Texas State Tax Help: Resolve Tax Debt with Local Experts

Texas has no state individual income tax and no state income tax on corporations, making it one of the largest no-income-tax states in the country. Texas imposes a franchise tax (commonly called the margins tax) on most businesses with Texas revenues above $2.47 million per year; rates are 0.75% of taxable margin for most businesses and 0.375% for qualifying wholesalers and retailers. The state sales tax is 6.25%, with cities, counties, special districts, and transit authorities adding up to 2% for a maximum combined rate of 8.25%; Texas has strict rules about which add-on rates apply in each jurisdiction. Payroll tax obligations in Texas are limited to federal payroll taxes and Texas unemployment insurance (SUTA) at rates from 0.23% to 6.23% depending on the employer's experience rating; there is no state income tax withholding. Texas applies its sales tax to tangible personal property and many services, including repair and maintenance, data processing, information services, and amusement; businesses in the technology and professional services sectors frequently have unexpected sales tax exposure. Back tax problems for Texas residents are primarily federal IRS issues: oil field workers, real estate investors, construction contractors, and restaurant owners frequently underpay federal estimated taxes due to variable income. The Texas Comptroller audits for franchise tax and sales tax compliance; businesses in retail, manufacturing, and oil and gas services are the most common audit targets. Resolution options for federal back taxes include IRS installment agreements, Offer in Compromise, and Currently Not Collectible status; franchise tax disputes can be appealed to the State Office of Administrative Hearings.