said, the relief wasn't enough to offset the $10,500 spike in Aerofit's margin tax liability.
The National Federation of Independent Business's Texas chapter, which claims dozens of members in the Bryan-College Station area, said 84 percent of its members responded in a recent survey that they would see their tax burdens increase by more than 100 percent over their previous franchise tax bill.
More than 40 percent of those who saw an increase in their state tax liability expect to face an increase of more than 500 percent over their previous bill, according to the survey.
The NFIB Texas chapter, the Independent Electrical Contractors of Texas, the Air Conditioning Contractors of America Texas Chapter, the Associated Plumbing-Heating-Cooling Contractors of Texas and the Texas Courier & Logistics Association have banded together in an effort to make the tax less onerous for small-business owners.
The new Texas Business Tax Coalition will propose exempting from liability small businesses that are losing money or are marginally profitable.
Some local business owners told The Eagle on Friday they had never heard of the tax, while others said they were still determining their tax liability.
"Our CPA does it," said Laura Leminger, administrative assistant for Christopher's World Grille in Bryan. "It's so complicated, and there are so many different ways to figure it out, it's hard for an individual person to do it."
Representatives of Brazos Natural Foods in Bryan said they were not familiar with the tax.
Janet Briaud of Briaud Financial Planning in Bryan said one big difference is that there is no financial strategy on how not to pay the margin tax, as there was on the earlier franchise tax.
Eyeington said some businesses are discussing suing the state, having likened the margin tax to a personal income tax -- which the state doesn't have the authority to assess.
• Holli L. Estridge's e-mail address is holli.estridge@theeagle.com.
