Texas Form 05-169: Franchise Tax EZ Computation Report (2022)

What the Form Is For

Form 05-169, the Texas Franchise Tax EZ Computation Report, is a simplified method for calculating and reporting franchise tax for eligible Texas businesses. The Texas franchise tax is a privilege tax imposed on each taxable entity formed, organized, or doing business in Texas. The EZ Computation provides a streamlined alternative to the standard Long Form franchise tax report by using a straightforward formula: total revenue multiplied by an apportionment factor, then multiplied by a flat tax rate. This method eliminates the complexity of calculating margin deductions such as cost of goods sold or compensation expenses, making it ideal for smaller businesses that meet the revenue threshold requirements.

For the 2022 report year, entities with annualized total revenue of twenty million dollars or less can elect to file using the EZ Computation method. The tax rate for entities choosing this method is 0.331 percent. This form is suitable for both individual entities and combined groups, provided they meet the eligibility requirements. The EZ Computation report must be accompanied by either Form 05-102 (Public Information Report) for corporations, limited liability companies, professional associations, limited partnerships, and financial institutions, or Form 05-167 (Ownership Information Report) for associations, trusts, and other taxable entities.

When You’d Use Form 05-169

Filing Eligibility and Timing

You would file Form 05-169 for your 2022 annual franchise tax report if your entity's annualized total revenue is twenty million dollars or less and you prefer a simplified calculation method over the Long Form. Annual reports are typically due on May 15 of the year following the accounting period. The accounting period covered by the report is generally the entity's last accounting period ending date for federal income tax purposes in the year before the report is originally due.

Late Filing Penalties

If you file your report late, you will face penalties. A fifty-dollar late filing penalty is assessed on each franchise tax report filed after the due date, regardless of whether any tax is due. Additionally:

• 1 to 30 days late → 5% penalty
• More than 30 days late → 10% penalty
• Interest begins accruing after 61 days

Amended Returns

You can file an amended Form 05-169 to:

• Correct mathematical or reporting errors
• Support a refund claim
• Change reporting method

If you originally used the EZ Computation, you may amend to the Long Form if it reduces your tax liability. An amended report that reduces tax is treated as a refund request and must meet refund requirements.

Key Rules or Details for 2022

Revenue Threshold Requirements

The core eligibility rule is that your entity's annualized total revenue must be twenty million dollars or less.

If your accounting period is not exactly twelve months, you must annualize revenue:

• Divide total revenue by number of days in the accounting period
• Multiply by 365

Tax Rate and Limitations

• Flat tax rate: 0.331%
• No deductions allowed:
  • Cost of goods sold
  • Compensation
  • Any credits

No Tax Due Threshold

• Threshold: $1,230,000 annualized revenue
• If below threshold → generally no tax due
• If tax calculated is under $1,000 → must file, but no payment required

Required Reporting Components

You must report:

• Gross receipts or sales
• Dividends
• Interest
• Rents and royalties
• Gains or losses
• Other income

Apportionment Factor

Calculate by:

• Texas gross receipts ÷ total gross receipts everywhere

This determines how much of your revenue is taxable in Texas.

Combined Groups

Combined groups must include:

• Form 05-166 (Affiliate Schedule)
• Form 05-177 (Common Owner Information Report)

Step-by-Step (High Level)

Step 1: Gather Financial Data

Collect all revenue sources:

• Gross receipts
• Dividends
• Interest
• Rents
• Royalties
• Capital gains/losses

Step 2: Calculate Total Revenue

Add all revenue sources and subtract allowable exclusions.

Step 3: Determine Apportionment Factor

Divide Texas gross receipts by total gross receipts everywhere.

Step 4: Compute Taxable Revenue

Multiply:

• Total revenue × apportionment factor

Step 5: Apply Tax Rate

Multiply result by 0.00331 (0.331%).

Step 6: Annualize If Needed

If not a 12-month period:

• Divide tax by days in period
• Multiply by 365

Step 7: Compare Thresholds

Check:

• If revenue exceeds $1,230,000
• If tax is below $1,000

Step 8: Complete and File

Include:

• Taxpayer information
• Signature and date
• Required companion form:
  • Public Information Report OR
  • Ownership Information Report

Submit via:

• Webfile (recommended)
• Mail

Common Mistakes and How to Avoid Them

Incorrect Revenue Annualization

Even a one-day difference from 12 months requires annualization. Always calculate based on exact days.

Claiming Disallowed Deductions

EZ Computation does NOT allow:

• Cost of goods sold
• Compensation
• Credits

Use the Long Form if deductions matter.

Miscalculating Apportionment

Ensure:

• Same time period
• Same revenue categories

Missing Required Forms

You must include:

• Public Information Report OR
• Ownership Information Report

Using the Wrong Form

• Revenue over $20M → must use Long Form
• Revenue under $1,230,000 → may not need this form

What Happens After You File

Processing and Confirmation

• Webfile → instant confirmation
• Paper → processed in order received

Review by Comptroller

They check:

• Math accuracy
• Completeness
• Consistency with prior filings

Payment Handling

• $1,000+ tax → payment processed
• Under $1,000 → recorded as filed, no payment required

Notices and Corrections

You may receive notices for:

• Missing information
• Errors
• Additional tax assessments

You typically have 30 days to respond.

Account Status and Compliance

Maintaining a current account is required for:

• Business termination
• Mergers or conversions
• Certificate of Account Status (Form 05-359)

FAQs

Can I use the EZ Computation if I operate in multiple states?

Yes. The apportionment factor ensures you only pay tax on Texas-based revenue while still using the simplified method.

What if I filed the wrong report?

You can file an amended Form 05-169 with an explanation. Include payment if additional tax is due.

How do I determine my accounting period?

Typically, it aligns with your federal tax year ending in 2021 for the 2022 report.

Can I file by mail?

Yes, but Webfile is faster and includes built-in error checks. Mail submissions must be postmarked by the due date.

Can I request an extension?

Yes. You must:

• Pay 100% of prior year tax OR
• Pay 90% of current estimated tax

Deadline remains May 15.

What if I overpay?

File an amended return to request a refund. Include documentation and submit promptly.

Do I need to attach financial statements?

No. However, you must keep records for at least four years in case of audit.

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