Regulatory and Industry News Alerts from Armanino

Texas Franchise Tax Deadline Is May 16 — Health Care Providers, Institutions Could Get Tax Savings

by Dan Jones, Naz Bhangal
March 24, 2022

The Texas franchise tax due date is May 16, 2022. Qualifying health care providers are eligible for impactful exclusions from their taxable base and might be overpaying tax in Texas.

Health care providers based in Texas and those that are doing business in Texas are required to file and pay the franchise tax. If a provider is not based in Texas, physical presence through employees and assets or sales exceeding the economic nexus threshold could trigger a franchise tax obligation.

Tax reductions

Health care providers qualify for an exclusive 100% reduction in their taxable base for patient revenues generated under any of the following circumstances:

  • Under the Medicare program
  • Under the Medicaid program
  • Pursuant to the Indigent Health Care and Treatment Act
  • Pursuant to the Children’s Health Insurance Program
  • In relation to a worker’s compensation claim
  • Under the TRICARE military health insurance system
  • Any of the above from a third-party agent or administrator
  • Capitation revenues paid by Medicare managed plans

Other providers will qualify as health care institutions and be eligible for a 50% exclusion of the qualifying revenues. Health care institutions include the following:

  • Ambulatory surgical centers
  • Assisted living facilities
  • Emergency medical service providers
  • Home and community support services
  • Hospice
  • Hospital
  • Hospital system
  • Certain intermediate care facilities
  • Birthing centers
  • Nursing homes
  • Pharmacies
  • End-stage renal disease facilities

To assess whether you have a Texas filing obligation and to determine your eligibility for these exclusions, contact our experts.

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Dan Jones - Partner, Tax - San Ramon CA | Armanino
Naz Bhangal, Tax, Armanino
Senior Manager
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