Franchise Tax

A franchise tax is a yearly tax levied by state governments against private businesses and/or other organizations like banks. Specific rules regarding tax amounts, due dates and reporting/collecting agencies vary by state.

State law, sometimes called statutes or codes, determines the particulars about franchise taxes. States individually dictate the process a business must use for paying and reporting taxes. Some states, like Texas, require that companies file annual reports by a certain date. A company's size, organizational structure, profits and/or other circumstances may affect the amount of tax it owes.

Tax laws change frequently, so be certain to file your franchise tax forms correctly. Obtain forms from the state agency that is responsible for collecting taxes. Note that directions on these forms may be difficult to understand and/or you may need a broader look at the law to ensure that you take all available deductions and get the biggest tax benefit possible.

While it is usually correct, many states do not consider law posted for the public on the internet official, even if a state agency posted it. That is unless the law is published by a recognized site source like Lexis or WestLaw, but only a few states use Lexis as its means for publishing laws via the internet. Otherwise, it and WestLaw are billed at an expensive rate. If you need to perform research of current tax law, the library at your local law school should have a wealth of useful information. Ignorance of the law is not an excuse for filing papers incorrectly or paying franchise taxes late. When in doubt, get professional help.

The table below contains links for states and agencies responsible for collecting franchise taxes and all other state taxes. Additionally, it presents links to state law regarding taxes. Some links will not connect directly to the Code/Chapter/Section listed, because select sites direct users to a table of contents listing the state's Code. If that's the case, you may have to find the law listed on that page. In some instances, official state Codes are not available online. Links for the law in these states will lead you to the section of the tax reporting agency’s website that discusses legal subjects.

Please note that this article does not constitute legal advice. Seek assistance from a reputable tax preparer or attorney if you have any questions regarding franchise or other taxes.

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