FASB Says Texas Margin Tax
is an Income Tax

Aug. 3, 2006

At its meeting earlier this week, the Financial Accounting Standards Board (FASB) declined to set up a project to give advice on whether or not the new Texas margin franchise tax is an income tax.

The board concluded that a project was not necessary because it did not expect diversity of practice on the issue.

The board agreed with the FASB staff’s conclusion that the margin tax was an income tax under Financial Accounting Standards (FAS) 109 “because the tax is based on some measure of income.”

One board member opined that the board's view that the tax was an income tax was "not inconsistent with practically everyone we have talked to." National accounting firms have gone on record with their clients that the tax is an income tax under FAS 109.

Listen to Audio Tape of FASB Meeting (12 minutes)