Texas Margin Tax Alert: New Veteran-Owned Business and Texas Margin Tax

Starting with the 2016 tax year (2017 Report year), newly formed veteran-owned businesses are not subject to franchise tax for an initial 5 year period.

To be considered a new veteran-owned business, an entity must meet the following qualifications as verified by the Comptroller’s office:

• Be a Texas entity (formed with the Texas Secretary of State);
• Begin doing business in Texas on or after Jan. 1, 2016, and before Jan. 1, 2020;
• Be wholly owned by a natural person (or persons), each of whom was honorably discharged from a branch of the United States armed services; and
• Provide a letter from the Texas Veterans Commission (“TVC”) verifying the honorable discharge of each owner.

If you meet the qualifications as described above, you will need to follow certain steps in order to register with the Comptroller and the Texas Secretary of State. Your Weaver state and local tax team can assist you through the registration process.

For questions about this regulation or other state and local tax matters, please contact us.