Oklahoma Franchise Tax: Everything You Need to Know



The Oklahoma Franchise Tax is a state tax levied against companies doing business within the borders of Oklahoma. Companies are taxed on their total gross receipts, less certain deductions. This is called “taxable income.” In addition to the franchise tax, several other taxes apply to businesses operating in Oklahoma, including sales tax, use tax, corporate excise tax, and others.

Who must pay franchise tax?

The Oklahoma Corporation Commission says only corporations incorporated or formed in Oklahoma after July 1st, 2013, must pay the franchise tax. Foreign corporations are exempt from paying the franchise tax.

There are differences between the old and new taxes.

The new franchise tax is very similar, but there are some key differences between the old and new taxes. Here are some things you need to know:

• A business must file a form with the state to determine whether it is subject to the franchise tax.

• If a business is subject to the franchise fee, it must report gross sales of $1 million or less annually.

• There are no exemptions under the new law.

• For businesses that sell products online, the franchise tax applies to the seller of those products.

• The franchise tax is based on the total amount of net income earned by the corporation during the taxable period.

• In addition, the franchise tax is assessed on a calendar year basis.

Liability for Filing Return

If you are required to file a tax return, you must do so within three months of filing your federal income tax return. If you fail to file a state return, you could face penalties and interest charges. You may want to consult with an accountant or attorney about whether you need to file a return.

Time for Filing and Payment Information

The Oklahoma Franchise Tax is due on or before January 31st of every year. If you don’t pay it on time, there could be serious consequences. The state imposes a penalty of $100 per day plus interest. And if you’re still delinquent after 30 days, the department can suspend your franchise tax permit.

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A 10% late fee is assessed if payments are received after the deadline. The Oklahoma Franchise Tax Department doesn’t waive penalties or interest on remittances made beyond the deadline.

Steps: Franchise Tax Return Filing

Preparing and filing your franchisee income tax return involves much more paperwork than you might think. If you are a franchise owner, there are two ways to file it. Either you can do it yourself or hire someone to help you prepare and file your franchise tax return.

The good news is that both options are relatively easy. However, if you choose to do it yourself, you will need to know what you need to complete your franchise tax return. This includes information about your business and personal finances.

There are two different types of franchise tax returns. One is filed with your state agency and one is filed directly with the Internal Revenue Service (IRS). Each type requires slightly different information. For example, some states require additional documentation while others don’t.

If you decide to file your franchise tax report online, you will need to provide the following information:

• Your name, address, and Social Security number

• A list of all businesses owned by you

• Your gross receipts for each business


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How Is Franchise Tax Calculated?

The franchise tax is calculated at 25 cents per every $1000 of the corporation’s capital employed in or allocated into the business’s outpost within the state. This includes both domestic and foreign corporations. Domestic corporations must pay franchise tax regardless of how much capital they employ in or allocate to Oklahoma. A foreign corporation operating in Oklahoma pays franchise tax based on the amount of capital it employs in or allocates to Oklahoma.

What happens if you don’t file franchise tax returns?

The IRS provides information about how long it takes to file a franchise tax return. This includes the deadline to file and the length of time you have to pay. If you fail to make a timely filing, you could face penalties and interest charges.

Franchise tax returns are filed annually. They must be submitted within 45 days after the end of each calendar quarter. For example, if the end of a calendar quarter falls on April 15th, the franchise tax return must be received by the IRS by June 15th.

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If you miss the deadline, you lose the chance to claim deductions for certain expenses related to running a franchise. These include depreciation and amortization, advertising costs, and rent. You cannot deduct these costs during the next year.

You also cannot take advantage of the passive activity loss rules. This allows owners of businesses like restaurants and hotels to offset income earned from those activities against ordinary income.

Delinquency occurs when there are no payments made during the grace period. After the grace period expires, the IRS starts charging interest on unpaid amounts.

What Are the Penalties For Paying Franchise Tax Late?

The Franchise Tax Act requires every franchisor to file a franchise tax return and pay taxes owed to the state within 30 days of the close of the fiscal year. Failure to do so could lead to penalties.

Franchise Tax Return Deadline

A franchise tax return must be submitted to the Franchise Tax Board no later than the third Monday of the following April. However, there is an exception to this rule. If the franchisee files a federal income tax return on or before July 15th, the franchise tax return must be received by the Franchise Tax Board by September 15th. This applies to both domestic and foreign corporations.

Payment Deadlines

If the franchise tax return is not timely filed, the Franchise Tax Board will notify the taxpayer of the delinquency and provide instructions regarding how to make the required payments. In addition, the Franchise Tax Board may assess interest and penalties. Interest begins accruing on the date the tax return is delinquent.

Penalty Rates

Failure to pay the franchise tax by the due date could result in a penalty equal to 10% of the amount of tax unpaid. Additionally, the Franchise Tax Board can charge a penalty of up to $1,500 per month beginning on the first day of the next month.

Additional Information

For additional information about filing franchise tax returns, please contact our office. We can help you determine whether you are subject to tax and determine the proper amount of franchise tax owed.

Changing Your Filing Date

You must file Form 200F by August 31st to report your franchise tax liability for the previous calendar year. However, you may choose to file your return earlier than August 31st. If you do, you must file Form 200F no later than July 1st. This form reports information about your income and expenses for the prior calendar year.

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If you want to change your filing date, you must file Form 300A. You cannot change your filing date after filing your Form 200F. In addition, you cannot change your filing period more than once each year.



Frequently Asked Questions

What is the purpose of the franchise tax?

The Franchise Tax is imposed upon persons engaged in business activities in California. The Franchise Tax is levied at rates varying from 1% to 10%, depending upon the type of activity involved. In addition, the Franchise Tax may be assessed on any income earned in California.

The Franchise Tax is not a sales tax but a tax on the privilege of engaging in business activities in California, including the right to conduct those activities in California.

The primary purposes of the Franchise Tax are to provide revenues for state government and to discourage businesses from leaving California.

In order to encourage investment in California, the Franchise Tax is generally structured to allow investors who invest in California-based companies to deduct their investments from their taxable incomes.

Who is exempt from Oklahoma franchise tax

Oklahoma Franchise Tax Exemptions

The Oklahoma Constitution provides certain exemptions from state taxation. These exemptions apply to individuals, corporations, partnerships, trusts, estates, insurance companies, associations, educational institutions, religious organizations, fraternal benefit societies, veterans’ organizations, and nonprofit charitable organizations. In addition, some businesses are exempt from paying taxes under federal law.


An individual may claim an exemption if he/she meets any of these requirements:

• He/She is 65 years old or older;

• He/She receives no income from wages, salaries, dividends, interest, rents, royalties, annuities, pensions, social security payments, unemployment compensation, workers’ compensation, veteran’s disability payments, alimony, child support, or public assistance;

• His/Her total gross annual income does not exceed $30,000 per year;

• He/ She owns real property valued at less than $100,000;

• He/ she is disabled and receives SSI (Supplemental Security Income) benefits;

• He/she is blind or totally deaf;

• He/he is 62 years old or older and is receiving Social Security retirement benefits;

• He is a full-time student who is enrolled in a degree program leading toward his/her bachelor’s, master’s, doctoral, professional, or vocational degree;

• He/He is employed by a school district or a private school;

• He/His spouse is a full-time homemaker;

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