Texas Franchise Report

[jdpierce1989]

This year the State of Texas changed its filing requirement so that we no longer have to file the "No Tax Due" reports.  We must only submit the Public Information Reports.  However, on a few of my clients Lacerte is automatically choosing the "EZ Computation Report" (Form 05-169) and it should not be doing this.  Is there a way to correct this or override this in Lacerte? 

[dmwBH]

I believe under the new rules if the entity is passive you still have to file a return (EZ or long) so the Comptroller sees the passive box is checked.  And I don't think the public info report is required if it's passive.  That might be why you are only seeing the EZ report on a few clients, maybe they are passive?

[jdpierce1989]

The entities that I have that this is happening to are not considered "passive" per Texas statutes and I do not have them marked as passive. 

It is happening only on my entities that have zero revenues.  This does not happen if the entity has even $1 of revenue.....when an entity has any positive revenue the system reports the Texas Franchise Report correctly (meaning that it only chooses to file the Public Information Report).

[dmwBH]

We ran into the same issue on returns with zero gross receipts.  Try putting a "1" in the  apportionment section for Gross Receipts - Texas and Gross Receipts Everywhere.  That seemed to do the trick for us.  Not sure why we have to do that but those returns are now only generating the PIR.

[Rhysanna · Accepted solution]

This is one of those instances where you should be careful when overriding Lacerte because it is doing it correctly. If the entity has zero revenues, it is required to file the EZ or long form. Don't ask me why Texas decided that $0 is not less than $2.47M. It doesn't make any sense to me but it is what the Comptroller is requiring. See the link below.

https://comptroller.texas.gov/taxes/franchise/ntd-rpt-updates-2024.php#:~:text=A%20taxable%20entity%....

[jdpierce1989]

Thank you so much for that!

[Rhysanna]

You're welcome! I was searching for when Lacerte will finally allow us to e-file the Texas returns and came across your post. The answer to my question is still TBD as far as I know. 

[dmwBH]

Agree, report still required when zero.  Are you guys getting filing instructions when there is just a PIR?  We contacted Lacerte and they told us filing instructions only generate for a main form and the PIR is not considered a main form so the filing instructions are blank.  

[Rhysanna]

We do not use the filing instructions and instead use the letter generated by Lacerte with some modifications to the settings. Unfortunately, when there is no main form, it messes up the letter such that it tacks on a duplicate sentence that there is no tax payable onto the federal paragraph and doesn't have a Texas paragraph. We've been using the custom letter to add in a paragraph that looks similar to what it used to say. I'm hoping Lacerte will fix the letter issue when there is no main form at some point but I guess we'll have to wait and see. 

[vww78]

I use the letter generated by Lacerte as well. Unfortunately, when there is no main form, it doesn't have a Texas paragraph. I'm hoping Lacerte will fix the letter issue when there is no main form at some point but I guess we'll have to wait and see. 

[vww78]

I was searching for if Lacerte will finally allow us to e-file the Texas Franchise returns. Is there a way to tell if they are fileable other than continuing to resubmitting them? I anything in diagnostics or water marked on the forms like Lacerte has done in the past when a form is not ready.