Can a travel agent exclude from total revenue the funds collected from a customer for items such as an airline ticket?
Total revenue for franchise tax purposes is calculated by reference to specific income line numbers from federal income tax return forms. Therefore, a travel agent’s total revenue for franchise tax purposes is determined by how they report income on their federal income tax return, as long as the method is appropriate under federal income tax law. For example, if a travel agent files IRC Form 1120 and reports as income the full amount received from their customers on Line 1c, then the entire amount is included in total revenue. In this situation the amount received from the customer for the airline ticket cannot be excluded from total revenue. If the travel agent files IRC Form 1120 and only reports on Line 1c their commission, then only their commission is included in total revenue for franchise tax reporting purposes. See STAR Document 200704932L.
