Texas Franchise-Tax Payment
Missing the May 15 filing or payment deadline for your Texas franchise-tax can trigger multiple charges: a flat late-filing fee, percentage-based penalties, and accruing interest. Understanding how each is calculated—and how quickly they add up—helps you assess the real cost of a late payment and explore possible waiver options.
Applicable Tax Authority & Code References
- Late-Filing Fee: Tex. Comptroller assesses a $50 penalty for each franchise-tax report filed after the due date, even if no tax is due.
- Statutory Penalties:
- 1–30 days late: 5 % of tax due.
- Over 30 days late: 10 % of tax due.
- After date on Notice of Tax Due: additional 10 % (total 20 %).
- Minimum Penalty: At least $1 per period applies, regardless of calculated percentages.
- Interest on Past-Due Taxes: Begins 61 days after due date, at prime rate + 1% (as set under Tex. Tax Code § 111.060). For January–April 2025, prime rate is 7.50%, so interest = 8.50% per annum.
- Waiver Requests: Under the Texas Taxpayer Bill of Rights, you may request a waiver of penalties and/or interest for reasonable cause via the Comptroller’s online form.
Forms & Actions to Take
- Franchise-Tax Report: Form 05-158 (or 05-158-EZ) – file immediately, even if late.
- Payment Voucher: Form 05-170 – include payment for tax, penalties, and interest.
- Extension Request: Form 05-164 – if not yet past due date, file by May 15 for Nov 15 extension (no effect once late).
- Waiver Request: Online waiver form (Comptroller website) – for penalties/interest relief.
Detailed Example
Beta Tech LLC
- Franchise Tax Due (May 15, 2025): $10,000
- Filing/Payment Date: August 15, 2025 (92 days late)
| Item | Calculation | Amount |
|---|---|---|
| Late-Filing Fee | Flat $50 | $50 |
| Penalty (1–30 days) | 5 % of $10,000 = $500 (first 30 days) | $500 |
| Additional Penalty (31–92 days) | 5 % of $10,000 = $500 (days 31–…) | $500 |
| Total Penalty | $500 + $500 = $1,000 | $1,000 |
| Interest Accrual Period | Begins July 15, 2025 (61 days post–May 15) through Aug 15: 31 days | |
| Interest Rate | Prime 7.50% + 1% = 8.50% | |
| Interest on Tax Due ($10,000) | $10,000 × 8.50% × (31/365) ≈ $72 | $72 |
| Grand Total Paid | $10,000 + $50 + $1,000 + $72 = $11,122 | $11,122 |
Key Takeaway: A $10,000 tax liability paid 92 days late jumps to $11,122—an 11.22% increase.
Step-by-Step Guide to Calculate Your Charges
- Identify Missed Deadline
- Determine number of days past May 15 (or extension date).
- Compute Flat Fee
- $50 for any late report, even if no tax is due.
- Apply Percentage Penalties
- Day 1–30: add 5 % of tax due.
- Day 31+ (through payment): add another 5 %.
- After Notice Date: consider extra 10 % if applicable.
- Calculate Interest
- Interest starts on the 61st day after due date.
- Use prime + 1% (8.50% for January–April 2025) daily:
Interest=TaxDue×Rate×(DaysofAccrual/365) Interest = Tax Due × Rate × (Days of Accrual/365).
- Complete Forms
- File Form 05-158 (or EZ), attach Form 05-170 with all amounts.
- Consider Waiver
- If reasonable cause exists, submit waiver request online.
- Document Everything
- Retain filing confirmation, payment receipts, and waiver submissions.
Conclusion
Late filings and payments can be costly: beyond your original tax, you face a $50 per-report fee, up to 20 % in penalties, and high-rate interest starting 61 days after your due date. Running the numbers promptly—or requesting a waiver if warranted—helps you manage cash flow and minimize additional charges.
Schedule a Meeting to discuss strategies for avoiding penalties or pursuing a waiver.
About Our CPA
Anshul Goyal, CPA, EA, FCA, is a licensed Certified Public Accountant in the United States and admitted to practice before the IRS as an Enrolled Agent. He represents clients in tax litigation, specializes in cross-border tax compliance for U.S. businesses and Indian nationals, and delivers tailored tax planning strategies.
Disclaimer
This blog is for general informational purposes and does not constitute tax, legal, or accounting advice. Consult a qualified professional regarding your specific situation. Anshul Goyal, CPA, EA, FCA, and Kewal Krishan & Co. disclaim liability for actions taken based on this content.
FAQs
1. When does interest begin on a late franchise-tax payment?
Interest accrues beginning 61 days after the original due date (May 15), per Tex. Tax Code § 111.060.
2. Can I get penalties or interest waived?
Yes. Submit a waiver request online under the Texas Taxpayer Bill of Rights for reasonable cause.
3. Is a late-filing fee still due if no tax is owed?
Yes. A flat $50 applies to any report filed after May 15, even if “no-tax-due”.
4. What if I pay within 30 days?
You pay 5% of the tax due as penalty for payments 1–30 days late.
5. How is the interest rate determined?
It’s the prime rate (as published by WSJ on first business day) + 1%; as of early 2025, that’s 8.50% annually.