Franchise Tax Consistency Bill Ready for Abbott’s Signature

- Clarifies Process for Calculating Radio Stations’ Tax Liability

Legislation clarifying that Radio stations are permitted to take costs of goods sold into consideration when calculating their state franchise tax liability has passed the Legislature and is headed to Governor Greg Abbott’s desk for signature.

While broadcasters have been permitted to account for cost of goods sold (COGS) in their tax calculations since lawmakers drastically revamped the franchise tax in 2006 and 2007, recent actions by state tax officials suggested that further clarification would be helpful to forestall potential misinterpretations of the law.

SB 1614 by Sen. Charles Perry, R-Lubbock, and HB 4384 by Rep. Four Price, R-Amarillo, clarify, consistent with the tax code’s applicable provisions for broadcasting and “live and prerecorded television and radio programs,” that Radio broadcasters may take COGS into consideration when calculating their franchise tax liability, just as Television broadcasters are permitted to do.

This clarification will not result in a loss of revenue to the State of Texas.

The measure garnered unanimous support in both chambers with no opposition testimony in either of the two committee hearings held during the process.

The bill takes effect upon the Governor’s approval which can be made by signature or by leaving it unsigned for 10 days.

Questions? Contact TAB’s Oscar Rodriguez or call (512) 322-9944.