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Today, May 15, is the deadline for physicians and other businesses to pay their annual franchise tax.
The Texas Legislature created the new business tax in 2006 as part of Gov. Rick Perry's school finance reform plan.
The tax impacts all corporations, limited liability partnerships, professional associations, some general partnerships, and other business entities. The tax is calculated based on a business' gross receipts, minus the cost of goods sold or the cost of compensation and benefits paid to owners and employees. Businesses with taxable gross receipts less than $300,000 pay no tax, and those grossing less than $1 million will get discounts off the standard tax rates, which are 0.5 or 1 percent, depending on the type of business. Sole proprietorships and general partnerships in which all partners are individuals, rather than business entities, are exempt from the margins tax. That means a physician in solo practice who is not organized as a professional association will not be affected. Also exempt are physicians who practice in federally qualified nonprofit organizations.
Thanks to TMA lobbying, health care professionals have special treatment and can exclude revenues they receive for covered services to beneficiaries in Medicare, Medicaid, TRICARE, the Children's Health Insurance Program, workers' compensation plans, and in accordance with the Indigent Health Care and Treatment Act. Another exclusion is available for the actual costs of uncompensated care, calculated by multiplying the total uncompensated care charges by the ratio of total cost to total charges for the practice. According to the rules and revisions outlined by the comptroller, physicians can exclude all of these revenues, including related copays, coinsurance, deductibles, and program payments from private plans, but health care facilities can exclude only 50 percent.
Deductible compensation expenses include wages, salaries, and benefits with some limitations, but do not include contract labor payments.
Call (800) 252-1381 to speak to a franchise tax specialist in the State Comptroller's Office.
For more information on the franchise tax issue, log on to Franchise Tax Issues for Physicians on the TMA Web site.
Action, May 15, 2009
Last Published: 5/14/2009 Print this page
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