What the Form Is For
Texas Form 05-163, the Franchise Tax No Tax Due Information Report, was a simplified filing option for businesses that qualified to report no franchise tax liability to the Texas Comptroller of Public Accounts. The franchise tax itself is a privilege tax imposed on entities formed in Texas or doing business in the state. Form 05-163 allowed qualifying entities to meet their annual reporting obligations without completing the more complex standard franchise tax calculations.
For the 2017 report year, five categories of entities could use this streamlined form.
Eligible Entity Categories
Passive Entities
As defined in Texas Tax Code Section 171.0003—generally entities earning primarily passive income from investments rather than active business operations.
Low-Revenue Entities
Entities with total annualized revenue at or below the no tax due threshold of $1,110,000 for 2017.
Zero Texas Gross Receipts
Entities with zero Texas gross receipts despite having revenue elsewhere.
Real Estate Investment Trusts (REITs)
Meeting specific qualifications under Texas Tax Code Section 171.0002(c)(4).
Veteran-Owned Businesses
Pre-qualified new veteran-owned businesses as defined under Texas Tax Code Section 171.0005.
The form served as both a compliance document and an informational report. While these entities owed no franchise tax, Texas law still required them to file annually to maintain good standing.
Additional Filing Requirement
Entities still needed to submit a separate:
- Public Information Report (Form 05-102), or
- Ownership Information Report (Form 05-167)
Important Update
Beginning with the 2024 report year, Form 05-163 was discontinued entirely. Entities below the threshold no longer file a franchise tax report, though information report requirements remain.
When You’d Use It
Filing Deadline
The annual Form 05-163 was due on May 15 each year for the previous calendar year.
- If May 15 fell on a weekend/holiday → deadline moved to next business day
Electronic Filing Requirement
Starting January 1, 2016:
- Filing must be done through Webfile
- Required credentials:
- 11-digit Texas taxpayer number
- 6-digit Webfile number
Paper filing required an approved waiver.
Late Filing Consequences
Penalty
- $50 late filing penalty (even if no tax is due)
Legal Consequences
Failure to file could result in:
- Loss of right to transact business
- Loss of ability to sue/defend in Texas courts
- Personal liability exposure for owners and officers
Amended Filings
Entities could amend reports to:
- Correct errors
- Switch to:
- Form 05-158 (Long Form)
- Form 05-169 (EZ Computation)
Additional Requirement
- Cover letter explaining the amendment
Extensions
- Filed using Form 05-164
- Must be submitted by May 15
- No estimated tax payment required
Key Rules or Details for 2017
Revenue Threshold
- No Tax Due threshold: $1,110,000
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
Revenue Definition
Total revenue includes:
- All income reported for federal tax purposes
- Before deductions (COGS, compensation, etc.)
Important Distinction
Scenario 1: Below Threshold
- File Form 05-163
Scenario 2: Above Threshold but Tax < $1,000
- File Form 05-158 or 05-169
- No tax owed, but form required
Scenario 3: Tax Due
- File appropriate tax report with payment
Combined Group Rules
- All members included in combined reporting
- Group revenue determines eligibility
- Each member still files an information report
Special Entity Rules
Passive Entities
- Must meet strict statutory definition
REITs and Veteran-Owned Businesses
- Require additional certification
Filing Method
- Electronic filing required unless waiver granted
Step-by-Step (High Level)
Step 1: Determine Eligibility
- Calculate annualized revenue
- Confirm qualification category
Step 2: Access Webfile System
- Log in using taxpayer number + Webfile number
- Create account if needed
Step 3: Enter Entity Information
- Legal name
- Taxpayer number
- Accounting period dates
- Business classification codes
Step 4: Report Revenue
- Enter total revenue
- System auto-annualizes if needed
Step 5: Review and Submit
- Verify all entries
- Electronically sign
- Submit report
Step 6: File Required Information Report
Form 05-102 (Public Information Report)
For:
- Corporations
- LLCs
- Limited partnerships
Form 05-167 (Ownership Information Report)
For:
- Trusts
- General partnerships
Step 7: Save Confirmation
- Store confirmation number
- Keep records for compliance
Common Mistakes and How to Avoid Them
Incorrect Annualization
- Fix: Always apply full-year calculation even for short periods
Wrong Form Selection
- Fix: Use correct form if above threshold—even if tax is $0
Missing Information Report
- Fix: Always file BOTH required reports
Combined Group Errors
- Fix: Confirm reporting structure before filing
Misclassifying Passive Entity Status
- Fix: Verify strict legal definition
Paper Filing Without Approval
- Fix: Use Webfile unless waiver is granted
Missing Deadlines
- Fix: Set reminders before May 15
What Happens After You File
Immediate Confirmation
- Webfile generates confirmation number
Processing Timeline
- Account updated within weeks
Public Record Updates
Public Information Report
- Sent to Secretary of State
- Becomes publicly available
Ownership Information Report
- Remains confidential
Maintaining Good Standing
- Must file all required reports
- Must respond to notices
If Issues Are Found
Common notices include:
- Missing reports
- Calculation errors
- Qualification questions
Business Termination Process
Entities may also need:
- Final report
- Form 05-359 (Certificate of Account Status)
FAQs
What if I have revenue outside Texas but none in Texas?
Answer
Yes, you can still file Form 05-163. If your business has zero Texas gross receipts but earns revenue elsewhere, you qualify under the zero Texas receipts category. You must still report total revenue and confirm eligibility through the appropriate designation on the form.
Does filing this form keep my business active?
Answer
Not by itself. Filing Form 05-163 satisfies franchise tax requirements, but you must also comply with Secretary of State obligations, including maintaining registration and filing required reports.
What if my revenue slightly exceeds the threshold?
Answer
You cannot use Form 05-163. Even exceeding the threshold by a small amount disqualifies you. Instead, you must file Form 05-169 or 05-158, even if your calculated tax is minimal.
What if I filed incorrectly?
Answer
You must file an amended return. This usually involves contacting the Comptroller and submitting the correct form. Additional tax, interest, or penalties may apply depending on the correction.
Can a single-member LLC file this form?
Answer
Yes, if it meets eligibility requirements. Entity type does not determine qualification—revenue and activity do.
Why did I receive a forfeiture notice?
Answer
Most likely due to a missing information report. Filing Form 05-163 alone is not enough—you must also submit the required ownership or public information report.
How long should I keep records?
Answer
At least four years. This aligns with the Comptroller’s audit window. Keeping digital confirmations permanently is recommended.
