What Form 05-163 Is For
Texas Form 05-163, the Franchise Tax No Tax Due Information Report, was the official form that certain businesses used to satisfy their annual Texas franchise tax reporting obligations when they did not owe any franchise tax. The Texas franchise tax is a privilege tax imposed on entities formed or organized in Texas or doing business in the state. Form 05-163 served as a simplified alternative to the standard franchise tax return for entities that qualified for no tax due status.
The form was available in two versions: an annual report for regular yearly filings and a final report for entities ending their existence or ceasing to do business in Texas. For the 2012 report year, entities could file this form if they met one of four specific criteria that exempted them from owing franchise tax, even though they still had a reporting obligation to maintain good standing with the state.
Important Note: As of January 1, 2024, the Texas Comptroller's office discontinued Form 05-163. Entities that previously qualified to file this form now have different reporting requirements, though the historical information remains relevant for understanding prior tax years and for entities filing amended or late reports for years when the form was in effect. Texas Comptroller
When You’d Use Form 05-163
Eligibility Criteria for the 2012 Report Year
For the 2012 report year, you would file Form 05-163 if your entity qualified under any of these four categories:
- Passive Entities: Your entity met the definition of a passive entity under Texas Tax Code Section 171.0003, meaning it primarily earned passive income such as dividends, interest, royalties, or rental income, with limited active business operations.
- Below the No Tax Due Threshold: Your entity's annualized total revenue was at or below $1,030,000 for the 2012 report year. To calculate annualized total revenue when your accounting period was not exactly 12 months, you would divide your total revenue by the number of days in your accounting period, then multiply by 365.
- Zero Texas Gross Receipts: Your entity had zero gross receipts from business done in Texas, even if you had revenue from activities outside the state.
- Qualifying Real Estate Investment Trusts: Your entity was a REIT that met the specific qualifications outlined in Texas Tax Code Section 171.0002(c)(4).
Filing Deadlines
The form was typically due on May 15 of each year, following the same deadline as regular franchise tax reports. If May 15 fell on a weekend or holiday, the due date moved to the next business day.
Late Filings
If you missed the original deadline, you could still file Form 05-163 late, but you would incur a $50 late filing penalty regardless of whether you owed any tax. The penalty applied automatically when the Comptroller's office processed any report filed after the due date. Texas Comptroller
Amended Filings
You could file an amended No Tax Due Report to correct errors in your original filing, to change your filing method, or to support a refund claim. An amended report that resulted in a tax reduction was treated as a refund request and had to meet all refund requirements and deadlines. Texas Comptroller
Key Rules or Details for the 2012 Tax Year
Electronic Filing Requirements
Beginning with reports due on or after January 1, 2016, all No Tax Due Reports had to be filed electronically. For the 2012 report year, both electronic and paper filing were accepted. Texas Comptroller
Required Companion Reports
Filing Form 05-163 alone did not satisfy your franchise tax reporting obligations. You also had to file:
- Form 05-102 (Public Information Report), or
- Form 05-167 (Ownership Information Report)
Failure to file the required information report could result in forfeiture of your entity's right to transact business in Texas. Texas Comptroller
Combined Group Reporting
If your entity was part of a combined group, each member had to file its own information report, even if the group qualified for no tax due status.
Annualization Requirements
When your accounting period was not 12 months, you had to annualize revenue using this formula:
- Divide total revenue by the number of days in the period
- Multiply by 365
No Tax Due Still Requires Filing
Even if no tax was owed, filing was still required to maintain good standing and avoid penalties.
Step-by-Step (High Level)
Step 1 — Determine Your Eligibility
Confirm qualification under one of the four categories and calculate annualized revenue if needed.
Step 2 — Gather Required Information
Collect:
- Texas taxpayer number
- Report year
- Accounting period dates
- Required information report type
Step 3 — Complete Form 05-163
Fill in required details, select your qualification category, and ensure the form is signed by an authorized individual.
Step 4 — Complete the Information Report
Fill out Form 05-102 or Form 05-167 with all required entity and ownership details. Texas Comptroller
Step 5 — File the Forms
Submit electronically or by mail, ensuring both forms are included.
Step 6 — Retain Records
Keep confirmation receipts and documentation for at least four years.
Common Mistakes and How to Avoid Them
Missing the Information Report
Always file Form 05-163 together with the required information report. Texas Comptroller
Using the Wrong Information Report
Verify your entity type to determine whether Form 05-102 or Form 05-167 applies.
Failing to Sign Forms
Unsigned forms are considered incomplete and will trigger notices.
Missing the Deadline
Late filings result in a $50 penalty. File on time or request an extension using Form 05-164. Texas Comptroller
Incorrect Revenue Calculations
Always annualize revenue correctly when the accounting period is not 12 months.
Leaving Registered Agent Information Blank
This is required and must be completed to avoid filing rejection. Texas Comptroller
What Happens After You File
Processing Timeline
Electronic filings are processed faster than paper submissions.
Data Sharing with the Secretary of State
Public Information Report data becomes part of public records, while Ownership Information Reports remain confidential. Texas Comptroller
Account Status Update
Your entity remains in good standing after successful filing.
Certificate of Account Status
You may request Form 05-771 as proof of compliance.
No Payment Required
No tax bill is issued unless eligibility is later disputed.
Notices for Errors
Deficiency notices may be issued if errors are found. Texas Comptroller
Future Filing Obligations
Filing is required annually regardless of prior status.
FAQs
If my entity owes no tax, why do I still have to file forms?
Texas franchise tax law distinguishes between tax liability and reporting obligations. Even though your entity owes no tax, you still have a reporting obligation to inform the state of your continued existence, your qualification for no tax due status, and your current officer, director, partner, or member information. Failing to file can result in forfeiture of your entity’s right to do business and potential personal liability for certain debts.
What happens if I file Form 05-163 but later realize my entity should have filed a regular franchise tax return?
You can file an amended report with a cover letter explaining the correction. Submit the correct form along with any required payment and applicable penalties. While late penalties may apply, correcting the error promptly is always recommended.
Can entities in a combined group file Form 05-163?
A combined group can file only if it qualifies as a whole. Each member must still file its own information report. If the group exceeds the revenue threshold, it must file a regular franchise tax return.
How long should I keep my records?
You should retain records for at least four years. While the Comptroller keeps records indefinitely, the audit statute of limitations generally applies within a four-year window.
What is the difference between the Public Information Report and the Ownership Information Report?
Form 05-102 applies to corporations, LLCs, and similar entities and is publicly available. Form 05-167 applies to other entity types and remains confidential. Your entity type determines which form is required.
If I dissolved my business, do I still need to file?
Yes, you must file for the period during which your entity existed. You may also need to request a Certificate of Account Status before finalizing termination with the Secretary of State.
What should entities do now that Form 05-163 is discontinued?
For reports due on or after January 1, 2024, entities that previously filed Form 05-163 may no longer need to file a franchise tax return if they meet certain criteria. However, they must still file the appropriate information report. Requirements vary, so reviewing current guidance from the Comptroller is essential. Texas Comptroller
Sources: All information in this summary comes from official publications of the Texas Comptroller of Public Accounts.
