taxes

Franchise Tax Frequently Asked Questions

Apportionment

May a taxpayer use the three-factor apportionment formula permitted by the Multistate Tax Compact (MTC) to apportion its margin under the Texas franchise tax?

No. Texas franchise tax specifically provides for a single-factor apportionment formula based on gross receipts in Texas Tax Code (TTC) 171.105. The apportionment provision in TTC Chapter 141 related to the MTC does not apply to the revised Texas franchise tax, and entities may not elect to use the MTC's three-factor apportionment formula in lieu of the formula specified in TTC Chapter 171.