In the 87th Legislature, Regular Session, Senate Bill 938 reinstated the new veteran-owned business provision effective Jan. 1, 2022. Under the reinstated provision, a qualifying new veteran-owned business must be formed on or after Jan. 1, 2022, and before Jan. 1, 2026. A new veteran-owned business formed between Jan. 1, 2020 and Dec. 31, 2021 (the period during which the previous provision was expired), does not qualify.
A qualifying new veteran-owned business is not subject to franchise tax for its initial five-year period, but must file Form 05-163, Texas Franchise Tax No Tax Due Report (PDF), for each of those years. For more information, see Texas Tax Code Section Section 171.0005, Definition of New Veteran-Owned Business and Rule 3.574, Margin: New Veteran-Owned Businesses.
To be considered a new veteran-owned business, an entity must:
The Texas Comptroller of Public Accounts verifies this information. If, during the initial five-year period, a new veteran-owned business no longer meets the above criteria, the entity must notify the Comptroller’s office; and the entity becomes subject to franchise tax.
For your new veteran-owned business to qualify for the five-year franchise tax exemption, you must complete three steps:
To receive a Letter of Verification of Veteran’s Honorable Discharge that includes a unique alpha-numeric identification code, each veteran-owner must email a request, along with their Department of Defense Form 214 (DD214), to the TVC at firstname.lastname@example.org. Please black out the Social Security number on the DD214 before emailing.
Each emailed request must include:
Once all owners have received their Letter of Verification of Veteran’s Honorable Discharge from the TVC, complete Comptroller Form 05-904, Certification of New Veteran-Owned Business (PDF).
You must enter each owner’s:
Include as many pages as needed to identify 100 percent ownership in the business.
A veteran-owned business must either form with the Secretary of State (SOS) or register with the Comptroller’s office. Please use the instructions below to complete Step 3.
If you formed, or are forming, a new veteran-owned business as a corporation, limited liability company, limited partnership, limited liability partnership or professional association, you must file these documents with the SOS:
Mail your documents to the following address:Secretary of State
Contact the SOS at 512-463-5555 for filing assistance.
If you formed, or are forming, a new veteran-owned business as any other entity type that is subject to franchise tax, you must file these documents with the Comptroller’s office:
Mail your documents to the following address:Comptroller of Public Accounts
Contact the Comptroller’s office at 512-463-4402 for assistance.