taxes

Franchise Tax – Reasons We Send Courtesy or Statutory Notices

Sometimes businesses make errors when filing the franchise tax report. We will send notices letting you know that there is a problem with the account. The information below explains what the error messages mean and how to fix them.

Original Franchise Tax Report Not Filed

If you have not filed an original franchise tax report, or your franchise tax report was not accepted, we estimate the tax liability. Paying the estimate does NOT resolve the delinquency. The entity must file the franchise tax report and the appropriate information report (Public Information Report or Ownership Information Report).

You can file your report using:

If your entity is a member of a combined group that did not file the franchise tax report, your entity is delinquent for that reason. You do not need to contact our office or file anything with us. Contact the entity that reports your company's information on the combined franchise tax report to resolve this issue. The delinquency associated with your entity's franchise tax account will be resolved automatically when the reporting entity's delinquency is resolved.

Form 05-158A, Texas Franchise Tax Report - Page 1, Not Filed, or Form 05-158B, Texas Franchise Tax Report - Page 2, Not Filed

An entity filing the long form report must file both pages 1 and 2 of this report. To resolve this issue, file the missing page.

The franchise tax report forms are available online.

Webfile is not available for Franchise Tax Report - Page 1 or Franchise Tax Report - Page 2 as a stand-alone filing.

If you use tax preparation software, be sure you have the most current version of the software from an approved vendor.

Form 05-160, Texas Franchise Tax Credits Summary Schedule, Not Filed

An entity taking a credit on Line 32 of Form 05-158B, Texas Franchise Tax Report (PDF) (long form report, page 2), must also file Form 05-160, Texas Franchise Tax Credits Summary Schedule (PDF), to support the credit being taken.

Answers to frequently asked questions about credits are available online.

To resolve this issue, file the missing Form 05-160, Texas Franchise Tax Credits Summary Schedule (PDF). See filing instructions.

Webfile is not available for the Credits Summary Schedule as a stand-alone filing.

If you use tax preparation software, be sure you have the most current version of the software from an approved vendor.

Long Form, EZ Computation Report or No Tax Due Report Filed as a Combined Report, but Affiliate Schedule Not Filed

Page 1 of Form 05-158A, Texas Franchise Tax Report (PDF) (long form report), Form 05-169, Texas Franchise Tax EZ Computation Report (PDF), or Form 06-163, Texas Franchise Tax No Tax Due Report (PDF), was filed with the circle blackened that indicates this report is a combined report. Form 05-166, Texas Franchise Tax Affiliate Schedule (PDF), must be filed as part of a combined report filing.

Answers to frequently asked questions about combined reporting are available online.

To resolve this issue, file the missing Form 05-166, Texas Franchise Tax Affiliate Schedule (PDF). See instructions. If the report is not a combined report and the circle was blackened in error, notify our office in writing (Texas Comptroller of Public Accounts, P.O. Box 149348, Austin, TX 78714-9348).

Webfile is not available for the Affiliate Schedule as a stand-alone filing.

If you use tax preparation software, be sure you have the most current version of the software from an approved vendor.

Form 05-175, Tiered Partnership Report, Not Filed

Page 1 of Form 05-158A, Texas Franchise Tax Report (PDF) (long form report), Form 05-169, Texas Franchise Tax EZ Computation Report (PDF), or Form 06-163, Texas Franchise Tax No Tax Due Report (PDF), was filed with the circle blackened that indicates total revenue was adjusted for the tiered partnership election. Form 05-175, Texas Franchise Tax Tiered Partnership Report (PDF), must be completed by all entities (upper and lower) involved in a tiered partnership election under Texas Tax Code Section 171.1015.

Answers to frequently asked questions about tiered partnerships are available online.

To resolve this issue, file the missing Form 05-175, Texas Franchise Tax Tiered Partnership Report (PDF). See instructions. If a tiered partnership was not made and the circle was blackened in error, notify our office in writing (Texas Comptroller of Public Accounts, P.O. Box 149348, Austin, TX 78714-9348).

Webfile is not available for the Tiered Partnership Report as a stand-alone filing.

If you use tax preparation software, be sure you have the most current version of the software from an approved vendor.

Form 05-175, Tiered Partnership Report, Filed Without a Tax Report

The tiered partnership report was filed without a tax report and could not be processed to the account. Answers to frequently asked questions about tiered partnerships are available online.

To resolve this issue, the entity can file the applicable report: long form or, if qualified, EZ Computation or No Tax Due. However, the no tax due thresholds, discounts and the EZ Computation do not apply to a lower or an upper tier entity if, before the attribution of any total revenue by a lower tier entity to an upper tier entity, the lower tier entity does not meet the criteria.

You can file your report using one of these methods:

Form 05-175, Invalid Data on Texas Franchise Tax Tiered Partnership Report

The tiered partnership report that was filed cannot be processed because the entity did not include the lower tier total revenue before passing revenue to the upper tier entity or because the entity reported passing revenue in an amount greater than the lower tier entity's revenue.

To resolve this issue, file a corrected Form 05-175, Texas Franchise Tax Tiered Partnership Report (PDF).

Webfile is not available for the Tiered Partnership Report as a standalone filing. If you use tax preparation software, be sure you have the most current version of the software from an approved vendor.

