Texas franchise tax credits generated by business loss carryforwards under the prior franchise tax may need action to preserve them. To preserve the franchise tax credits generated by business loss carryforwards, taxpayers were required to report certain information to the Texas Comptroller by October 31, 2011. That deadline has been extended to November 30, 2011. Businesses that do not respond by the deadline, could lose their credits. The Texas Comptroller’s notice can be found here.
Taxable entities that preserved business loss carryforwards in 2008 may convert the carryforwards to temporary credits against their margin tax. Combined groups may use their members’ temporary credits; however, if a combined group member leaves the group, the group and the departing entity forfeit the unused credit amount generated by the departing entity. To identify combined groups claiming credits attributable to departed group members, the notice requires reporting entities of combined groups that have claimed the credit to identify the parent of the combined group and to verify the respective business loss carryforwards for each entity.