What the Form Is For
The Texas Franchise Tax No Tax Due Information Report (Form 05-163) was a streamlined annual filing option that allowed certain qualifying Texas businesses to satisfy their state franchise tax reporting requirements without calculating or paying any tax. This form essentially informed the Texas Comptroller of Public Accounts that your business existed and met specific criteria that exempted it from owing franchise tax for that reporting period, while still maintaining your entity's good standing with the state.
For the 2015 report year, businesses could file this form if they fell into one of five qualifying categories: entities with annualized total revenue at or below $1,080,000 (the no tax due threshold for 2015); passive entities as defined by Texas Tax Code Section 171.0003; qualifying Real Estate Investment Trusts (REITs); new veteran-owned businesses within their initial five-year exemption period; or entities with zero Texas gross receipts. Filing this report was crucial because even though your business owed no tax, you still needed to maintain your legal standing to conduct business in Texas and avoid potential forfeiture of your right to transact business in the state.
It's important to note that for reports originally due on or after January 1, 2016, the law required all No Tax Due Reports to be filed electronically through the Comptroller's Webfile system or through approved electronic submission providers, though paper filing was allowed for 2015 reports. Additionally, the No Tax Due Report was discontinued entirely for the 2024 report year and later due to legislative changes that eliminated the filing requirement for entities below the no tax due threshold.
When You’d Use It
Regular Annual Filing
You would typically file Form 05-163 by May 15, 2015 (or the next business day if May 15 fell on a weekend or legal holiday) if your business qualified under one of the five categories mentioned above during the accounting period covered by the 2015 report. The form covered your business activity for a specific privilege period, which for most entities was either a calendar year or their fiscal year accounting period. This annual deadline applied regardless of whether your business owed any actual tax—maintaining current filing status was essential for keeping your entity's right to transact business in Texas.
Late Filing
If you missed the May 15 deadline, you could still file a late No Tax Due Report, but there were consequences. The Comptroller assessed a $50 late filing penalty on each report filed after the due date, regardless of whether any tax was owed. This penalty applied even to No Tax Due situations because Texas law required timely reporting to maintain your entity's good standing. If your account became delinquent, the Comptroller would mail a Texas Notice of Intent to Forfeit Right to Transact Business, giving you at least 45 days to bring your account current before actual forfeiture occurred. Forfeiture carried serious consequences: your entity could lose its right to sue or defend itself in Texas courts, and officers, directors, partners, members, or owners could become personally liable for certain business debts.
Amended Filing
You would file an amended No Tax Due Report to correct mathematical errors or other mistakes in your original filing, or if your circumstances changed and you discovered you actually qualified for No Tax Due status when you had previously filed a different report type. An amended report required the same information as the original filing, along with an explanation of what was being corrected. When filing an amended report, you would mark "Amended" at the top and include a cover letter explaining the changes. Like late filings, addressing errors promptly was important to maintain your entity's compliance status with the state.
Key Rules or Details for 2015
Electronic Filing Requirement
For the 2015 report year, businesses could still file paper forms, but beginning with reports originally due on or after January 1, 2016, all No Tax Due Reports had to be filed electronically through the Comptroller's Webfile system or through approved electronic submission software providers.
No Tax Due Threshold Amount
For 2015 reports, the no tax due threshold was set at $1,080,000 in annualized total revenue.
Public Information Report Requirement
Filing a No Tax Due Report did not eliminate all your filing obligations. Most entities were also required to file Form 05-102 (PIR) or Form 05-167 (OIR).
Combined Group Limitations
If your business was part of a combined group, the threshold applied to the group as a whole.
Accounting Period Consistency
Your report had to use the same accounting period as your federal tax return.
Step-by-Step (High Level)
Step 1: Determine Your Eligibility
Before filing Form 05-163, verify that your business truly qualifies for No Tax Due status.
Step 2: Gather Required Information
Collect all necessary information before starting your form.
Step 3: Complete the Form
Fill out Form 05-163 carefully and accurately.
Step 4: Sign and Date
An authorized person must sign and date the report.
Step 5: File Accompanying Information Report
Submit PIR or OIR if required.
Step 6: Submit Your Filing
Mail or file electronically through Webfile.
Step 7: Confirm Receipt and Monitor Your Account Status
Verify your filing was received and processed.
Common Mistakes and How to Avoid Them
Filing the Wrong Form Type
One of the most frequent errors businesses make is filing incorrectly.
Forgetting the Public Information Report
Many businesses forget to file PIR or OIR.
Incorrect or Missing Taxpayer Number
Using the wrong number causes delays.
Missing the Filing Deadline
Missing May 15 triggers a penalty.
Incomplete or Unsigned Forms
Incomplete forms are not accepted.
Failing to Update Changed Information
Outdated information can cause compliance issues.
Confusing Accounting Periods
Your accounting period must match federal filings.
What Happens After You File
Initial Processing
The Comptroller processes your report.
Account Status Update
Your account is updated to reflect compliance.
Information Report Processing
PIR/OIR is processed separately.
No Payment or Refund
No tax is owed, but refunds may apply.
Maintaining Good Standing
Filing keeps your entity compliant.
Next Year's Filing Obligation
You must file again annually.
Potential Audits or Inquiries
Your filing may be reviewed for accuracy.
FAQs
If my business had no activity and no revenue during the year, do I still need to file?
Yes, you still need to file even with no activity or revenue.
What's the difference between the No Tax Due Report and the E-Z Computation form?
They serve different purposes based on revenue and eligibility.
Can I file an extension for my No Tax Due Report?
Yes, you can file Form 05-164.
My business just started in December 2014. Do I need to file in 2015?
Yes, and you must annualize revenue.
I received a forfeiture notice. What should I do?
File missing reports and resolve issues immediately.
Do I need to hire a tax professional?
Not required, but helpful in complex situations.
If I'm part of a combined group, can I file separately?
