What the Form Is For
The Texas Franchise Tax No Tax Due Information Report (Form 05-163) allows certain qualifying businesses to fulfill their annual franchise tax reporting obligation without owing any tax. This simplified report is specifically designed for entities that meet at least one of several exemption criteria established under Texas law. The franchise tax itself is a privilege tax imposed on entities that are formed or organized in Texas or that do business in the state, but not every taxable entity owes money with their report.
For the 2019 report year, Form 05-163 serves as your official filing when your business qualifies for no tax due status. Despite not owing tax, Texas requires you to file this information report to maintain good standing with the Comptroller's office. The report captures basic identifying information about your entity and confirms which exemption criteria you meet. Importantly, even though the form is called ""No Tax Due,"" most entities still need to file an accompanying Public Information Report (Form 05-102) or Ownership Information Report (Form 05-167) to provide details about officers, directors, or owners. Texas Comptroller
The report comes in two versions: annual and final. Most businesses file the annual version each year by May 15. The final version is used when your entity is terminating, converting, merging, or permanently ceasing operations in Texas. Both versions serve the same basic purpose—documenting that your entity exists and qualifies for no tax due status—but the final report closes out your franchise tax account.
When You'd Use It (Filing Late or Amended Reports)
Filing Deadlines and Reporting Period
The standard due date for annual franchise tax reports, including the No Tax Due Report, is May 15 each year. If May 15 falls on a weekend or legal holiday, the next business day becomes the due date. For the 2019 report year, you're reporting information based on your entity's accounting period end date in 2018. The report covers financial activity that determines whether you meet the no tax due threshold or other qualifying criteria.
Late Filing and Penalties
If you miss the May 15 deadline, you should file as soon as possible to avoid additional penalties. Texas assesses a $50 penalty on each report filed after the due date, even if no tax is owed. This minimum penalty applies to all late reports, including No Tax Due Reports. If your entity had mistakenly filed a different report type (such as the EZ Computation or Long Form) when you actually qualified for no tax due status, you would file Form 05-163 to correct your franchise tax filing. Texas Comptroller
Extensions
Extensions are available but work differently for no tax due filers than for taxpayers who owe money. Since you're not paying tax, you can request an extension by submitting Form 05-164 (Texas Franchise Tax Extension Request) on or before the original May 15 due date. The extension moves your filing deadline to November 15. For No Tax Due Reports originally due in 2019, electronic filing was mandatory for most entities, with limited exceptions for those requesting special waivers. If you discover errors on a previously filed No Tax Due Report, contact the Comptroller's office to determine whether an amended filing is necessary or whether corrections can wait until your next annual filing. Texas Comptroller
Final Reports
Final reports follow different timing rules. If your entity is terminating, converting, or merging within Texas, you must file your final report and obtain a Certificate of Account Status in the same year these events occur. Out-of-state entities ending their Texas nexus must file their final report within 60 days of ceasing to have a connection with Texas. Missing these deadlines can complicate your business closure and lead to penalties.
Key Rules or Details for 2019
Qualification Criteria
To file Form 05-163 for the 2019 report year, your entity must meet at least one of five specific qualification criteria.
Revenue Threshold
First, if your annualized total revenue is $1,130,000 or less, you qualify. This threshold is the most common reason businesses file a No Tax Due Report. To calculate annualized total revenue, take your entity's total revenue for the accounting period and divide by the number of days in that period, then multiply by 365.
Passive Entities
Second, passive entities as defined in Texas Tax Code Section 171.0003 can file a No Tax Due Report regardless of their revenue. A passive entity must be a general partnership, limited partnership, or trust (not a business trust). Additionally, 90 percent or more of its federal gross income must come from specific passive sources.
Zero Texas Gross Receipts
Third, entities with zero Texas gross receipts qualify for the No Tax Due Report.
REIT Qualification
Fourth, Real Estate Investment Trusts (REITs) that meet the qualifications in Texas Tax Code Section 171.0002(c)(4) can file a No Tax Due Report.
Veteran-Owned Business Exemption
Fifth, pre-qualified new veteran-owned businesses as defined in Texas Tax Code Section 171.0005 qualify during their initial five-year exemption period.
Electronic Filing Requirement
Electronic filing was mandatory for all No Tax Due Reports originally due on or after January 1, 2016. For 2019 reports, you must file electronically through the Comptroller's Webfile system or through approved electronic submission software providers.
Step-by-Step (High Level)
Step 1: Gather Required Information
Begin by gathering your entity's basic information: your 11-digit Texas taxpayer number, legal entity name, and the report year you're filing for.
Step 2: Access Webfile System
Access the Comptroller's Webfile system through the Texas Comptroller website.
Step 3: Select Filing Option
Navigate to the franchise tax section and select the option to file a No Tax Due Report for the 2019 report year.
Step 4: Identify Qualification Criteria
Identify which qualification criteria your entity meets and check all applicable boxes.
Step 5: Complete Entity Information
Complete the entity classification section and provide your NAICS code and business details.
Step 6: Handle Combined Groups (If Applicable)
If your entity is part of a combined group, complete additional schedules such as Form 05-166.
Step 7: Review and Submit
Review all information carefully before submitting. An authorized individual must electronically sign the report.
Step 8: File Required Information Report
After submitting Form 05-163, immediately file your accompanying information report (Form 05-102 or Form 05-167).
Common Mistakes and How to Avoid Them
Missing Required Information Reports
One of the most frequent errors is assuming that filing Form 05-163 alone satisfies all franchise tax requirements.
Miscalculating Annualized Revenue
Miscalculating annualized total revenue is another common problem.
Filing the Wrong Report Type
Some businesses mistakenly file a No Tax Due Report when they don't actually qualify.
Ignoring Electronic Filing Requirements
Missing the electronic filing requirement causes unnecessary complications.
Confusing “No Tax Due” With “No Filing Requirement”
Business owners sometimes confuse ""no tax due threshold"" with ""no filing requirement.""
What Happens After You File
Confirmation and Processing
Once you successfully submit Form 05-163 through Webfile, you'll receive an electronic confirmation with a confirmation number.
Incomplete Filings
If you filed only Form 05-163 but your entity requires additional reports, the Comptroller will notify you.
Account Status Updates
Your entity's franchise tax account status will be updated once all required reports are processed.
Notices and Penalties
If you filed late or incorrectly, the Comptroller will send notifications.
Future Filing Requirements
Your next franchise tax report will be due May 15 of the following year.
Risk of Forfeiture
Entities that fall behind may receive a Notice of Intent to Forfeit Right to Transact Business.
FAQs
My LLC made less than $1 million in 2018—do I really need to file anything?
Yes. Even though your annualized total revenue is below the $1,130,000 threshold and you owe no franchise tax, you must file Form 05-163 and Form 05-102 (Public Information Report) by May 15, 2019.
Can I file a paper form instead of using the online system?
For 2019 reports, electronic filing is mandatory unless you receive a waiver.
We're a partnership that only receives rental income and investment dividends—what should we file?
You may qualify as a passive entity under Texas Tax Code Section 171.0003.
What if we filed the EZ Computation form but later realized we qualified for No Tax Due?
Contact the Comptroller's office to determine how to correct your filing.
Our out-of-state corporation stopped doing business in Texas in November 2018—when is our final report due?
Your final report is due within 60 days after you ceased doing business in Texas.
We're a new LLC formed in December 2018—do we need to file a 2019 report by May 15, 2019?
Yes, you must file an initial franchise tax report.
If we're below the threshold this year but might exceed it next year, what happens?
Each report year stands independently.
