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Texas Franchise Tax Challenged

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The Texas Supreme Court heard arguments this week in a case that could have significant implications on the Texas franchise tax. Nestle USA and two Texas-based companies, Switchplace LLC and NSMBA Relators, sued the State of Texas arguing the Texas franchise tax is unconstitutional.  The franchise tax charges one-half of one percent to wholesalers, but a full one percent to …

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Texas Supreme Court Rules Franchise Tax is Constitutional

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On October 19, 2012, the Texas Supreme Court held that the Texas franchise tax does not violate the Texas Constitution.  Nestle USA and two Texas-based companies, Switchplace, LLC and NSMBA Relators, sued the State of Texas arguing the Texas franchise tax is unconstitutional.  The franchise tax charges one-half of one percent to wholesalers, but a full one percent to businesses …

Challenge to Texas Franchise Tax Rejected by Supreme Court

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A constitutional challenge to the Texas Franchise Tax was recently rejected by the Texas Supreme Court. In In Re: Allcat Claims Service, L.P. et al., No. 11-0589, 2011 WL 6091134 (Tex. 2011), a partnership argued that the Texas Franchise Tax constituted an income tax and, as such, violated the Texas Constitution. The Texas Constitution provides that the state may not collect …