PTO Today

We received a letter from the Texas Comptroller stating we need to pay initial franchise tax. (we are a newly formed PTO).

We have only obtained our EIN, Inc. with the Secretary of State and have yet to finish our non-profit application/paperwork.

Do we have to pay franchise tax???

I am confused......Can someone shed some light for me?

I forgot to mention in the previous post that is isn't due until Oct 2009.

Once we obtain our non-profit status we will be exempt from paying franchise tax?

As you can tell some of this stuff just goes over my head.

We are getting the same information and funny thing is our PTO has been around for many years. We have no idea what it means either. Our treasuer is trying to figure it all out. They wanted us to pay ours over the phone when they contacted us. We have all our proper documents ein #, 501 3C and sales tax info. Who knows what this is? Just more headache for us to deal with!

Here's some info from the FAQ section of the Texas Comptroller regarding franchise tax. I'm afraid I don't know much except that the Franchise Tax was revamped as part of the Texas School Finance crisis and more entities fall under its requirements now.

Please keep us posted.

Are non-profit corporations subject to franchise tax? Yes, but some non-profit corporations may qualify for an exemption from the franchise tax. Texas Tax Code Sec. 171.063 recognizes that certain corporations qualifying for a federal exemption may qualify for exemption from the franchise tax. A corporation will qualify for exemption from the franchise tax if it has been granted an exemption from federal taxation under Internal Revenue Code (IRC) Section 501(c) (2), (3), (4), (5), (6), (7), (8), (10), (16), (19) or (25) and submits a copy of its Internal Revenue Service determination letter with a completed Form AP-204, Application for Exemption - Miscellaneous. See Form AP-204, for details about the required documentation to be submitted. If the corporation has not obtained a federal exemption under IRC Section 501(c) as mentioned above, it may qualify for exemption from the franchise tax under another provision of the Tax Code. See Tax Code Secs. 171.051 through 171.087 for more information about franchise tax exemptions. To apply for exemption from the Texas franchise tax based on one of the other provisions available under Texas law, submit a completed Form AP-204, identifying the section that applies to the corporation, along with all required documentation as explained in Publication 96-1045, Guidelines to Texas Tax Exemptions.