Form 05-102, Completed, Signed Public Information Report, Not Filed or Form 05-167, Completed, Signed Ownership Information Report, Not Filed
  • An information report was not filed;
  • The incorrect information report was filed for your entity type; or
  • The information report was filed without a signature.

Beginning Jan. 1, 2016, entities legally formed as corporations, limited liability companies (LLCs), limited partnerships, professional associations and financial institutions must file Form 05-102, Texas Franchise Tax Public Information Report (PDF), as part of their franchise tax filing. All other entity types must file Form 05-167, Texas Franchise Tax Ownership Information Report (PDF), as part of their franchise tax filing.

For reports originally due on before Dec. 31, 2015, only corporations, LLCs and financial institutions must file Form 05-102, Texas Franchise Tax Public Information Report (PDF). All other entity types must file Form 05-167, Texas Franchise Tax Ownership Information Report (PDF).

To resolve these issues, file the correct information report signed by an officer, director, partner, member or other person authorized by the entity. Electronic filing of this report satisfies the signature requirements.

You can file the report using one of these methods:

Form 05-166, Incomplete Affiliate Data on Affiliate Schedule

A complete Form 05-166, Texas Franchise Tax Affiliate Schedule (PDF), must be filed as part of a combined report filing. The reporting entity must be included on the Affiliate Schedule.

To resolve this issue, file a new Form 05-166, Texas Franchise Tax Affiliate Schedule (PDF). If you filed an extension, you will want to compare Form 05-165, Texas Franchise Tax Extension Affiliate List (PDF), that you filed with your extension request with the Affiliate Schedule that you filed with your report. The most common errors are:

  • failure to list the reporting entity on the affiliate schedule;
  • failure to report for all the entities that were shown as affiliates on Form 05-165, Texas Franchise Tax Extension Affiliate List (PDF), when an extension request was filed; and/or
  • invalid accounting period begin and end dates because the affiliate's dates are not the same as, or within the accounting period of the combined group as shown on page 1 of the franchise tax report.

Webfile is not available for the Affiliate Schedule as a stand-alone filing.

If you use tax preparation software, be sure you have the most current version of the software from an approved vendor.

Balance Due

The entity filed the franchise tax report but did not pay the entire amount due. The amount due may include tax, penalty, interest or any combination of the three. The breakdown of the amount of tax, penalty and/or interest due is listed on the delinquent notice.

To resolve this issue, pay the amount due.

Electronic payment options include:

  • Web Electronic Funds Transfer (WebEFT) via Webfile
  • Credit card (American Express, Discover, MasterCard) via Webfile
  • Approved Electronic Submission Software Providers
  • TEXNET
Missing Combined Group Common Owner

A combined group franchise tax report was filed but we did not receive your common owner information. The reporting entity of a combined group with a temporary credit for business loss carryforward preserved for itself or one of its affiliates must electronically file the common owner information by the franchise tax report due date. The common owner is the individual or entity that owns more than 50 percent (directly or indirectly) of each member of the combined group. Note that the common owner is not necessarily the same as the reporting entity. File your common owner information online to resolve this issue.

Form 05-178, Research and Development Activities Credits Schedule, Not Filed

An entity taking a research and development activities credit on Form 05-160, Texas Franchise Tax Credits Summary Schedule (PDF), must also complete Form 05-178, Texas Franchise Tax Research and Development Activities Credits Schedule (PDF), to support the credit being taken.

Answers to frequently asked questions about the research and development activities credit are available online.

To resolve this issue, file the missing Research and Development Activities Credits Schedule. See forms and instructions under the applicable report year.

Webfile is not available for the Research and Development Activities Credits Schedule as a stand-alone filing.

If you use tax preparation software, be sure you have the most current version of the software from an approved vendor.

Form 05-180, Historic Structure Credit Supplement for Credit Claimed on Report, Not Filed

An entity taking a historic structure credit on Form 05-160, Texas Franchise Tax Credits Summary Schedule (PDF), must also complete Form 05-180, Texas Franchise Tax Historic Structure Credit Supplement for Credit Claimed on Report (PDF), to support the credit being taken.

Answers to frequently asked questions about the historic structure credit are available online.

To resolve this issue, file the missing Historic Structure Credit Supplement for Credit Claimed on Report. See forms and instructions under the applicable report year.

Webfile is not available for the Historic Structure Credit Supplement for Credit Claimed on Report as a stand-alone filing.

If you use tax preparation software, be sure you have the most current version of the software from an approved vendor.

Other Issues

If your entity filed a franchise tax report and still received a delinquent notice, all the reports or schedules necessary to satisfy franchise tax requirements may not have been filed. If you filed the report or schedule we show as missing, call us at 800-252-7942 so we can resolve the issue.

If you think your entity would qualify for exemption from the franchise tax, detailed information about categories of exemption, and the forms to apply for exemption, are available online.

If the entity no longer exists or is no longer subject to the tax, the entity must formally end its existence with the Texas Secretary of State, if registered with their office. Detailed information about terminating, cancelling and withdrawing is available online.

Entities not registered with the Texas Secretary of State that are not, or are no longer, subject to the tax should notify the Comptroller's office in writing. Please provide the reason and the date the entity is no longer subject to the tax.