MARCH 2016

Glenn Hegar           TAX TOPICSFRANCHISE TAX

Texas Comptroller of 
                      Franchise Tax Reporting Tips for Combined Groups
Public Accounts

                      • Taxpayer numbers: Reporting entities                      included on the affiliate list in error, notify 
                      should use the 11-digit taxpayer number assigned            the Comptroller’s office in writing explaining the 
                      by the Comptroller’s office or the entity’s federal         error and how the entity will report — separately, 
                      employer identification number (FEIN). Use our              or as a part of another combined group. This 
                      search at https://mycpa.cpa.state.tx.us/coa/                mailing address is:
                      to find the taxpayer number. If affiliates do not have      Texas Comptroller of Public Accounts 
                      their own Comptroller taxpayer number or FEIN,                                 P.O. Box 149348
                      do not substitute the file number assigned by the                              Austin, TX 78774-9348
                      Secretary of State, the reporting entity’s taxpayer
                                                                                  Do not submit the extension request or the affiliate 
                      number, or a tax number assigned to any other
                                                                                  list again when the report and schedule are filed.
                      entity. Leave the field blank.
                                                                                  • Payments: When making a franchise tax
                      • Extensions: A combined group requesting an
                                                                                  payment, use the name and taxpayer number of the
                      extension must complete both Form 05-164, Texas
                                                                                  reporting entity for the combined group. Payments
                      Franchise Tax Extension Request (PDF), and
                                                                                  submitted with the name or taxpayer number of an
                      05-165, Texas Franchise Tax Extension Affiliate
                                                                                  affiliate could delay the account status update.
                      List (PDF). If the combined group is required to pay
                      by electronic funds transfer (EFT), Form 05-164 is          • Affiliate List/Affiliate Schedule:
                      not required, but Form 05-165 must be filed. The            On the Forms 05-165, Texas Franchise Tax
                      affiliate list tells us which entities will be reported as  Extension Affiliate List (PDF), and 05-166, Texas
                      a part of the combined group, so we will not expect a       Franchise Tax Affiliate Schedule (PDF), the re-
                      separate report from those affiliates.                      porting entity should only include those affiliates that
                      When the combined group files the report,                   are part of the affiliated group and are unitary. An
                       it will also file Form 05-166, Texas Franchise             affiliate that meets both criteria should be included
                      Tax Affiliate Schedule (PDF). The reporting                 regardless of whether the entity has nexus in Texas. 
                      entity must be included on both the list and                If an affiliate does not meet both criteria, the affiliate
                      the schedule.                                               should not be included on the affiliate list or affiliate
                      Before filing the franchise tax report and the              schedule. Also, neither the affiliate list nor the
                      affiliate schedule for the extended due date, please        affiliate schedule should include any entity where the
                      review the affiliate list submitted with the extension      ownership interest is 50 percent or less. If ownership
                      request. If an entity was included on the affiliate         interest is 50 percent or less in every entity owned, 
FOR MORE INFORMATION, list but not on the affiliate schedule, the combined        a combined report is not due; however, each entity
SEARCH OUR WEBSITE AT group will not be in good standing. If an entity was        must file a separate report.
Comptroller.Texas.Gov

OR CALL               This publication is intended as a general guide and not as a comprehensive resource on the subjects covered. 
1-800-252-1381.                                              It is not a substitute for legal advice.

                                                                                 1

Glenn Hegar           FRANCHISE TAX

Texas Comptroller of  FRANCHISE TAX REPORTING TIPS FOR COMBINED GROUPS
Public Accounts
                      • Nexus: Blacken the circle when the entity DOES
                      NOT have nexus in Texas. If the nexus circle is left
                      blank, we will assume the entity has nexus and will
                      expect the applicable information report. If an entity
                      ceases to have nexus, blacken the circle and com-
                      plete Form AP-114, Texas Nexus Questionnaire
                      (PDF), to provide an end date of activity so we can
                      close the account.

                      • Common Owner Information:
                      The reporting entity of a combined group with a
                      temporary credit for business loss carryforward
                      preserved for itself and/or its affiliates must submit
                      common owner information by the due date of the
                      annual franchise tax report each year. The informa-
                      tion must be submitted to satisfy franchise tax filing
                      requirements, even if the combined group is not
                      claiming the credit on the current year’s report. The
                      entity can submit the common owner information
                      report electronically using WebFile or on paper by
                      filing Form 05-177, Texas Franchise Tax Common
                      Owner Information Report (PDF).

                                                                             In compliance with the Americans with Disabilities  
                                                                             Act, this document may be requested in 
                                                                             alternative formats by calling 1-800-252-5555,  
FOR MORE INFORMATION,                                                        or by sending a fax to 512-475-0900.
SEARCH OUR WEBSITE AT
                                                                              Sign up to receive email updates on  
Comptroller.Texas.Gov
                                                                             the Comptroller topics of your choice at 
                                                                             comptroller.texas.gov/subscribe/.
OR CALL
1-800-252-1381.

                                                                            2
                                                                                                    Publication #98-862 •Revised March 2016