Welcome back to another for another edition of Texas Tax Roundup! We got some franchise tax apportionment, some sales and use tax in the oil and gas industry, and some mulling over the age-old question: Is a franchise tax an occupation tax? Let’s dive in!
Distinction from Occupation Tax
Swift Transp. Co. of Az., LLC v. Hegar, No. 13-21-00010-CV (Tex. App.—Corpus Christi-Edinburg Nov. 10, 2022)—The Thirteenth Court of Appeals held that the franchise tax wasn’t an occupation tax. Thus, Tex. Transp. Code § 20.001 (Certain Carries Exempt from Gross Receipts Tax), which exempts certain motor carriers from any occupation tax measured by gross receipts, didn’t apply to franchise tax. The court of appeals observed that Texas franchise taxes and occupations tax dated back to at least 1880, that both types of taxes were in existence when Section 20.001 was enacted, and that various statutes implied a distinction between these types of taxes. The court of appeals also distinguished as dicta (and thus nonbinding) insinuations in the case law that the franchise tax was an occupation tax or that that a franchise tax and an occupation was basically the same.