Texas Senate, House Measures Aim for Radio, TV Franchise Tax Consistency

- Clarifies Process for Calculating 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 been filed in the House and Senate in an effort to preserve consistency in how the tax is applied to the broadcast industry.

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 suggest 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, would 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 is not expected to result in a loss of revenue to the State of Texas.

The measures will be subject to committee hearings in both chambers this spring.

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