taxes

New Veteran-Owned Businesses and Texas Franchise Tax

New veteran-owned businesses are not subject to franchise tax for an initial five-year period (Senate Bill 1049, 84th Legislature).

To be considered a new veteran-owned business, an entity must:

  • be an entity formed or organized in Texas on or after Jan. 1, 2016, and before Jan. 1, 2020;
  • be wholly owned by a natural person (or persons), each of whom was honorably discharged from a branch of the United States armed services; and
  • provide a letter from the Texas Veterans Commission (TVC) verifying the honorable discharge of each owner.

The Comptroller’s office will verify this information. We must be notified if the ownership of the new veteran-owned business changes at any point during the initial five-year period. If during the initial five-year period a new veteran-owned business no longer meets the above criteria, it will become subject to the franchise tax.

Verification Process for a New Veteran-Owned Business

Follow these steps for Comptroller verification that your business qualifies as a new veteran-owned business.

Step 1 – Request an Honorable Discharge Letter

To receive a Letter of Verification of Veteran’s Honorable Discharge (honorable discharge letter), veterans must fax a written request, along with their Department of Defense Form 214, to the TVC at 512-463-8741.

The written request must include the following information:

  • Date of the request;
  • Veteran’s:
    • first name, middle initial, last name;
    • mailing address;
    • city, state, ZIP code;
    • telephone number;
  • This statement: “In accordance with the verification provision of Senate Bill 1049 I am hereby requesting verification of my status as a Veteran of the United States Military.”
  • Veteran’s signature.
Step 2 – Complete Comptroller Form 05-904

Once all owners have received their honorable discharge letter from the TVC, complete Form 05-904, Certification of New Veteran-Owned Business (PDF), by including each owner’s:

  • name;
  • unique identification number from the honorable discharge letter;
  • percentage of ownership in the business; and
  • signature.

Use as many pages as necessary to identify 100 percent ownership in the business.

Step 3 – Submit Required Formation/Registration and Verification Documents

A veteran-owned business that is forming as a corporation, limited liability company, limited partnership, limited liability partnership or professional association must complete the appropriate Secretary of State (SOS) formation documents and mail them along with the verification documents to the SOS. All other entities must mail registration and verification documents to the Comptroller’s office. Follow the instructions below.

ENTITIES FORMING WITH THE SECRETARY OF STATE

A veteran-owned business forming with the SOS must mail the following documents to the SOS:

Secretary of State
P.O. Box 13697
Austin, TX 78711-3697

Contact the SOS at 512-463-5555 for filing assistance.

ENTITIES REGISTERING WITH THE COMPTROLLER’S OFFICE

Entities registering with the Comptroller’s office must submit all of the following documents by mail to the Comptroller’s office:

Comptroller of Public Accounts
P.O. Box 149348
Austin, TX 78714-9348

Contact the Comptroller’s office at 512-463-4402 for assistance.

ENTITIES THAT HAVE FORMED WITH THE SECRETARY OF STATE SINCE JAN. 1, 2016

If your entity has formed with the SOS on or after Jan. 1, 2016, but has not submitted the required verification documents to the SOS, mail the following completed verification documents to the SOS:

Secretary of State
Attn. Legal
P.O. Box 13697
Austin, TX 78711-3697

ENTITIES THAT HAVE REGISTERED WITH THE COMPTROLLER’S OFFICE SINCE JAN. 1, 2016

If your entity registered with the Comptroller’s office on or after Jan. 1, 2016, but has not submitted the required verification documents to the Comptroller, mail the following completed verification documents to the Comptroller’s office:

Comptroller of Public Accounts
P.O. Box 149348
Austin, TX 78714-9348

NOTE: Your business will be notified by mail if, after submitting the required documentation, the Comptroller cannot verify your business’ status as a new veteran-owned business.