House Bill 1195, recently passed by the Texas Legislature and signed by Governor Abbott, stipulates that proceeds from certain federal programs that are forgiven by the federal government are not included in total revenue for franchise tax reports due on or after January 1, 2021. The qualifying federal programs, all resulting from COVID-19 relief legislation, include the following:

• Loans through the Paycheck Protection Program;
• Shuttered Venue Operator Grants;
• Microloan program recovery assistance; and
• Grants from the Restaurant Revitalization Fund.

In addition to excluding the forgiven proceeds from these programs from revenue, businesses may also include expenses paid using qualifying proceeds as either cost of good sold or as compensation in the franchise tax calculation, to the extent such expenses are otherwise eligible under current law.

Further, the filing deadline for 2021 franchise tax reports was extended from May 15 to June 15 to align with the federal extension granted by the IRS in response to the winter storms. It is not necessary to file any additional forms to receive this extension.

Should you have any questions regarding the franchise tax calculation for your business, please contact your JTaylor tax advisor.

Additional Resources:

• Press Release from Texas Comptroller of Public Accounts
• HB 1195