What the Form Is For
Form 05-163, the Texas Franchise Tax No Tax Due Information Report, was the form used by qualifying Texas businesses to notify the Texas Comptroller of Public Accounts that they owed no franchise tax for a particular reporting period. The Texas franchise tax is a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas. For the 2016 report year, this form allowed eligible entities to meet their state tax obligations without calculating or paying franchise tax.
Four distinct categories of entities qualified to file Form 05-163 in 2016.
Eligibility Categories
- Entities whose annualized total revenue was at or below the no tax due threshold of $1,110,000
- Passive entities as defined in Texas Tax Code Section 171.0003
- Real Estate Investment Trusts meeting Texas Tax Code Section 171.0002(c)(4) requirements
- Entities with zero Texas gross receipts
The form served as both a tax return and an official declaration that the business met one of these exemption criteria.
Required Companion Forms
Along with Form 05-163, filers were required to submit:
- Form 05-102 (Public Information Report)
- Form 05-167 (Ownership Information Report)
When You’d Use It (Late/Amended Filing)
Standard Filing Deadline
- Due date: May 15 annually
- If weekend/holiday → next business day
Late Filing Consequences
- 5% penalty (1–30 days late)
- 10% penalty (over 30 days late)
Extension Options
- Form 05-164 must be filed by May 15
- Extension deadline: August 15
- EFT filers may extend to November 15
Amended Filings
Amended reports were required for:
- Mathematical errors
- Refund claims
- Method changes
- Incorrect eligibility
All amended reports had to be filed on paper with an explanation letter.
Key Rules to Know
Revenue Threshold
- $1,110,000 annualized total revenue
Annualization Formula
Annualized Revenue=(Total RevenueDays in Period)×365\text{Annualized Revenue} = \left(\frac{\text{Total Revenue}}{\text{Days in Period}}\right) \times 365Annualized Revenue=(Days in PeriodTotal Revenue)×365
Electronic Filing Requirement
- Mandatory starting January 1, 2016
- Filed via Webfile or approved providers
- Paper filing required waiver
Combined Group Rules
- Group must meet threshold collectively
- Individual members cannot file separately
- All members must submit information reports
Information Report Requirement
- Cannot be waived
- Required even if no tax is due
- Failure may result in forfeiture of business rights
Step-by-Step (High Level)
Determine Eligibility
- Calculate annualized revenue
- Confirm qualifying category
Gather Required Information
- Texas taxpayer number
- Report year and due date
- Entity details and classification
File Electronically
- Access Webfile system
- Enter required data
- Confirm eligibility selection
Submit Information Report
- Form 05-102 or 05-167 depending on entity type
- Include ownership/officer details
Maintain Records
- Save confirmation numbers
- Monitor account status via Comptroller tool
Common Mistakes and How to Avoid Them
Miscalculating Revenue
- Not annualizing short periods correctly
- Always use full formula and exact day count
Missing Information Report
- Filing 05-163 without 05-102 or 05-167
- Treat both as one required submission
Misclassifying Entity Type
- Incorrect passive entity or REIT status
- Verify using Texas Tax Code definitions
Missing Deadlines
- Assuming no tax means no urgency
- Always track May 15 deadline
Using Wrong Form
- Filing 05-163 when small tax is due
- Use proper forms if revenue exceeds threshold
What Happens After You File
Processing Timeline
- Typically several weeks
- Status updated in Taxable Entity Search
Good Standing Status
- Required for loans, licenses, partnerships
Possible Notices
- Missing info
- Eligibility issues
- Calculation discrepancies
Future Filing Planning
- Eligibility must be reassessed annually
- Revenue thresholds may change
Public Record Impact
- Officer/director info becomes public
- Updates made during next reporting cycle
Important Note
Form 05-163 was discontinued beginning with the 2024 report year.
FAQs
If my business had revenue for only part of the year, how do I know if I qualify for Form 05-163?
You must annualize your revenue to compare against the $1,110,000 threshold. Take your actual total revenue for the reporting period, divide it by the number of days in that period, then multiply by 365. For example, if you operated for 200 days and earned $500,000, your annualized revenue would be $912,500, which is below the threshold and qualifies you for Form 05-163. If you operated for 90 days and earned $500,000, your annualized revenue would be $2,027,778, which exceeds the threshold and requires you to file a regular franchise tax return. Always use the precise number of days.
I filed Form 05-163 electronically, but do I still need to file a Public Information Report?
Yes. Filing Form 05-163 alone does not satisfy your franchise tax reporting obligations. You must also file Form 05-102 or Form 05-167 depending on your entity type. Failure to file the required information report can result in forfeiture of your entity's right to transact business.
What’s the difference between “no tax due” and calculating a small amount of tax?
“No tax due” applies when you qualify under revenue threshold or entity type. If your revenue exceeds the threshold but your calculated tax is under $1,000, you must still file a regular return showing the calculation.
Can I file a paper Form 05-163 if I don’t have computer access?
Yes, but it requires a waiver. Filing paper means requesting exemption from electronic filing requirements. The Comptroller encourages electronic filing for accuracy and faster processing.
Our business operates in multiple states. Do we still need to file?
If your entity has nexus in Texas, you must file. Eligibility is based on total revenue, not just Texas revenue.
If we filed Form 05-163 last year, do we automatically qualify this year?
No. Eligibility must be determined each year based on current revenue and qualifications.
What happens if I file Form 05-163 but don’t qualify?
You’ll receive a notice and must file an amended return using the correct form. This may include paying tax, penalties, and interest.
Sources: All information in this guide comes from the Texas Comptroller of Public Accounts.
