What the Form Is For
The Texas Franchise Tax No Tax Due Information Report (Form 05-163) was a specialized filing that allowed certain qualifying businesses to report to the Texas Comptroller of Public Accounts that they owed no franchise tax for the reporting period. The Texas franchise tax is a privilege tax imposed on entities formed or organized in Texas or doing business in the state. For the 2015 report year, Form 05-163 served as a simplified alternative to the standard franchise tax returns for entities that met specific eligibility criteria.
The form essentially notified the state that while your business existed and had reporting obligations, your circumstances meant you didn't owe any tax. Think of it as checking in with the state to confirm your business status without having to complete the more complex calculations required on regular franchise tax returns. The form was significantly shorter and simpler than the Long Form or EZ Computation reports, requiring only basic entity identification information and confirmation of why no tax was due.
For 2015 reports, the no tax due threshold was set at $1,080,000 in annualized total revenue. Entities meeting this threshold or other qualifying criteria could use this streamlined reporting method while still maintaining compliance with Texas tax law.
When You’d Use It
Eligibility Categories
For the 2015 report year, you would file Form 05-163 if your entity fell into one of four categories:
- Passive entity as defined in Texas Tax Code Section 171.0003
- Annualized total revenue of $1,080,000 or less
- Zero Texas gross receipts
- Qualified Real Estate Investment Trust (REIT)
Late Filings
The standard annual franchise tax report was due May 15, 2015. If this date fell on a weekend or holiday, the deadline extended to the next business day.
- $50 late filing penalty applied even if no tax was due
- Interest applied only if tax was owed (starting 61 days after the due date)
Amended Filings
You could file an amended Form 05-163 to:
- Correct errors
- Update information
- Support refund claims
Paper filing was still allowed for 2015, though electronic filing became mandatory starting in 2016.
Key Rules or Details for 2015
Required Companion Reports
All entities filing Form 05-163 had to also file:
- Form 05-102 (Public Information Report), or
- Form 05-167 (Ownership Information Report)
Annual vs. Final Reports
- Annual report: For ongoing entities
- Final report: For entities ceasing operations
Final reports may require:
- Form 05-359 (Certificate of Account Status request)
Annualized Revenue Calculation
If your accounting period was not 12 months:
- Divide total revenue by number of days
- Multiply by 365
Combined Group Considerations
Entities in combined groups:
- May not file separately
- Must consider group-level revenue thresholds
Step-by-Step (High Level)
1. Gather Basic Information
- Taxpayer number
- Report year (2015)
- Legal entity name
- Accounting period dates
2. Determine Eligibility Category
Select one applicable category:
- Passive entity
- Revenue below threshold
- Zero Texas receipts
- REIT
3. Complete and Sign the Form
An authorized individual must:
- Sign
- Date
- Certify accuracy
4. Prepare Companion Report
File either:
- Form 05-102, or
- Form 05-167
5. Submit to the Comptroller
Options for 2015:
- Mail paper forms
- File electronically
Deadline: May 15, 2015
Common Mistakes and How to Avoid Them
Filing the Wrong Form
Some businesses incorrectly filed Form 05-163 when:
- Revenue exceeded $1,080,000
- They should have filed Long Form or EZ Computation
Missing Companion Reports
Failing to include:
- Public Information Report, or
- Ownership Information Report
This results in incomplete filing.
Incorrect Revenue Calculation
Common issue:
- Not annualizing partial-year revenue
Combined Group Errors
Mistake:
- Filing individually when part of a combined group
Missing the Deadline
Even if no tax is due:
- Filing is still required
- $50 penalty applies
What Happens After You File
Processing and Status Update
- Comptroller processes filing
- Updates entity account status
Good Standing Status
If complete:
- Entity remains in good standing
- Eligible for business transactions
Deficiency Notices
You may receive notices for:
- Missing reports
- Incorrect information
- Eligibility issues
Public Verification
Account status becomes:
- Publicly accessible
- Verifiable by third parties
Future Filing Requirement
Each year requires:
- Re-evaluation of eligibility
- New filing by May 15
FAQs
Can I file Form 05-163 electronically or do I need to mail a paper form?
For the 2015 report year, both electronic and paper filing were available. You could file electronically through the Comptroller's Webfile system or approved third-party software providers, or you could mail a paper form. However, starting in 2016, electronic filing became mandatory, with limited exceptions granted upon request.
If my business had revenue below $1,080,000 and also qualified as a passive entity, which box should I check?
You should check only one box—the most accurate classification. If your entity meets the technical definition of a passive entity, that is typically the best option. However, selecting the revenue threshold box is acceptable if your revenue qualifies and you’re unsure about passive status.
What happens if I forget to file Form 05-163 even though my entity owed no tax?
You are still required to file. Missing the deadline results in a $50 penalty and a delinquent status, which may impact your ability to obtain certificates of account status. Filing late restores compliance, and penalty waivers may be requested for valid reasons.
Do I need to attach my federal tax return or financial statements?
No. The form does not require attachments. However, you should retain supporting documents in case of audit or verification requests by the Comptroller.
Can I amend Form 05-163 after filing?
Yes. You can submit an amended report to correct errors or update information. The amended form should be clearly marked and include an explanation of changes. It must also be signed like the original filing.
If I file Form 05-163 for 2015, does that mean I won’t owe taxes in future years?
No. Each tax year is evaluated independently. Changes in revenue, structure, or operations may affect your eligibility, so you must reassess and file appropriately each year.
What’s the difference between an annual and final report?
An annual report fulfills your regular filing requirement. A final report is used when your entity is ceasing operations or terminating. Final filings may require additional documentation, including a Certificate of Account Status, before the entity can be formally dissolved.
