What Texas Form 05-359 (2017) Is For
Texas Form 05-359 is used to request a Texas Certificate of Account Status from the Texas Comptroller of Public Accounts. This certificate confirms that a business entity has satisfied all franchise taxes, required tax reports, and related tax obligations under Texas law.
The certificate is required before the Texas Secretary of State will accept documents that terminate or withdraw a business entity. Without this tax clearance certificate, the entity cannot legally terminate its existence or registration in the State of Texas, even if its business operations have ceased.
Form 05-359 applies to most taxable entities, including corporations, limited liability companies, and limited liability partnerships that are taxed as corporations. Entities that hold exempt status are generally not required to obtain a certificate because they are exempt from the Texas Franchise Tax.
When You’d Use Texas Form 05-359
A business owner would use Form 05-359 when preparing to terminate a business entity or withdraw a foreign entity’s registration from Texas. This typically occurs after business operations have ceased, during mergers, or when an entity ceases to conduct business transactions in the state.
The form must be submitted only after all required franchise tax returns have been filed and all tax payment obligations have been satisfied. The Texas Comptroller’s office will not issue a certificate if any franchise taxes, penalties, or interest remain unpaid.
There is no late or amended version of Form 05-359. However, if the certificate expires before it is filed with the Texas Secretary of State, a new request must be submitted for the current tax year.
Key Rules or Details for 2017
For the 2017 tax year, taxable entities were required to comply with the Texas Tax Code provisions governing franchise tax reporting and termination. This included filing a final Texas Franchise Tax Report covering the period through the termination date.
The following rules applied in 2017:
- All franchise tax reports through the final tax year were required to be filed.
- All franchise taxes, penalties, and interest were required to be paid in full.
- A final report was required even if the entity had no total revenue during the final period.
- The certificate was valid only through December 31 of the year it was issued.
Certain entities were not eligible for electronic filing and were required to submit a physical copy of Form 05-359. This included entities under audit, combined reporting members, and entities active for less than one year.
Step-by-Step (High Level)
The termination process must follow a specific sequence to avoid delays.
- The entity must file all required Texas Franchise Tax Reports, including the final report for the short tax year.
- The entity must complete all required tax payment obligations, including any sales and use tax liabilities.
- The entity must confirm Franchise Tax Account Status with the Texas Comptroller’s office.
- The entity must submit Form 05-359 through online submission or by mailing a completed physical copy.
- The Texas Certificate of Account Status must be received from the Comptroller.
- Termination documents must be filed with the Texas Secretary of State along with the required filing fee.
Entities eligible for franchise tax Webfile generally receive the certificate immediately. Paper submissions typically require several weeks for processing.
Common Mistakes and How to Avoid Them
- Requesting the certificate before all required tax reports are filed: Confirm that every required report is filed and processed, so that a missing return does not block issuance.
- Using the wrong final reporting period: File a final Texas Franchise Tax Report through the termination date rather than relying on the most recent annual report.
- Letting the certificate expire before filing termination documents: File termination paperwork promptly after the certificate is issued to ensure its validity and prevent any issues.
- Submitting account printouts instead of the issued certificate: Use the official Certificate of Account Status issued through Form 05-359 rather than account status screenshots or summaries.
- Using the wrong submission method or missing other tax obligations: Confirm whether mail filing is required and close outstanding sales and use tax or other state tax accounts before requesting clearance.
What Happens After You File
The Texas Comptroller of Public Accounts reviews the entity's tax accounts after Form 05-359 is filed to ensure they are complying with state tax laws. The certificate is given out if all the requirements are met. When an entity meets the requirements, electronic submissions create an electronic document right away. We process submissions that arrive by mail in the order they are received, and this typically takes a few weeks.
The Texas Secretary of State must receive the certificate and the correct termination documents as soon as they are issued. After acceptance, the entity's legal status changes to terminated, and it no longer has to pay franchise taxes as of the termination date. Records should be kept forever in case you need them for tax purposes, business debts, or court cases.
FAQs
Who is required to file Texas Form 05-359?
Most taxable entities, including corporations, Texas LLCs, and limited liability partnerships subject to the Texas Franchise Tax, must file this form before termination or withdrawal.
Does an entity with exempt status need this form?
No, entities with exempt status are not subject to franchise taxes and are not required to obtain a tax clearance certificate.
Is there a filing fee for Form 05-359?
There is no filing fee for the certificate request, but termination filings with the Texas Secretary of State do require a filing fee.
Can Form 05-359 be submitted electronically?
Many entities can submit the form through the franchise tax Webfile. Certain entities are required to submit a physical copy by mail.
What happens if the certificate expires?
If the certificate expires on December 31 before termination documents are filed, a new request must be submitted for the current tax year.
Does this process affect federal tax filings?
No, Form 05-359 applies only to state tax obligations. Federal tax filings must be handled separately.
Where can I obtain the official form?
Form 05-359 is available directly from the Texas Comptroller of Public Accounts for the applicable tax year.
