What the Form Is For
The Texas Franchise Tax Report (Form 05-158) is the "Long Form" used by businesses to calculate and report their Texas franchise tax liability to the Texas Comptroller of Public Accounts. The Texas franchise tax is a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas. This two-page report (05-158-A and 05-158-B) is designed for entities that don't qualify to file the simpler No Tax Due Report or choose not to use the EZ Computation method.
For the 2021 report year, Form 05-158 applies to any taxable entity that had annualized total revenue exceeding the no tax due threshold of $1,180,000 and either doesn't qualify for or chooses not to file using the EZ Computation. The form calculates tax based on the entity's margin—essentially its taxable income after certain deductions—multiplied by the applicable tax rate. Retail and wholesale businesses pay 0.375%, while other businesses pay 0.75%.
The Long Form allows businesses to compute their margin using either the cost of goods sold deduction (limited to 30% of total revenue) or the compensation deduction (capped at $390,000 per person for 2021), whichever produces the lower tax burden. Entities can also claim various tax credits on this form, including research and development credits and historic structure rehabilitation credits.
When You’d Use Form 05-158
Late Filing
Annual franchise tax reports are due May 15 each year. If May 15 falls on a Saturday, Sunday, or legal holiday, the next business day becomes the due date. You would file Form 05-158 late if you missed this deadline but still need to satisfy your filing obligation.
- A $50 penalty is assessed on each late report
- 1–30 days late: additional 5% penalty
- Over 30 days late: 10% penalty
- Interest begins 61 days after the due date
Amended Filing
You may file an amended Form 05-158 to correct errors in your original filing.
You can amend to:
- Correct mathematical or reporting errors
- Support a refund claim
- Change your margin calculation method
- Switch deduction methods (COGS vs. compensation)
Even if you originally filed a No Tax Due Report or EZ Computation, you can amend to the Long Form if it reduces liability.
Filing Extensions
Entities can request an extension:
- Must be submitted by May 15
- Extends deadline to November 15
- Requires:
- 90% of current tax due, or
- 100% of prior year tax
Key Rules or Details for 2021
Entity Coverage
Form 05-158 applies to:
- Corporations
- LLCs
- Partnerships
- Professional associations
- Business trusts
- Other Texas-operating entities
(Some exceptions apply, such as passive entities and qualifying veteran-owned businesses.)
No Tax Due Threshold
- Revenue ≤ $1,180,000 → eligible for No Tax Due Report
- Tax < $1,000 → no payment required (but filing is still mandatory)
Accounting Period
The report covers your accounting year ending in 2020 for the 2021 filing.
- Must match your federal tax reporting period
Electronic Filing Requirement
- Electronic filing is encouraged
- Required if prior-year franchise tax paid ≥ $10,000
Information Reports
You must also file:
- Form 05-102 (Public Information Report) — for corporations, LLCs, LPs, etc.
- Form 05-167 (Ownership Information Report) — for other entity types
Combined Groups
Entities under common ownership may file as a combined group.
- Requires Form 05-166 (Affiliate Schedule)
Step-by-Step (High Level)
Step 1 – Determine Your Accounting Period
Identify your accounting year end date used for federal income tax purposes.
Step 2 – Calculate Total Revenue
Include:
- Sales
- Receipts
- Rental income
- Other revenue
Annualize if not a full 12-month period.
Step 3 – Subtract Statutory Exclusions
Remove allowable exclusions such as:
- Dividends
- Interest
- Bad debts
Step 4 – Calculate Margin
Choose one:
- Cost of goods sold (max 30% of revenue)
- Compensation (max $390,000 per person)
Use whichever results in lower tax.
Step 5 – Apply Apportionment
Multiply margin by Texas apportionment factor.
- Typically 100% for in-state businesses
Step 6 – Calculate Tax and Apply Credits
- Apply tax rate:
- 0.375% (retail/wholesale)
- 0.75% (others)
- Subtract credits using Form 05-160
Step 7 – Complete Information Reports and Submit
- File required information report
- Submit by May 15 with payment
Common Mistakes and How to Avoid Them
Missing Information Reports
Always include:
- Form 05-102 or
- Form 05-167
Incorrect Accounting Period
Ensure it matches your federal return.
Filing Only One Page
Form 05-158 includes:
- Page 1 (05-158-A)
- Page 2 (05-158-B)
Both are required.
Wrong Deduction Calculation
- Compensation capped at $390,000 per person
- COGS limited to 30% of revenue
Forgetting Credit Schedules
Include:
- Form 05-160
- Form 05-178 (R&D credits)
- Form 05-180 (historic credits)
Combined Group Errors
- Include Form 05-166
- Ensure all affiliates are listed correctly
What Happens After You File
Once submitted:
- Electronic filers receive immediate confirmation
- Paper filings take several weeks
Review Process
The Comptroller checks for:
- Accuracy
- Completeness
- Missing forms
Missing items trigger notices such as:
- Form 05-211 (Intent to Forfeit Business Rights)
Account Status
- Updated once filing + payment complete
- Can be checked online
Audits
- May occur within 4 years
- Requires full documentation
Refunds
- Processed after review
- Amended returns receive extra scrutiny
Penalties for Noncompliance
Failure to file/pay may result in:
- Increasing penalties
- Loss of business rights
- Revocation by the state
FAQs
Can I file Form 05-158 if my revenue is under the threshold?
If your annualized total revenue for 2021 is $1,180,000 or less, you may file a No Tax Due Report instead. However, you can voluntarily file Form 05-158 if you prefer the Long Form, though there's typically no advantage to doing so unless you want to claim specific credits or deductions.
What if my calculated tax is less than $1,000?
You must still file Form 05-158 showing your calculations, but you don't owe any tax. Texas law provides that entities owing less than $1,000 in franchise tax pay zero tax, even though they must file the report documenting this calculation.
Do I need to send my federal tax return with Form 05-158?
No. You don't need to attach your federal return or any federal forms. However, you should use consistent figures and accounting methods between your federal and Texas returns, as discrepancies may trigger questions during audit.
Can I change from EZ Computation to the Long Form?
Yes. If you previously filed using Form 05-169 (EZ Computation) but want to use the cost of goods sold or compensation deduction to reduce your tax, you can file an amended return on Form 05-158. This allows you to claim deductions not available on the EZ form.
What’s the difference between the Public Information Report and Ownership Information Report?
Your entity type determines which you file. Corporations, LLCs, limited partnerships, professional associations, and financial institutions file Form 05-102 (Public Information Report), which becomes public record. Trusts, associations, and other entity types file Form 05-167 (Ownership Information Report), which remains confidential under Texas law.
How long should I keep my franchise tax records?
Keep all records supporting your Form 05-158 for at least four years from the report due date. The Comptroller can audit returns within this period, and you'll need documentation to substantiate your revenue, deductions, credits, and calculations.
What if my business closed during the year?
If your entity ceased doing business in Texas during the reporting period, you must file a final report within 60 days of cessation. Use the Final Report version of Form 05-158 (Form 05-158-F) and mark it "FINAL." You'll also need to request a Certificate of Account Status (Form 05-359) to properly close your account with the Texas Secretary of State.
