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Important Texas Tax Updates

Employers Cannot View Unemployment Insurance Tax Rates Until February 2021

2020 brought a long list of concerns for Texas employers; one our firm hears frequently is whether an employer’s unemployment insurance tax rate will increase dramatically due to increased claims.  The Texas Workforce Commission (“TWC”) acknowledged this concern earlier this month, stating it is “explor[ing] options to keep the 2021 tax rates as low as possible for Texas employers as Texas and the entire nation continue to deal with the economic disruptions of the COVID-19 pandemic.”  The TWC further raised the Congressional relief legislation as a possible ameliorating factor for keeping tax rates low.

Typically, tax rates are released in December—before the new year.  Employers typically pay the State of Texas a percentage of the first $9,000 in employee wages as an unemployment tax.  The minimum and maximum tax rates are set annually.  In 2020, the minimum rate was 0.31% and the maximum rate was 6.31%.  Only one element of an employer’s rate is based on the employer’s actual experience, while other elements are based on the health of the unemployment fund and repayment of bonds issued to fund the unemployment payments. 

In February 2021, the TWC will mail notices to employers; employers will also be able to view their 2021 tax rate using the TWC Unemployment Tax Services system at that time.  This should allow employers to update their programs, discuss with agents, and submit their first 2021 tax report and payment by April 2021.  Employers should discuss strategy with their tax professionals for January and February to avoid a shortfall.

The press release can be found here.

Texas Comptroller Will Cease Mailing Annual Franchise Tax Notices to Certain Filers

Effective 2021, franchise tax filers with an email address on file with the Texas Comptroller’s office will receive an email due date reminder, in lieu of the mailed annual filing notice, to file or seek an extension for the May 17, 2021 due date.  Companies should review the email address on file now and calendar the deadline to avoid missing this deadline due to an email sent to spam or an unmonitored email account.  Electronic filing is highly encouraged for faster account updates and is mandatory for no-tax due returns.

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