What Texas Form 05-359 (2015) 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 intends to end its legal existence or terminate its registration in the State of Texas. This certificate confirms that all franchise taxes and required tax reports have been filed and that no outstanding tax payment obligations remain.
The Certificate of Account Status is required before the Texas Secretary of State will accept a certificate of termination. Without this tax clearance certificate, an entity cannot complete administrative dissolution or formally close a business in Texas under the Texas Tax Code.
When You’d Use Texas Form 05-359
A business owner uses Form 05-359 when preparing to legally terminate a taxable entity, withdraw a foreign entity from Texas, or complete a merger or conversion that ends the entity’s separate legal status. The form is required after all tax filings are up to date and before submitting termination documents to the Texas Secretary of State.
Limited liability companies, corporations taxed as corporations, limited liability partnerships, and other taxable entities subject to the Texas Franchise Tax commonly use this form. It is not typically required for entities with exempt status, such as qualifying nonprofit organizations.
Key Rules or Details for 2015
Several vital rules apply when requesting a Certificate of Account Status for the 2015 tax year. All franchise taxes, including penalties and interest, must be fully paid before the certificate can be issued. The Comptroller of Public Accounts will not grant tax clearance if any tax accounts remain delinquent.
The certificate issued for 2015 is valid only through December 31 of the year it is granted. If the certificate of termination is filed after that date, a new certificate must be requested. The certificate must specifically state that it is issued for filing with the Texas Secretary of State and cannot be replaced by a general Certificate of Status printout.
Entities with sales tax or use tax obligations must ensure that their tax accounts are closed. Outstanding sales and use tax liabilities can prevent the issuance of the certificate even if franchise taxes are paid.
Step-by-Step (High Level)
Step 1: File all required tax reports
File the annual Franchise Tax Report or No Tax Due Report, plus any required Public Information Report or Ownership Information Report. Include any supporting schedules as are necessary for the entity, such as an Affiliate Schedule or Tiered Partnership Report.
Step 2: File the final franchise tax report
Within 60 days of closing down, file a final Franchise Tax Report that covers the time between the last annual report and the day after it ended. This filing is still needed even if the total revenue is zero.
Step 3: Pay all outstanding tax obligations
Pay any outstanding interest, penalties, and franchise tax. To ensure that the account is fully settled, settle any outstanding sales tax or use tax balances.
Step 4: Request the Certificate of Account Status
To obtain the Certificate of Account Status, use Form 05-359 or the franchise tax Webfile system. If the request cannot be made online, use the appropriate Comptroller office or mail it to the designated P.O. Box.
Step 5: File the termination with the Secretary of State
After obtaining the certificate, you must file the Certificate of Termination (usually Form 651) with the Texas Secretary of State and pay the applicable filing fee. Keep copies of filings, proof of payment, and the certificate for your records.
Common Mistakes and How to Avoid Them
- Requesting the Certificate of Account Status before filing the final Franchise Tax Report: File all required franchise tax reports first, including the final report, so that the Comptroller can issue the certificate.
- Attaching the wrong document to the termination filing: Include the correct Certificate of Account Status rather than a general Certificate of Status to avoid rejection by the Texas Secretary of State.
- Submitting incomplete ownership information reports: File accurate Ownership Information Reports or Public Information Reports so tax clearance is not delayed.
- Letting the certificate expire before termination is processed: Coordinate the timing so that the certificate remains valid when the termination filing is submitted and processed.
- Skipping a final pre-filing checklist: Verify reports, ownership filings, certificate type, and signatures before submission to reduce delays and rejections.
What Happens After You File
The Texas Comptroller of Public Accounts examines the entity's tax accounts to confirm compliance following the submission of Form 05-359. The Certificate of Account Status is granted, often instantly for electronic requests, if all conditions are met.
The entity's legal status in Texas ends when the certificate of termination is submitted and approved by the Texas Secretary of State. After that, the organization is not required to submit franchise tax returns going forward.
If termination is not completed correctly, the entity remains subject to ongoing tax filings and enforcement actions. Failure to terminate can result in administrative dissolution, ongoing tax assessments, and potential court proceedings related to unpaid business debts.
FAQs
Is the Certificate of Account Status the same as a tax clearance letter?
No, a Certificate of Account Status is explicitly issued for termination filings, while Tax Clearance Letters are typically used for reinstatement or other limited purposes.
Do entities with no revenue still need Form 05-359?
Yes, even if total revenue was zero and a No Tax Due Report was filed, taxable entities must still obtain tax clearance before termination.
Can Form 05-359 be used for reinstatement?
No, reinstatement generally requires Form 05-391 and a Tax Clearance Letter Request for Reinstatement rather than Form 05-359.
Does termination eliminate prior tax liabilities?
No, before termination is authorized, all franchise taxes, sales taxes, and other state taxes must be paid.
Can termination be reversed?
Reversing termination requires formal reinstatement procedures if permitted by the regulations.
