Are non-profit corporations subject to franchise tax?
Yes, but some non-profit corporations may qualify for an exemption from the franchise tax. Texas Tax Code Sec. 171.063 recognizes that certain corporations qualifying for a federal exemption may qualify for exemption from the franchise tax. A corporation will qualify for exemption from the franchise tax if it has been granted an exemption from federal taxation under Internal Revenue Code (IRC) Section 501(c) (2), (3), (4), (5), (6), (7), (8), (10), (16), (19) or (25) and submits a copy of its Internal Revenue Service determination letter with a completed Form AP-204, Application for Exemption – Miscellaneous. See Form AP-204, for details about the required documentation to be submitted. If the corporation has not obtained a federal exemption under IRC Section 501(c) as mentioned above, it may qualify for exemption from the franchise tax under another provision of the Tax Code. See Tax Code Secs. 171.051 through 171.087 for more information about franchise tax exemptions. To apply for e
