What the Form Is For
Texas Form 05-164 is the official extension request document for businesses that need additional time to file their franchise tax reports. The Texas Franchise Tax applies to most business entities doing business in the state, including corporations, limited liability companies, partnerships, and other legal entities. When businesses cannot meet the standard May 15 annual filing deadline, Form 05-164 allows them to request an extension, moving their deadline to November 15—an additional six months to prepare and submit their complete franchise tax report.
The form serves as both a request mechanism and a payment vehicle. Texas requires businesses to demonstrate good faith by making a substantial payment along with their extension request. This isn't simply a paperwork exercise—the state wants to ensure that businesses making the extension request have calculated their likely tax liability and are prepared to pay most of what they owe even before filing their complete report. Businesses that paid less than $10,000 in franchise taxes during the previous state fiscal year can file this paper form, while larger taxpayers must use electronic filing methods.
When You'd Use This Form
You would use Form 05-164 primarily when filing your annual franchise tax report by the original May 15 deadline would create operational hardships or when you need additional time to gather complete financial information. Common scenarios include waiting for final accounting statements, dealing with complex business restructuring, managing multiple entity relationships, or addressing unexpected delays in financial record preparation.
The form is also required for final reports when a business is ending its nexus with Texas. Final reports are normally due within 60 days after ceasing operations in Texas, and Form 05-164 can extend that deadline by an additional 45 days.
Businesses cannot use this form for amended returns—amendments follow different procedures. The extension request applies only to the initial filing of your annual or final report. Additionally, if you made an online extension payment through the Texas Comptroller's Webfile system, you should not submit a paper Form 05-164; the electronic payment serves as your extension request.
Key Rules or Details for This Tax Year
Payment Requirements
The most critical rule governing Form 05-164 involves payment requirements. The Texas Comptroller will only grant a valid extension if you pay sufficient tax along with your request. You have two options: pay 90 percent of the tax you will ultimately owe for the current year, or pay 100 percent of what you paid on your prior year's franchise tax report. The 100 percent option provides certainty—you know exactly what you paid last year—but it comes with limitations. You cannot use this option if your business became subject to franchise tax during the previous year and this is your first annual report. Similarly, if you were previously part of a combined group but are now filing separately, the 100 percent option is unavailable.
Filing Deadlines
Timing is absolute. Your extension request must be postmarked or received on or before the original due date—typically May 15 for annual reports. If May 15 falls on a Saturday, Sunday, or legal holiday, the next business day becomes the due date. Missing this deadline by even one day means your extension is invalid, and you'll face late filing penalties.
Electronic Filing Requirements
Electronic filing requirements depend on your tax payment history. If your business paid $10,000 or more in franchise taxes during the previous state fiscal year (September 1 through August 31), you must file your extension electronically. For businesses that paid between $10,000 and $499,999, you can use Webfile to meet this requirement. For businesses that paid $500,000 or more, you must use the TEXNET system exclusively, making a payment using tax type code 13080. Some large taxpayers may even need two extensions—first extending to August 15, then requesting a second extension to November 15.
Penalties for Underpayment
If your extension payment falls short of the required 90 percent threshold, you will face penalties and interest. Penalties apply to any portion of the 90 percent not paid by the original due date, and additional penalties apply to any remaining balance not paid by the extended due date.
Step-by-Step (High Level)
Gather Required Information
Begin by gathering your business information. You'll need your Texas taxpayer identification number, legal entity name as registered with the state, and your current mailing address. Collect your prior year's franchise tax report to reference the tax amount you paid, and prepare preliminary calculations for your current year's expected tax liability.
Choose Your Payment Option
Next, determine which payment option you'll use. Review whether you qualify for the 100 percent payment option based on your filing history. If you're uncertain or if this is your first report, calculate 90 percent of your expected current year tax liability. This requires estimating your total revenue, determining your margin calculation method, and applying the appropriate franchise tax rate.
Complete the Form
Complete the form itself by filling in all required entity information accurately. Indicate whether you're requesting an annual report extension or a final report extension. Enter the report year for which you're requesting the extension—for a report originally due in May 2018, this would be report year 2018. Calculate and enter your extension payment amount based on either the 90 percent or 100 percent option.
Submit Your Request
Submit your request with payment before the deadline. If you're paying by check, make it payable to the Texas Comptroller of Public Accounts and mail everything together so it's postmarked by the due date. Mail to the address specified on the form instructions. If you're eligible to use Webfile instead of the paper form, consider that option for immediate confirmation of receipt.
Track Your Extended Deadline
Finally, mark your calendar for the extended due date—November 15 for annual reports or 45 days after the original due date for final reports. Even though you have an extension, interest begins accruing on any unpaid balance 61 days after the original due date, so filing earlier can save money.
Common Mistakes and How to Avoid Them
Misunderstanding Payment Requirements
One of the most frequent errors is misunderstanding the payment requirement. Many businesses incorrectly assume they can request an extension with minimal or no payment. Texas law requires substantial payment with your extension request—either 90 percent of your current year liability or 100 percent of your prior year payment. To avoid this mistake, perform a preliminary tax calculation before requesting your extension. Review your financial records to develop a reasonable estimate of your current year tax liability, and ensure your payment meets the threshold. When in doubt, paying more is safer than paying too little.
Missing the Filing Deadline
Another common mistake is missing the filing deadline. Businesses often confuse the extension request deadline with the extended filing deadline. Remember: you must file Form 05-164 by the original due date to receive an extension. The extension moves your report deadline; it doesn't move the deadline to request that extension. Set calendar reminders a week before the original due date, and consider filing your extension request early rather than waiting until the last day.
