Texas Practice and Procedure
Texas has no income tax and two regimes that surprise businesses expecting simplicity: a franchise tax on margin that reaches out-of-state companies on receipts alone, and a local sales tax sourced to the seller's place of business rather than the buyer's doorstep, a rule that has been in active litigation for years. This hub collects the questions that recur for businesses selling into or operating in the state.
10Texas articles
Income and franchise tax
3 articles- What happens when a Texas combined group's extension, affiliate list and member reports disagree, and how is it put right?Texas combined group affiliate lists and reports that disagree post as missing or duplicate member filings; new schedules or amended reports cure most.Law as of Oct 17, 2026
- Where does Texas source receipts from digital downloads and licenses for franchise tax?Texas franchise tax sources digital download receipts to the payor's legal domicile and license receipts to the extent the licensed right is used in Texas.Law as of Oct 14, 2026
- Can an LLC be a Texas passive entity, and what does an upper-tier partnership owe when its lower tiers already pay?An LLC cannot be a Texas passive entity, and an upper-tier partnership outside a combined group owes no franchise tax on income from taxable lower tiers.Law as of Oct 17, 2026
Procedure
1 articleSales and use tax
1 articleLocal and district taxes
2 articles- How should a business respond to a Texas business personal property appraisal that ignores its ledger?A Texas business protests to the appraisal review board by May 15 or 30 days after the notice, if later, and proves value from asset cost and age.Law as of Oct 15, 2026
- Where is a Texas sale consummated for local sales tax purposes?For Texas local sales tax, a sale is usually consummated at the retailer's Texas place of business, not the customer's address (Tax Code section 321.203).Law as of Oct 14, 2026
Nexus and registration
3 articles- How does an out-of-state entity end its Texas franchise tax account when nexus ends?An entity leaving Texas files a final franchise tax report by the 60th day after nexus ends, pays any tax, and withdraws or notifies the Comptroller.Law as of Oct 17, 2026
- When does an out-of-state business owe Texas franchise tax with no Texas footprint?Texas franchise tax nexus starts when an out-of-state entity's Texas gross receipts reach $500,000, with no presence needed; many still owe no tax.Law as of Oct 17, 2026
- Is the managing member of a Texas LLC doing business in Texas for franchise tax purposes?Being a Texas LLC's managing member does not alone create franchise tax nexus; the member's own Texas activity, services or $500,000 of Texas receipts decide.Law as of Oct 17, 2026
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