Authority/Reference(s) Texas Government Code §2252.903; Texas Government Code §403.055; Texas Government Code §403.0551
Revision Date September 7, 2018

Policy

Texas statutes prohibit state agencies from issuing a payment or entering into a contract with an entity that is indebted to the state unless arrangements are made to pay off the debt. State debt includes tax delinquency, child support delinquency, student loan default, or any other indebtedness.

To check for tax delinquency, Contract staff must verify the status of the Franchise Tax Account:

  • No earlier than the seventh calendar day before the effective date of a contract with a provider
  • Annually, during the month of August as long as a contract is in effect

The Texas franchise tax is a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas. It does not apply to Governmental Entities.

DFPS staff must conduct a franchise tax account status check to verify whether or not a contractor is current on franchise tax payments to the State, unless the check is not applicable per this policy.

An entity must have an active status of its franchise tax for DFPS to conduct business with the entity. DFPS does not conduct business with entities who have a forfeited franchise tax status.

The Texas Comptroller of Public Accounts requires that franchise taxes be paid in May and settled by July 15th of each year.

The franchise tax applies to partnerships (general, limited and limited liability), corporations, LLCs (including series LLCs), business trusts, professional associations, professional corporations, business associations, joint ventures, S corporations, trusts, and other legal entities.