What the Form Is For
The Texas Franchise Tax No Tax Due Information Report (Form 05-163) is an annual or final franchise tax document filed with the Texas Comptroller of Public Accounts when your business entity owes no franchise tax. Think of it as your official declaration to Texas that says, "We're still in business, but we don't owe any franchise tax this year." While you might not owe tax, you still need to maintain your good standing with the state and keep your business records current.
The Texas franchise tax is a privilege tax—essentially, it's what businesses pay for the right to do business in Texas or be chartered in the state. However, Texas recognizes that smaller businesses and certain types of entities shouldn't face this tax burden. For the 2018 report year, if your entity's annualized total revenue was $1,130,000 or less, you qualified to file this simplified No Tax Due Report instead of the more complex Long Form or EZ Computation reports.
Beyond the revenue threshold, several other circumstances allow you to file Form 05-163.
Qualifying Situations
- Passive entities under Texas Tax Code Section 171.0003
- Real Estate Investment Trusts (REITs) meeting Section 171.0002(c)(4) requirements
- Entities with zero Texas gross receipts
- New veteran-owned businesses pre-qualified under Section 171.0005
Form 05-163 serves a crucial legal purpose beyond tax reporting.
Why It Matters
- Keeps your entity in good standing
- Maintains your legal right to operate in Texas courts
- Protects officers and owners from personal liability
When You’d Use Form 05-163
Late Filing
The standard deadline for filing your 2018 report is May 15, 2018. If the date falls on a weekend or holiday, it moves to the next business day.
If you miss the deadline:
- A $50 penalty automatically applies
- Applies even if no tax is owed
- Delays can lead to loss of legal rights and personal liability risks
Amended Filing
You must amend your report if errors are found.
Common Reasons for Amendments
- Incorrect accounting period
- Wrong SIC or NAICS code
- Incorrect officer/director information
- Incorrect qualification category
How to Amend
- Mark “Amended” at the top
- Include a cover letter explaining corrections
Final Filing
File a final report when your business closes.
Final Report Timing
- Texas entities: date of termination, merger, or conversion
- Out-of-state entities: date business ceased in Texas
Key Rules or Details for 2018
Electronic Filing Requirement
- Mandatory for reports due after January 1, 2016
- Must use Webfile
- Paper filing only allowed with approved waiver
Revenue Threshold
- $1,130,000 annualized total revenue for 2018
- Applies to total business revenue, not just Texas
Required Companion Reports
You must also file:
- Public Information Report (Form 05-102), or
- Ownership Information Report (Form 05-167)
Who Files What
- Corporations, LLCs, LPs → Public Information Report
- Other entities → Ownership Information Report
Accounting Period Rules
- Must match federal tax accounting period
- Use prior year’s federal accounting end date
Industry Classification
- Provide SIC or NAICS code
- Must reflect primary business activity
Step-by-Step (High Level)
Step 1: Gather Required Information
- Texas taxpayer ID (11-digit)
- Webfile number
- Federal tax return
- Prior year report
- Entity and ownership details
Step 2: Access Webfile
- Log into Comptroller’s Webfile system
- Create account if first-time user
Step 3: Select Form
- Choose Form 05-163 for 2018
- Select annual or final report
Step 4: Enter Entity Details
- Legal name
- Taxpayer number
- Privilege period
- Accounting dates
Step 5: Select Qualification
Choose one:
- Revenue ≤ $1,130,000
- Passive entity
- Zero Texas receipts
- REIT
- Veteran-owned business
Step 6: Enter Industry Code
- Input SIC or NAICS code
Step 7: Enter Revenue (if applicable)
- Follow Long Form guidelines (Items 1–10)
Step 8: Review Information
- Double-check all entries
Step 9: Submit Report
- File through Webfile
- Save confirmation
Step 10: File Companion Report
- Submit Form 05-102 or 05-167
Common Mistakes and How to Avoid Them
Filing Despite Exceeding Revenue Threshold
- Miscalculating total revenue
- Forgetting non-Texas income
Filing Paper Instead of Electronically
- Leads to rejection and penalties
Missing Companion Reports
- Results in forfeiture and liability
Incorrect Accounting Dates
- Must match federal return exactly
Using Wrong Form Type
- Must meet qualification criteria
Missing Deadline
- Automatic $50 penalty
- Risk of legal and financial consequences
What Happens After You File
Confirmation
- Immediate confirmation generated
- Includes submission details
- Save and print for records
Processing
- Takes several weeks
- Comptroller verifies information
Good Standing Status
If accepted:
- Maintain legal business rights
- Avoid personal liability
- Status shows as current
Official Correspondence
- May receive Certificate of Account Status
- Required for loans, contracts, licensing
If Issues Arise
- Receive notice from Comptroller
- Must respond promptly
Public Disclosure
- Officer data sent to Secretary of State
- Appears in public database
Future Filing
- Must file annually
- Next deadline: May 15, 2019
FAQs
Do I have to file a franchise tax report if my business made no money this year?
Yes, generally you must still file unless you qualify for a specific exemption. If you had zero Texas gross receipts, you can file Form 05-163. However, if you had revenue but it was below the $1,130,000 threshold for 2018, you still file Form 05-163. Making no profit is different from having no revenue—even unprofitable businesses typically must file. The franchise tax is based on revenue and margin, not profit.
My entity was formed late in 2017. Do I still need to file a 2018 franchise tax report?
Yes, but your first report might effectively be a zero report depending on your formation date and federal accounting period. You still must file Form 05-163 to establish your account and maintain good standing.
Can I file a No Tax Due Report if I owe tax but the amount is less than $1,000?
No. If revenue exceeds $1,130,000 and you don’t qualify under another category, you must file a Long Form or EZ Computation report regardless of tax amount.
What’s the difference between filing a No Tax Due Report and requesting an extension?
A No Tax Due Report satisfies your filing obligation. An extension gives you more time to file. Extensions must be requested by May 15 and typically extend the deadline to November 15.
Do I still need to file a Public Information Report?
Yes. It is required regardless of your tax status and is necessary to maintain good standing.
Do out-of-state entities file this form?
Yes, if they have nexus in Texas and qualify for no tax due status.
What if I filed incorrectly?
File an amended report immediately. If necessary, submit the correct form and pay any tax due. Prompt correction reduces penalties.
