What Texas Form 05-158 Is For
Form 05-158, officially called the Texas Franchise Tax Report (Long Form), is the comprehensive reporting document that Texas taxable entities use to calculate and report their franchise tax liability to the Texas Comptroller of Public Accounts. This two-page form (05-158-A and 05-158-B) serves entities that either don't qualify for simpler reporting options or choose not to use them.
The franchise tax itself is not a tax on your business income—rather, it's a privilege tax for the right to do business in Texas. Form 05-158 helps you calculate your "taxable margin," which is essentially your revenue minus allowable deductions. For the 2022 report year, you'll report financial information from your accounting year that ended in 2021, meaning a December 31, 2021 year-end would be reported on the 2022 franchise tax report due May 15, 2022.
Any entity formed in Texas or doing business in Texas must generally file this form unless they qualify for an exemption or can file the simpler "No Tax Due" or "EZ Computation" reports. Corporations, LLCs, partnerships, banks, professional associations, trusts, and joint ventures all fall under franchise tax requirements. The Long Form applies when your entity has annualized total revenue exceeding $20 million or you don't meet the no tax due threshold of $1,230,000 for 2022.
Along with Form 05-158, you'll also need to file either a Public Information Report (Form 05-102) or Ownership Information Report (Form 05-167), depending on your entity type. Corporations, LLCs, limited partnerships, professional associations, and financial institutions file the Public Information Report; all other entity types file the Ownership Information Report.
When You’d Use Texas Form 05-158
Late Filing
The standard deadline for filing your 2022 Texas Franchise Tax Report is May 15, 2022. If May 15 falls on a weekend or legal holiday, the deadline shifts to the next business day. You should file Form 05-158 by this date if you filed neither a No Tax Due Report nor an EZ Computation Report and your entity has tax liability to report.
If you miss the May 15 deadline, you're still required to file as soon as possible. Texas assesses a $50 penalty for any franchise tax report filed after the due date—this applies even if you ultimately owe zero tax. Additionally, if you owe tax and pay it 1–30 days late, you'll face a 5 percent penalty; if payment arrives more than 30 days late, the penalty increases to 10 percent. Interest begins accruing on unpaid taxes 61 days after the due date.
Extensions
If you need more time to file, you can request an extension by submitting Form 05-164 (Extension Request) or making an online extension payment through the Comptroller's Webfile system on or before the original May 15 deadline.
To qualify for an extension, you must pay either:
- 100 percent of the tax due in the previous reporting year, or
- 90 percent of the tax that will be due with the current year's report
A federal extension does not apply—you must file separately with Texas.
Amended Returns
If you discover an error after filing your franchise tax report, you must file an amended return. These cannot be filed electronically.
Requirements for Amended Returns
- Write "AMENDED" across the top of each page
- Include a cover letter explaining the changes
- Mail to the Texas Comptroller
If a refund is involved, you must request it in writing.
Key Rules or Details for 2022
Tax Rates and Thresholds
- Retail/wholesale: 0.375%
- All other businesses: 0.75%
- No Tax Due threshold: $1,230,000
- EZ Computation eligibility: ≤ $20 million revenue
Calculating Taxable Margin
Choose the lowest result from:
- Total revenue × 70%
- Total revenue − cost of goods sold
- Total revenue − compensation
- Total revenue − $1 million
Compensation deduction cap: $400,000 per person
Accounting Period Rules
Your reporting period must match your federal tax year.
- 2022 report → covers 2021 accounting year
- Calendar year example: Jan 1–Dec 31, 2021
- Fiscal year example: July 1, 2020–June 30, 2021
Apportionment
If operating in multiple states, use a single-factor formula based on Texas receipts.
Combined Reporting
Entities in a unitary group must file a combined report using Form 05-166.
Electronic Filing Requirements
- Required if ≥ $100,000 tax paid previously
- Electronic payment required if ≥ $500,000
Step-by-Step (High Level)
Step 1: Gather Your Information
Collect:
- Federal tax return
- Texas taxpayer number
- Gross receipts records
- Deduction documentation
- Credit information
Step 2: Complete Page 1 (Form 05-158-A)
- Enter entity details
- Report total and Texas receipts
- Calculate apportionment
- Report total revenue
Step 3: Calculate Margin (Form 05-158-B)
- Compute all four margin methods
- Select lowest result
- Apply apportionment
- Apply tax rate
Step 4: Apply Credits
- Subtract eligible credits
- File Form 05-160 if applicable
Step 5: Complete Required Reports
- Form 05-102 or 05-167 depending on entity
Step 6: File and Pay
- Submit via Webfile, software, or mail
- Include payment if applicable
Common Mistakes and How to Avoid Them
Missing Required Forms
Ensure all required schedules are included:
- Form 05-160 (credits)
- Form 05-166 (affiliate schedule)
- Form 05-178 (R&D credits)
Wrong Accounting Period
Always match IRS-reported year.
Incorrect Compensation Deduction
- Apply $400,000 cap per person
- Exclude contractors and payroll taxes
Not Filing When No Tax Is Due
Filing is still required—even with zero liability.
Ignoring Combined Reporting
Affiliated groups must file together.
Poor Recordkeeping
Maintain documentation for at least four years.
What Happens After You File
Immediate Processing
- Electronic: instant confirmation
- Paper: longer processing time
Payment Processing
Payments are applied after clearing; track via Comptroller system.
Potential Notices
Common issues:
- Missing forms
- Reporting errors
- Documentation requests
Refunds
Processed after review; may take weeks to months.
Compliance Status
Filing keeps your entity in good standing.
Future Obligations
Next report due: May 15, 2023.
Audit Potential
The Comptroller has a 4-year audit window.
FAQs
If my business operates in multiple states, how do I allocate revenue to Texas?
Report total revenue first, then Texas-specific receipts. Use the ratio to determine your apportionment percentage based on sourcing rules like customer location, service location, or delivery destination.
Can I file the EZ Computation instead?
Yes, if revenue is $20 million or less. It uses a simplified 0.331% rate but limits deductions and credits.
What’s the difference between a final report and an annual report?
An annual report is your regular filing. A final report is filed when your business ends operations or withdraws from Texas and is required for legal closure.
I received a delinquent notice—what should I do?
Check for missing forms like Form 05-102, 05-167, or 05-166. Submit them promptly or contact the Comptroller for clarification.
Do I need a tax professional?
Not required, but helpful for complex businesses, multi-state operations, or credit claims.
What happens if I don’t file or pay?
Penalties escalate from notices to forfeiture of business rights, possible termination, and collection actions.
Are there exemptions from franchise tax?
Yes. Common exemptions include certain nonprofits, passive entities, and sole proprietorships. Confirm eligibility before assuming exemption.
For More Information
The Texas Comptroller provides extensive resources at:
https://comptroller.texas.gov/taxes/franchise
