What the Form Is For
Form 05-163, the Texas Franchise Tax No Tax Due Information Report, was a simplified filing option for certain Texas businesses that didn't owe franchise tax but still needed to satisfy their annual reporting obligations with the Texas Comptroller of Public Accounts. For the 2020 report year, this form served as proof that an entity met one of five qualifying conditions that exempted it from owing franchise tax, while keeping the business in good standing with the state.
The Texas franchise tax is a privilege tax charged to entities for the right to do business in Texas. Even when no tax is owed, most entities were still required to file annual reports. Form 05-163 provided a streamlined alternative to the more complex Long Form or EZ Computation reports for qualifying businesses. This form was discontinued effective for 2024 reports and later, but it remained a critical filing requirement for businesses with 2020 through 2023 reporting obligations. Texas Comptroller
Entities that qualified to file Form 05-163 for the 2020 report year included those with annualized total revenue at or below $1,180,000 (the no tax due threshold for reports due in 2020-2021), qualifying passive entities as defined in Texas Tax Code Section 171.0003, qualifying Real Estate Investment Trusts (REITs), new veteran-owned businesses formed after January 1, 2016, and entities with zero Texas gross receipts during the reporting period. Texas Comptroller
When You’d Use It (Late/Amended Filings)
Late Filings
Under normal circumstances, businesses filed Form 05-163 as their annual franchise tax report due on May 15, 2020 (though this deadline was automatically extended to July 15, 2020, due to COVID-19 relief measures).
Late filings occurred when a business missed the original deadline. Even though no tax was owed, filing Form 05-163 late triggered a mandatory $50 late filing penalty. This penalty applied regardless of whether any tax was due—the penalty existed solely for failing to file on time.
Additionally, if a business failed to file both the No Tax Due Report and the required Public Information Report (Form 05-102) or Ownership Information Report (Form 05-167), the entity could face forfeiture of its corporate privileges, meaning it would lose the legal right to conduct business in Texas and could not sue or defend itself in Texas courts. Officers and directors could become personally liable for certain business debts under forfeiture conditions. Texas Comptroller
Amended Filings
Amended filings were necessary when a business discovered errors on a previously submitted Form 05-163. Common reasons included:
- Selecting the wrong qualifying condition
- Entering incorrect revenue figures
- Providing inaccurate entity information
- Discovering the business didn’t qualify for no tax due status
While the Comptroller didn’t charge a penalty for honest corrections, businesses that amended to a taxable report would owe tax, interest, and possibly penalties based on the original due date.
Extensions
For extensions, businesses could request additional time by:
- Filing online through Webfile
- Submitting Form 05-164 (Extension Request)
Since no tax was due, no payment was required. The deadline extended to November 15, 2020. Texas Comptroller
Key Rules or Details for 2020
Revenue Threshold
The no tax due threshold for 2020 was $1,180,000 in annualized total revenue.
Businesses had to annualize revenue. Example:
- 6-month revenue: $700,000
- Annualized: $1,400,000 → disqualified
Electronic Filing Requirement
All filings had to be submitted electronically unless a waiver was approved. Texas Comptroller
Required Companion Reports
Most entities also had to file:
- Form 05-102 (Public Information Report)
- Form 05-167 (Ownership Information Report)
Exceptions:
- Passive entities
- New veteran-owned businesses
Passive Entity Rules
To qualify:
- Must be a partnership or trust
- 90%+ income from passive sources
- Rental income does NOT count
Veteran-Owned Business Rules
Requirements:
- Formed after Jan 1, 2016
- 100% veteran-owned
- Verified by Texas Veterans Commission
Exempt for 5 years from tax and information reports.
Texas Comptroller
Combined Groups
- Must report collectively
- Must meet threshold as a group
- Each member still files its own information report
Step-by-Step (High Level)
Step 1: Determine Eligibility
- Calculate annualized total revenue
- Confirm qualification category
Step 2: Gather Required Information
- Texas taxpayer number
- Entity details
- Revenue data
- Supporting documents
Step 3: File Through Webfile
- Log in or register
- Select No Tax Due Report
- Enter required data
Step 4: File Information Report
- Form 05-102 or 05-167 (if required)
Step 5: Review and Submit
- Verify all entries
- Submit electronically
- Save confirmation number
Step 6: Retain Records
- Keep records for 4 years
- Respond to any Comptroller notices
Common Mistakes and How to Avoid Them
Miscalculating Revenue
Always annualize revenue correctly.
Forgetting Information Reports
File both the tax report AND information report.
Selecting Wrong Qualification
Double-check eligibility category before filing.
Filing Paper Instead of Electronic
Only file paper if approved for waiver.
Missing Deadlines
- Late penalty: $50
- Set reminders early
Passive Entity Misclassification
Ensure:
- 90% passive income
- Meets Texas definition
Veteran Business Filing Too Early
Complete verification before filing.
What Happens After You File
Immediate Confirmation
- Receive confirmation number
- Email sent within 24 hours
Processing Timeline
- Typically 4–8 weeks
Account Status
Check via Texas Comptroller Taxable Entity Search.
Possible Notices
You may receive notices for:
- Missing reports
- Inconsistent data
- Qualification issues
- Calculation errors
If Issues Arise
- Respond within ~30 days
- Contact Comptroller if needed
If Disqualified
- File amended taxable report
- Pay tax + interest
Forfeiture Risk
Failure to file leads to:
- Loss of business rights
- Personal liability for officers
Reinstatement requires:
- Filing all reports
- Paying penalties
- Requesting clearance
Closing Your Business
To terminate:
- File final report
- Request certificate of account status
- Submit termination documents
FAQs
If my business earned $1,180,000 exactly in 2020, do I still qualify?
Yes, the threshold was “$1,180,000 or less.” If you exceed it by even $1, you must file a taxable report.
I'm a single-member LLC with low revenue. Do I have to file?
Yes, most LLCs must file Form 05-163 and Form 05-102 annually unless exempt.
I filed but received a forfeiture notice. What happened?
You likely missed filing the required information report. File it immediately and request reinstatement.
Can I file this form if I owe taxes from previous years?
Yes, but prior liabilities remain due. Filing doesn’t erase past taxes.
How do I calculate revenue for a short operating period?
Divide actual revenue by days operated, then multiply by 365.
Do passive entities need to file an information report?
No, qualifying passive entities are exempt from those reports.
What’s the difference between a final and annual report?
- Annual: Ongoing business
- Final: Used when closing the entity
Final filing requires additional termination steps.
Note: This summary addresses Form 05-163 for the 2020 report year. The form was discontinued for 2024 and later filings. Check current requirements at the Texas Comptroller website.
