What Texas Form 05-359 Is For
Texas Form 05-359 is used to request a Certificate of Account Status from the Texas Comptroller of Public Accounts when a taxable entity plans to end its legal existence or registration in the State of Texas. This certificate attests to the entity's fulfillment of all franchise taxes and associated tax obligations mandated by the Texas Tax Code.
Before the Secretary of State will accept a certificate of termination, certificate of withdrawal, or other comparable dissolution documents, the Certificate of Account Status must be filed. Before completing a business dissolution, the majority of taxable entities, including corporations, limited liability companies, and certain partnerships, must obtain tax clearance through this process.
When You’d Use Texas Form 05-359
A business owner would use Form 05-359 when winding up operations and formally ending a business’s legal existence in Texas. This applies to both domestic Texas LLC entities and foreign limited liability companies registered to do business in the state.
Typical situations include dissolving an LLC, completing a merger, converting to a non-taxable entity, or withdrawing a foreign entity from the state of Texas. The form must be filed after all required franchise tax reports are submitted, but before filing Form 651 or other termination documents with the Secretary of State.
There is no amended version of Form 05-359. If errors exist in a tax return, Public Information Report, EZ Computation Report, Long Form Report, or No Tax Due Report, those filings must be corrected first. The Texas Comptroller of Public Accounts will not issue a tax clearance certificate if tax liability remains unresolved.
Key Rules or Details for 2010
Several rules govern the use of Form 05-359 in the state of Texas. A Certificate of Account Status cannot be issued if franchise taxes, penalties, or interest remain unpaid. All required tax payment obligations must be resolved before submitting the request.
The certificate issued for tax clearance purposes is valid only through December 31 of the year it is granted. If termination documents are not filed with the Secretary of State by that date, a new certificate must be requested.
Texas tax law also requires a final franchise tax report covering the period from the day after the last annual report ended to within sixty days of ceasing business operations. This rule applies regardless of total revenue, gross receipts, or whether the entity qualifies as a passive entity or a real estate investment trust.
Step-by-Step (High Level)
Step 1: Confirm taxes are satisfied and reports are filed
Verify that all state, federal, and franchise tax obligations are met. Submit the final franchise tax return for the necessary accounting period after filing all the required franchise tax reports, including any No Tax Due Report, EZ Computation Report, or Long Form Report.
Step 2: Resolve any remaining balances
With the Texas Comptroller of Public Accounts, settle any unpaid tax debt, fines, or interest. For future reference, keep account updates and proof of payment on file.
Step 3: Request the Certificate of Account Status
Use Form 05-359 or an approved online process to ask for the Certificate of Account Status. Ensure the request contains the correct information and status for the entity.
Step 4: Receive and save the certificate
Acquire the Certificate of Account Status (PDF or mailed copy) and keep copies safe in internal records or authorized cloud storage, along with supporting tax filings.
Step 5: File the termination with the Secretary of State
Pay the necessary filing fee and submit the certificate of termination (such as Form 651) to the Secretary of State. When permitted and authorized, preserve the filing confirmation and associated documents using workflow tools or authorized electronic signatures.
Common Mistakes and How to Avoid Them
- Submitting termination documents without the correct Certificate of Account Status: Obtain the official Certificate of Account Status that the Secretary of State requires and confirm it is the proper document for dissolution.
- Requesting tax clearance before filing the final franchise tax return: File the final report and satisfy payment requirements first, then order the certificate after the Comptroller confirms the account is up to date.
- Miscalculating the final reporting period under the sixty-day rule: Set the final period to match the cessation date requirements and verify that the start and end dates align with the 60-day rule.
- Relying on account screenshots or informal clearance letters: Use the formal Certificate of Account Status rather than account screens or informal summaries that do not meet statutory requirements.
- Using outdated or mismatched certificates that trigger rejection: Confirm the certificate is current and matches the entity’s legal name and identification details before submitting dissolution paperwork.
What Happens After You File
After you submit Form 05-359, the Texas Comptroller of Public Accounts verifies the entity's account to ensure it is in compliance. After you submit Form 05-359, the Texas Comptroller of Public Accounts verifies the entity's account to ensure it complies with the rules. This means ensuring that all requirements of the Texas Tax Code for franchise taxes, reports, and other paperwork are met. This means ensuring that all requirements of the Texas Tax Code for franchise taxes, reports, and other paperwork are met.
When the Comptroller approves the Certificate of Account Status, it proves that the taxes have been paid. After that, you need to send the Secretary of State the certificate, any paperwork for termination, and any government fees that are due.
Upon termination, the entity's legal existence comes to an end. The company may still owe money from its old businesses, but it cannot conduct business, own property, or enter into new deals anymore.
FAQs
Who must file Texas Form 05-359?
Form 05-359 must be filed by the majority of taxable entities registered or operating in Texas in order to receive tax clearance prior to termination. Specific nonprofit organizations are generally excluded from this requirement under Texas law.
Is Form 05-359 required for a Texas LLC?
Yes, a Texas LLC must obtain a Certificate of Account Status before filing a certificate of termination or completing a business dissolution with the Secretary of State.
What happens if the certificate expires?
To finish the dissolution process, a new request must be submitted for the following year if the certificate expires on December 31 before the termination documents are filed.
Does filing Form 05-359 eliminate federal tax obligations?
Only state-level franchise taxes are covered by No. Form 05-359. IRS Forms 1065 and 1120 are examples of required federal tax filings that must be completed independently.
Can a forfeited entity request tax clearance?
An entity with forfeited existence may need to complete reinstatement steps before it can qualify for a Certificate of Account Status. Additional filings or an application for reinstatement may be required.
Is there an online security risk when filing electronically?
Using official state agency websites and approved security service solutions can help protect you from online attacks, malicious data submissions, and technical issues such as SQL command errors or Cloudflare Ray ID notices.
