What is Texas Form 05-359 (2022) 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 confirms that all franchise taxes and required tax reports have been filed and that no outstanding tax payment obligations remain under the Texas Tax Code.
The Certificate of Account Status is required before the Texas Secretary of State will accept termination filings for most taxable entities. A business owner cannot carry out a voluntary termination or administrative dissolution in accordance with the Business Organizations Code without this tax clearance certificate.
This form is applicable to taxable entities, such as corporations, limited liability partnerships, limited liability companies, and other entities subject to corporation tax. This certificate is typically not required for the termination of nonprofit organizations with exempt status.
When You’d Use Texas Form 05-359
A business owner fills out Form 05-359 when the business is closing permanently in Texas and plans to file paperwork with the Secretary of State to end its operations formally. This commonly occurs when closing a Texas LLC, completing a merger, or withdrawing a foreign entity from the state.
The form is used only after all franchise tax obligations have been resolved. All Franchise Tax Reports, Public Information Reports, ownership information report filings, and related tax filings must be complete before the certificate can be issued. Entities that have unpaid business debts or franchise taxes are not eligible.
To formally end the entity's legal status, you must also submit Form 651 to the Texas Secretary of State, which requires the certificate. Federal tax obligations are distinct from this procedure.
Key Rules or Details for 2022
The 2022 Certificate of Account Status is only valid until December 31 of the tax year in which it was issued. A new certificate request is necessary if termination documents are submitted after the expiration date, which could result in additional franchise tax obligations for the following tax year.
Entities must submit a final Franchise Tax Report from the day after the last annual report is submitted until the termination date. Within sixty days of the conclusion of business operations, this final report must be submitted. It must include all required tax accounts, total revenue, and, if applicable, E-Z Computation eligibility.
Some entities cannot request the certificate online through the franchise tax Webfile. Mail filing of Form 05-359 is required in situations such as:
- Entities involved in combined group reporting
- Limited Liability Partnerships
- Entities with an active audit or court proceedings
- Businesses forfeited before the year 2000
The Certificate of Account Status is different from Tax Clearance Letters or a Tax Clearance Letter Request for Reinstatement, which are issued using Form 05-391 for reinstating a forfeited entity.
Step-by-Step (High Level)
Before requesting the Certificate of Account Status, the entity must confirm that all Texas Franchise Tax obligations are complete.
The high-level process includes the following steps:
- Review all Tax Accounts with the Texas Comptroller of Public Accounts to confirm compliance
- File all required tax reports, including annual and final Franchise Tax Reports
- Submit any remaining tax payment for franchise taxes, sales tax, or use tax
- Verify Public Information Report and Form 05-102 ownership information accuracy
- Request the Certificate of Account Status using form 05-359 or the online system
Once approved, the Comptroller of Public Accounts issues the certificate, which must be submitted with Form 651 to the Texas Secretary of State along with the required filing fee.
Common Mistakes and How to Avoid Them
- Requesting the Certificate of Account Status before filing the final Franchise Tax Report: File all required reports first, even when no tax is due, so that the Comptroller can issue tax clearance.
- Letting the certificate expire before filing termination documents: Coordinate the request and the Secretary of State filing timeline so the certificate remains valid through the termination submission.
- Using the wrong certificate for termination: Submit the termination-specific Certificate of Account Status rather than a general Certificate of Status or account printout.
- Providing inconsistent entity information: Match the business name, EIN, and ownership details to the entity’s formation documents and Comptroller records to prevent holds.
- Skipping a final document consistency check: Cross-check the termination filing packet against the Certificate of Formation records (Form 205, Form 304, or Form 612), so identifiers and names align.
What Happens After You File
The time it takes to process your Form 05-359 request depends on whether you sent it by mail or online. Requests made online may be processed immediately, but requests sent by mail typically take a few weeks to be reviewed.
The Texas Secretary of State must receive the Certificate of Account Status promptly after it is issued to complete the termination process. Once the entity accepts, its legal status changes to "terminated," and it can no longer conduct business, own property, or enter into new contracts in the state of Texas.
Ending something doesn't automatically end other obligations. Business owners should make sure that federal tax filings, sales and use tax accounts, employment tax issues, and record-keeping requirements are all handled separately. These steps help keep problems from happening in the future.
FAQs
Who must file Texas Form 05-359?
Most taxable entities registered in Texas, including Texas LLCs and corporations, must file Form 05-359 to obtain tax clearance before termination. Nonprofit entities with exempt status are generally excluded.
Does Texas Form 05-359 have a late or amended filing option?
There is no late or amended version of Form 05-359. If the Certificate of Account Status expires or becomes invalid, a new request must be submitted after confirming continued compliance with the terms and conditions.
Is the Certificate of Account Status the same as a Tax Clearance Letter?
No, a Certificate of Account Status is used for termination, while Tax Clearance Letters are typically associated with reinstatement requests, which are submitted using Form 05-391.
Can online security issues affect filing?
Yes, errors related to online attacks, security service interruptions, malformed data, Cloudflare Ray ID issues, or rejected SQL command submissions may require paper filing or assistance from field offices.
How does Texas termination compare to other states?
Unlike the California Secretary of State process, Texas requires tax clearance through the Comptroller of Public Accounts before processing termination filings.
