What the Form Is For
Texas Form 05-163, the Franchise Tax No Tax Due Information Report, was a specialized state tax form that allowed certain qualifying businesses to satisfy their annual franchise tax reporting obligation without owing any tax. The Texas Comptroller of Public Accounts designed this form for entities that met specific criteria showing they had little or no tax liability for the reporting period.
The franchise tax itself is a privilege tax imposed on businesses formed or organized in Texas, or conducting business within the state. While the tax applies broadly to corporations, limited liability companies, partnerships, trusts, and other business entities, Form 05-163 provided a streamlined reporting option for smaller businesses and certain special entity types that qualified for zero tax liability. The form served two key purposes: maintaining the entity's good standing with the state and providing transparency through public disclosure of basic business information.
For the 2014 report year specifically, this form was available to entities whose annualized total revenue fell at or below $1,080,000—the "no tax due threshold" at that time. The form was also available to passive entities, Real Estate Investment Trusts (REITs) meeting specific qualifications, and entities with zero Texas gross receipts. By filing Form 05-163, qualifying businesses fulfilled their franchise tax obligations without calculating complex margin deductions or paying tax.
It's important to note that Form 05-163 was discontinued beginning with the 2024 report year. The Texas Legislature passed Senate Bill 3 in July 2023, which increased the no tax due threshold and eliminated reporting requirements for certain entities. For current tax years, entities that previously would have filed Form 05-163 now have different reporting obligations.
When You’d Use Form 05-163
Annual Filing Requirement
For the 2014 report year, businesses would file Form 05-163 as their annual franchise tax report due on May 15, 2014. This annual report covered an accounting period based on the entity's federal income tax reporting period ending in 2013.
For example:
- Calendar-year business: January 1, 2013 – December 31, 2013
- Fiscal-year business: Based on their federal year-end
New Businesses
New businesses that became subject to franchise tax during 2013 would file their first annual report using Form 05-163 if they qualified. Their accounting period would begin on the date they became subject to the tax and end on their last federal accounting period ending date in that same calendar year.
Final Reports
Entities could file a final Form 05-163 if:
- They were ending their existence in Texas
- They no longer had sufficient nexus (business presence)
Late Filing
Late filing was—and remains—a significant concern:
- $50 late filing penalty applies even if no tax is owed
- Electronic filing (post-2015) failures add a 5% penalty
Amended Reports
Amended reports could be filed to:
- Correct mathematical errors
- Change reporting methods
- Address mistakes
Entities could amend to a different form if needed, subject to refund rules and timing limits.
Key Rules or Details for 2014
Qualification Categories
Entities had to meet at least one of the following:
Revenue Threshold
Annualized total revenue ≤ $1,080,000
- Requires proper annualization if period ≠ 12 months
Passive Entity Status
- 90% income from passive sources
- ≤10% from active business
REIT Qualification
- Must meet federal and Texas REIT requirements
Zero Texas Gross Receipts
- No revenue from Texas business activity
Required Accompanying Forms
Form 05-163 had to be filed with:
- Form 05-102 (Public Information Report) for most entities
- Form 05-167 (Ownership Information Report) for trusts/associations
Exception:
- Passive entities do NOT need an information report
Electronic Filing Rule
- Mandatory for reports due after Jan 1, 2016
- 2014 allowed paper filing
Combined Groups
- One No Tax Due Report filed for the group
- Each member must file its own information report
Step-by-Step (High Level)
Step 1: Determine Eligibility
- Calculate annualized total revenue
- Confirm passive entity, REIT, or zero receipts status
Step 2: Gather Required Information
- Taxpayer number
- Report year
- Accounting period dates
- Entity details
Step 3: Complete the Form
- Fill taxpayer and reporting info
- Select qualifying category
- Multiple categories allowed
Step 4: Sign the Form
- Must be signed by an authorized individual
- Unsigned forms are rejected
Step 5: Prepare Information Report
- Form 05-102 or 05-167 (if required)
Step 6: Submit the Filing
Electronic Filing
- Webfile system or approved software
Paper Filing (2014 only)
- Mail to Texas Comptroller
- Must be postmarked by May 15
Step 7: Receive Confirmation
- Accepted or correction notice issued
Common Mistakes and How to Avoid Them
Miscalculating Annualized Revenue
- Error: Not annualizing revenue properly
- Fix: Use formula or Comptroller tools
Missing Information Report
- Error: Filing only Form 05-163
- Fix: Include required Form 05-102 or 05-167
Using the Wrong Form
- Error: Filing No Tax Due when tax is owed
- Fix: Use Long Form or EZ Computation if required
Misunderstanding Texas Gross Receipts
- Error: Confusing profit with Texas revenue
- Fix: Focus only on Texas-sourced revenue
Ignoring Electronic Filing Rules
- Error: Mailing when e-file is required
- Fix: Use approved electronic systems
Incorrect First Filing Timing
- Error: Misunderstanding first report deadline
- Fix: File by May 15 following first tax year
What Happens After You File
Processing
- Electronic: processed within days
- Paper: may take weeks
Acceptance
- Account marked as filed
- Entity remains in good standing
Public Disclosure
- Information report becomes public record
Notices and Corrections
- Issued if errors or missing info
- Must respond to avoid penalties
Audit Possibility
- Lower risk, but still possible
- Must retain records for 4 years
Ongoing Filing Requirement
- Annual filing continues
- Rules may change yearly
FAQs
If my business made less than $1,080,000 but more than the current threshold, do I need to file anything?
Yes. Even though Form 05-163 was discontinued starting with the 2024 report year and the threshold increased to $2,470,000 (and later $2,650,000), entities must still satisfy filing requirements. For current years, if your annualized total revenue is at or below the threshold, you file Form 05-102 (Public Information Report) or Form 05-167 (Ownership Information Report) but no longer need to file a No Tax Due Report. For historical 2014 filings, if revenue was at or below $1,080,000, Form 05-163 was required along with the information report.
What’s the difference between annualized total revenue and Texas gross receipts?
Annualized total revenue is your total revenue from all sources, everywhere, adjusted to a 12-month equivalent if your accounting period is shorter or longer than a year. Texas gross receipts refers only to revenue from business done in Texas. An entity might have $2 million in annualized total revenue but zero Texas gross receipts if all its business activity occurs in other states. Both measures matter for franchise tax, but they serve different purposes.
Can an entity switch from Form 05-163 to the Long Form after filing to claim deductions?
Yes, through an amended report. An entity that filed Form 05-163 but later realizes it could reduce its tax liability further by filing the Long Form can submit an amended return. This must be done within the statute of limitations, typically four years from the original due date.
What happens if a business files Form 05-163 but doesn’t actually qualify?
The Comptroller will reject the filing and require the correct form. Penalties and interest may apply, including:
- $50 late filing penalty
- 5% or 10% late payment penalties
- Monthly interest accrual
Do passive entities need to file the Public Information Report with Form 05-163?
No. Passive entities are exempt from filing the Public Information Report. They only submit Form 05-163.
If a combined group has multiple members, does each member file Form 05-163?
No. The group files one report. However, each member must file its own information report (Form 05-102 or 05-167).
Where can I find instructions and help for filing historical Form 05-163?
The Texas Comptroller provides archived forms and instructions at comptroller.texas.gov. For the 2014 report year, Form 05-900 includes full guidance. You can also contact the Taxpayer Services Division at 1-800-252-1381.
