What former Texas franchise-tax penalties applied when a report was more than 60 days late and a tax determination remained unpaid?

Plain-English summary

The late report triggered a 10% unpaid-tax penalty, and a separate unpaid determination could trigger another 10%.

Because the report was more than 60 days late, Texas Tax Code Sec. 171.362 imposed a 10% penalty on unpaid tax. An additional 10% applied only if the taxpayer received a deficiency or jeopardy determination—a Notice of Tax Due—and did not pay within the required time.

What this means for you

Taxpayers with late historical reports

The letter distinguishes the basic late-report penalty from the conditional determination penalty.

Common questions

Q: Was the first penalty 10% of unpaid tax?
A: Yes.

Q: Did every late report automatically incur another 10%?
A: No. That required an unpaid deficiency or jeopardy determination.

Citations and references

• Tex. Tax Code Sec. 171.362, as cited in the letter
• 34 Tex. Admin. Code Sec. 3.544(b), as cited in the letter

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=FIT
• Opinion: https://star.comptroller.texas.gov/view/9609766L

Original ruling text

September 17, 1996

To **

Dear **:

Thank you for your e-mail in which you inquired about the penalties imposed for
the late filing of a franchise tax report.

You indicate that Taxpayer is more than 60 days late in filing the franchise
tax report. Therefore, a 10% penalty is imposed on the unpaid tax under Texas
Tax Code Sec. 171.362. In addition, if Taxpayer was issued either a deficiency
determination or a jeopardy determination (i.e., a Notice of Tax Due), an
additional 10% penalty is imposed if Taxpayer did not pay the determination
within the required time. I have faxed you a copy of Rule 3.544 which provides
an explanation of the additional penalty imposed. You should carefully review
subsection (b) of Rule 3.544 which discusses penalties and interest.

If you have questions about the penalties imposed on Taxpayer, you should
contact Colleen Capelle at 1-800-531-5441, extension 5-0282. Colleen's internet
address is [email protected].

If you have other questions regarding franchise tax, my internet address is
[email protected], or you may call me at 1-800-531-5441, extension
3-4662.

Sincerely,

Bob Jeffcoat
Tax Policy Division