Comptroller Contemplating Rules

When the franchise tax first went into effect the mixed beverage tax was treated as flow through funds, much like the sales tax. Later interpretations have held that the tax should be included in calculation of the businesses total revenue and thus subject to franchise tax.

Meaning the business would be paying a tax on a tax.

Franchise tax payers have submitted returns with some excluding the mixed beverage tax while others included it, paying the franchise tax on that amount. The Comptroller’s office is contemplating rules to clarify the treatment of mixed beverage taxes in the calculation of total revenue. It is hoped that this will be resolved prior to the May 15 franchise tax due date and in favor of excluding the tax from the calculation.

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