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Franchise Tax Frequently Asked Questions
Exemptions
How does a nonprofit organization obtain an exemption from the Comptroller's office?
The organization must submit an application for exemption along with the appropriate documentation to the Comptroller's office.
Do nonprofit entities have to file a franchise tax report?
Certain exemptions from the franchise tax are outlined in Texas Tax Code Chapter 171, Subchapter B. Nonprofit entities that have requested and been granted an exemption from the Comptroller's office do not have to file franchise tax reports, including the Public Information Report or Ownership Information Report. If the entity has not requested or been granted an exemption, it must file all reports.
If an entity has been granted exemption from the franchise tax but has unrelated business income for federal tax purposes, does the entity have to file a franchise tax report on the unrelated business income?
No, the entity is exempt regardless of whether it has unrelated business income.