Dallas, TX (Law Firm Newswire) January 12, 2012 – The Texas Supreme Court’s recent ruling that the state’s franchise tax does constitute a personal income tax leaves many small businesses saddled with costly compliance measures.
An insurance adjuster brought the case before the high court after the legislature changed the tax code in 2006 to widen the reach of the franchise tax. The tax code change was a result of school funding lawsuits that made it necessary to revolutionize how schools were funded in the Lone Star State.
“The franchise tax is a burden on small businesses and many changed how they drew up their business plan to try and avoid being considered under the tax,” said Dallas business lawyer Ty Gomez. “Now that the court has ruled that all businesses must pay, many partnerships may need to adjust their partnership accordingly.”
Tax reform advocates see the court’s decision as a positive for the state because it opens the door for the state legislature to address the tax code and find a more equitable way to fund the state’s school system.
Texas requires a popular vote to enact a personal income tax. Lawmakers are expected to revise the tax code during the 2013 legislative session after an appropriate amount of research.
“Changing the tax codes can have a huge impact on businesses and small businesses are often the ones hit disproportionately with high compliance costs,” Gomez said. “Small firms rarely have a full-time tax team and new regulations can slow down business. I hope the legislature keeps small businesses in mind as they reform the laws so that they do no damage to the struggling economy.”
Gomez Law Group is a Dallas employment lawyer and Dallas business lawyer. To learn more about Dallas business lawyer, Dallas employment lawyer, Dallas business attorney, or Dallas employment attorney Ty Gomez, visit http://www.gomezlawyers.com.
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