What Form 05-163 Is For
Form 05-163 was the official Texas Franchise Tax No Tax Due Information Report used by qualifying entities to satisfy their annual franchise tax reporting requirements when no tax was owed. This form served as a simplified alternative to the more complex EZ Computation or Long Form reports that entities owing tax had to file.
The form allowed eligible businesses to declare their status and explain why they qualified for no-tax-due treatment. Rather than calculating complex tax figures, businesses simply indicated which exemption category applied to them and provided basic identifying information. For the 2014 report year, this form was accompanied by Form 05-102, the Public Information Report (PIR), which disclosed officer, director, and ownership information to maintain corporate transparency.
The form came in two versions: an annual report for routine yearly filings and a final report for businesses closing operations or leaving Texas. Both served the same fundamental purpose—documenting that the entity met specific criteria exempting it from owing franchise tax while maintaining its good standing with the state.
Important Note
As of January 1, 2024, Form 05-163 has been discontinued. Entities with annualized total revenue at or below the no tax due threshold ($2.47 million for 2024 and later) are no longer required to file a No Tax Due Report, though they must still file a Public Information Report or Ownership Information Report.
When You’d Use Form 05-163
Late and Amended Filings
For the 2014 report year, businesses filed Form 05-163 annually by May 15 following the end of their accounting period. This standard due date applied to most Texas entities reporting franchise tax. If your business's accounting period ended December 31, 2013, your 2014 report would have been due May 15, 2014.
Late filings triggered automatic penalties. The state assessed a $50 late filing penalty on any report submitted after the May 15 deadline, regardless of whether tax was owed. This penalty applied even to No Tax Due Reports, emphasizing Texas's commitment to timely compliance documentation.
Extensions were available for businesses needing additional time. By filing an extension request and making any required extension payment by May 15, entities could extend their filing deadline to August 15.
Amended reports corrected errors or omissions on previously filed No Tax Due Reports. These required a cover letter explaining the correction and should have been marked "Amended" at the top.
Final reports were filed when businesses permanently closed, ceased operations in Texas, or no longer had sufficient nexus with the state. These reports were due within 60 days of the terminating event.
Key Rules or Details for 2014
Eligibility Categories
For the 2014 report year, five specific categories of entities qualified to file Form 05-163.
Annualized Total Revenue Below the Threshold
The most common qualification was having annualized total revenue of $1,080,000 or less. This required adjusting revenue to reflect a full 12-month period.
Passive Entity Status
Partnerships and trusts (except business trusts) qualified if 90% or more of income came from passive sources such as dividends, interest, or capital gains.
Real Estate Investment Trust (REIT) Status
Entities qualifying as REITs under Texas Tax Code could file the No Tax Due Report.
Zero Texas Gross Receipts
Entities with no Texas gross receipts during the entire accounting period qualified regardless of out-of-state revenue.
Electronic Filing Requirement
For 2014, paper filing was still allowed, though later years required electronic filing.
Public Information Report Requirement
Corporations and LLCs filing Form 05-163 also had to file Form 05-102. Other entities filed Form 05-167.
Step-by-Step (High Level)
1. Determine Qualification
Verify eligibility under one of the five criteria. Carefully calculate revenue or confirm passive status.
2. Gather Required Information
Collect:
- Taxpayer identification number
- Report year
- Accounting period dates
- Legal business name and address
- Revenue figures
3. Complete the Form
Fill in identifying details and select all applicable qualification statements.
4. Prepare the Public Information Report
Complete Form 05-102 or Form 05-167 depending on entity type.
5. Sign and Date
Authorized individuals must sign both forms, certifying accuracy.
6. Submit by Deadline
Submit via mail or Webfile by May 15 (or August 15 with extension).
7. Verify Processing
Check status using the Comptroller’s Taxable Entity Search tool.
Common Mistakes and How to Avoid Them
Misunderstanding the Revenue Threshold
Businesses often confuse gross revenue with net income or fail to annualize properly.
Forgetting the Public Information Report
Failing to submit Form 05-102 or 05-167 can lead to forfeiture of business rights.
Selecting the Wrong Qualification
Incorrect classification (e.g., passive income misunderstandings) can trigger audits.
Missing the Deadline
Late filing results in a $50 penalty even if no tax is owed.
Using Outdated Forms
Always use the correct form for the specific report year.
Insufficient Documentation
Maintain records supporting eligibility for at least four years.
What Happens After You File
Processing and Account Update
The Comptroller processes the report and updates your status to “good standing.”
Public Information Report Processing
Your PIR is forwarded to the Secretary of State for public record inclusion.
Good Standing Maintenance
Maintains legal ability to operate, enter contracts, and secure financing.
Notice of Any Issues
You’ll receive notices if corrections are needed.
Next Year’s Filing Obligation
Filing once does not remove future filing requirements.
Potential for Audit or Review
The Comptroller may audit within a four-year window.
Forfeiture Consequences for Non-Filing
Failure to file can lead to loss of business rights and personal liability risks.
FAQs
If my business had less than $1,080,000 in revenue for 2014, do I need to file anything at all?
Yes, you must file Form 05-163 and the appropriate information report. Even if no tax is owed, filing is required to maintain compliance and good standing.
What’s the difference between a final report and an annual report?
An annual report covers ongoing operations. A final report is filed when closing or leaving Texas and is due within 60 days of that event.
Can I file Form 05-163 if my business is a sole proprietorship?
No. Sole proprietorships are not subject to franchise tax and do not file this form.
I filed Form 05-163 but later realized my revenue exceeded the threshold. What should I do?
File an amended report immediately using the correct tax form and include payment for any tax owed.
Do passive entities have to file a Public Information Report?
No, passive entities filing Form 05-163 were not required to submit Form 05-102 or 05-167 for 2014.
How long does processing take?
Electronic filings typically process in 2–3 weeks, while paper filings may take 4–8 weeks.
What if I overpaid tax due to incorrect filing?
You can file an amended No Tax Due Report and request a refund with supporting documentation.
Note
This guide applies specifically to the 2014 version of Form 05-163. Tax rules and requirements change over time, so always verify current guidance with the Texas Comptroller.
