The Comptroller highlights franchise tax issues facing the transportation industry in its September 2010 Tax Policy News. In addition to explaining other franchise tax issues, the Comptroller notes the following agency rules and policies: (1) transportation companies are not entitled to use the cost of goods sold deduction, (2) transportation companies are not permitted to exclude subcontract payments to independent contractors from revenue, (3) transportation companies are not permitted to include subcontract payments to independent contractors in the calculation of the compensation deduction, and (4) federal tax law does not permit transportation companies to report federal tax on the basis of netting out subcontract payments. The ultimate result of these policies is that transportation companies are required to pay franchise tax on payments they receive that flow-through to independent contractors. The Tax Policy News also opines that using the E-Z Computation may be the most advantageous reporting method for transportation companies that qualify (by having $10 million or less in total revenue). Click here to review the September Tax Policy News.