Incorrect Use of the 100% Option
Many first-time filers incorrectly claim the 100 percent payment option when they don't qualify. If this is your first annual report after becoming subject to Texas franchise tax, you cannot use the 100 percent of prior year option because you didn't file a prior year report. Similarly, if your business was part of a combined group last year but is filing separately this year, the 100 percent option is unavailable. Always review the eligibility criteria for payment options before making your choice.
Filing Method Errors
Entities that meet electronic filing requirements sometimes submit paper forms when they should file electronically. If your business paid $10,000 or more in franchise taxes during the previous state fiscal year, you cannot use the paper Form 05-164. Instead, use Webfile or TEXNET depending on your payment amount threshold. Check your prior year payment history before deciding which filing method to use.
Assuming Extensions Stop Interest
Some businesses assume that filing an extension eliminates interest charges. Extensions provide more time to file your report, but they don't stop interest from accruing. Interest begins accumulating 61 days after the original report due date on any unpaid tax balance. To minimize interest charges, pay as much as possible with your extension request, and file your final report as soon as you can rather than waiting until the extended deadline.
What Happens After You File
Processing and Confirmation
Once the Texas Comptroller receives your extension request, the office reviews it to verify compliance with payment requirements. If you filed electronically, you receive immediate confirmation. If you mailed a paper form, processing takes several weeks, though the postmark date controls whether your request was timely.
Extension Approval
If your extension meets all requirements—timely filing and sufficient payment—the Comptroller grants a tentative extension. This means your report deadline moves to November 15 for annual reports or 45 days after the original due date for final reports. You won't receive a formal approval letter for a valid extension; the absence of a rejection notice means your extension was accepted.
Penalties and Interest
If your extension payment proves insufficient when you file your final report, the Comptroller assesses penalties and interest retroactively. Penalties apply to the portion of the 90 percent minimum that wasn't paid by the original due date. Additional penalties apply to any balance remaining unpaid by the extended deadline. The penalty structure is straightforward: 5 percent if tax is paid 1-30 days late, and 10 percent if paid more than 30 days late. A $50 late filing penalty applies to reports filed after the due date regardless of whether any tax is owed.
Interest charges begin accruing 61 days after the original due date at a variable rate set annually based on the prime rate plus 1 percent. Even with a valid extension, interest accrues on any unpaid tax balance from that 61-day point until full payment.
Using the Extension Period
During your extension period, gather all necessary documentation, finalize your financial statements, and complete your franchise tax calculations. Use the additional time productively rather than waiting until November to start working on your report. File your complete franchise tax report and pay any remaining balance by the extended deadline to avoid additional penalties.
FAQs
Can I get an extension even if my business owes no franchise tax?
Yes, absolutely. If your business was under the no tax due threshold in the prior year and you expect to be under that threshold again, you can file a no-payment extension request. Since your prior year tax was zero, paying 100 percent of your prior year liability equals zero, which satisfies the extension payment requirement. Simply submit Form 05-164 indicating you owe no tax and no payment is required.
What happens if I file an extension but then file my actual report late—after the extended deadline?
The extension only protects you until the extended deadline. If you file after November 15 despite having a valid extension, you'll face the same late filing penalties as if you never requested an extension. A $50 late filing penalty applies to any report filed after its due date, whether that due date is the original May 15 or the extended November 15. Additionally, penalties of 5 to 10 percent apply to any unpaid tax depending on how late the payment arrives.
Our business is part of a combined group. Can we use the same Form 05-164?
Yes, but combined groups have special requirements. A combined group must file Form 05-164 and also file Form 05-165, the Extension Affiliate List, which identifies all entities in the combined group requesting the extension. Both forms must be submitted together with the required payment for the extension to be valid. The 100 percent payment option is available to combined groups as long as the group filed as a combined group in the prior year, even if the specific member entities have changed.
If I file my extension electronically through Webfile, do I also need to mail in a paper Form 05-164?
No, never do both. If you make an online extension payment through Webfile, that electronic payment serves as your extension request and you should not submit a paper Form 05-164. Submitting both creates confusion in the Comptroller's system and can cause processing delays. Choose one method—electronic or paper—but not both.
Can large businesses that must use TEXNET get two extensions instead of just one?
Yes, certain large businesses can receive two sequential extensions. If your business paid $10,000 or more in franchise taxes during the previous state fiscal year, you can request a first extension to August 15. Then, before that August 15 deadline, you can request a second extension to November 15. Make the first extension through TEXNET using tax type code 13080, pay the required amount, and then submit a second extension request (again through TEXNET or via Webfile) by August 15 to extend to November 15.
Does filing an extension increase my chances of being audited?
No, filing an extension request does not increase audit risk or flag your account for special scrutiny. Extensions are a normal part of tax administration, and thousands of businesses use them every year. The Texas Comptroller views extensions as a compliance tool that helps businesses file accurate reports. As long as you meet the payment requirements and file your complete report by the extended deadline, requesting an extension carries no negative implications.
What if we miscalculated and our extension payment was less than 90 percent of what we actually owed?
The Comptroller will assess penalties and interest on the underpaid portion. Penalties apply to the amount that should have been paid to meet the 90 percent threshold by the original due date. Additional penalties apply to any remaining balance not paid by the extended deadline. To minimize penalties if you discover the shortfall before the extended deadline, file your complete report and pay the remaining balance as soon as possible rather than waiting until November 15.
