Reed Smith In-depth

Key takeaways

  • Texas Supreme Court denies review of gross versus net franchise tax apportionment issue, leaving taxpayers with uncertainty
  • Texas Comptroller revises policy on employee benefits includible in the franchise tax compensation subtraction
  • Texas franchise taxpayers will see changes to No Tax Due Reporting for 2024
  • Texas Comptroller’s marketplace sales and use tax policy is ripe for litigation
  • Texas Comptroller proposes additional amendments to local sales and use tax sourcing rule while pending litigation drags on

Auteurs: Rich Moore

Substance of alert

We summarize some recent Texas franchise tax and sales tax updates that you may have missed.

Texas Franchise Tax: Texas Supreme Court Declines to Hear Gross v. Net Securities Apportionment Issue

On November 10, 2023, the Texas Supreme Court denied the petitions for review in Citgo Petroleum Group Corp. v. Hegar1 and Conagra Brands Inc. v. Hegar2 following full briefing on the merits. The taxpayers in these cases argued that gross proceeds, not net proceeds, from sales of commodity futures contracts and options on commodity futures contracts should be used to calculate the apportionment factor denominator. Under Tex. Tax Code § 171.106(f), gross proceeds from the sale of a loan or security “treated as” inventory of the seller for federal tax purposes are considered gross receipts.