What the Form Is For
Texas Form 05-169, the Franchise Tax EZ Computation Report, is a simplified alternative to the standard Long Form franchise tax report used by eligible Texas businesses to calculate and report their annual state franchise tax obligation. The Texas franchise tax is a privilege tax imposed on entities that are formed in Texas or conduct business in the state, and it applies to corporations, limited liability companies, partnerships, professional associations, banks, and most other legal business entities—with notable exceptions including sole proprietorships and general partnerships owned entirely by natural persons.
For the 2017 report year, the EZ Computation provides a straightforward calculation method for businesses with annualized total revenue of $20 million or less. Rather than working through the complex margin calculations required on the Long Form—which involves choosing between multiple deduction methods like cost of goods sold or compensation—the EZ Computation simply multiplies your total revenue by an apportionment factor, then applies a flat tax rate of 0.331 percent. This streamlined approach makes tax compliance more manageable for smaller businesses, though it comes with trade-offs: entities using this method cannot claim any margin deductions and are ineligible for most franchise tax credits.
The form consists of several key sections including taxpayer identification information, industry classification codes, accounting period dates, qualification questions, detailed revenue calculations, statutory exclusions, and apportionment calculations to determine what portion of your business activity occurs in Texas. The EZ Computation is filed alongside the Public Information Report or Ownership Information Report, depending on your entity type.
When You’d Use It (Annual, Late, and Amended Reports)
Annual Reports
The standard franchise tax report is due May 15 each year. If May 15 falls on a weekend or legal holiday, the next business day becomes the due date. Your 2017 annual report covers the accounting period that ended during 2016—specifically, your last federal accounting period end date in 2016. For example, if your business operates on a calendar year, your 2017 report would cover January 1, 2016, through December 31, 2016, and would be due May 15, 2017.
Final Reports
If your Texas entity is terminating, merging, or converting, you must file a final EZ Computation report along with your annual report (if required) before obtaining a Certificate of Account Status from the Texas Comptroller. The final report covers the period from the day after your previous accounting year end through the date you ceased doing business in Texas. Out-of-state entities ending their Texas nexus must file their final report and pay any amount due within 60 days of ceasing Texas business activities.
Late Filing
Reports filed after the May 15 due date are considered late and automatically trigger a $50 late filing penalty regardless of whether any tax is owed. If you're paying tax 1–30 days late, an additional 5 percent penalty applies to the tax amount. If you're paying more than 30 days late, the penalty increases to 10 percent. Interest begins accruing on unpaid taxes 61 days after the due date. You can request a waiver of penalties if you have reasonable cause for the delay, though waivers are evaluated case-by-case and are not guaranteed.
Extensions
You can request an extension of time to file by submitting Form 05-164 on or before the original May 15 due date. The Comptroller's office will tentatively grant the extension upon timely receipt. However, an extension to file does not extend the deadline to pay any tax owed—you must estimate and pay your tax liability by the original due date to avoid penalties and interest.
Amended Reports
You may file an amended EZ Computation report to correct mathematical errors, support a refund claim, or change your computation method. Interestingly, if you originally filed using the EZ Computation, you can amend to the Long Form and elect to use cost of goods sold or compensation deductions if that results in a lower tax liability. Amended reports that reduce your tax liability constitute refund requests and must meet specific refund requirements. All amended franchise tax reports must be submitted in paper format with a cover letter explaining the reason for the amendment.
Key Rules or Details for 2017
Eligibility Requirements
For 2017, you can file Form 05-169 only if your entity, including any combined group, has annualized total revenue of $20 million or less. This threshold is critical—if your annualized revenue exceeds this amount, you must file the Long Form instead. When your accounting period covers more or less than 12 months, you must annualize your total revenue by dividing it by the number of days in your accounting period and multiplying by 365.
No Tax Due Threshold
For 2017, entities with annualized total revenue of $1,110,000 or less qualify for no tax due status. However, even if you qualify, if your actual calculated tax is between $1 and $999, you must still file the EZ Computation or Long Form (not the No Tax Due Report), but you won't owe any tax. If your calculated tax is $1,000 or more, you must pay the full amount regardless of your revenue level.
Tax Rate and Calculation
The EZ Computation applies a simplified tax rate of 0.331 percent to your total revenue after apportionment to Texas. The basic formula is:
(Total Revenue minus Exclusions) × (Texas Gross Receipts ÷ Gross Receipts Everywhere) × 0.331%.
No Credits Allowed
Texas Tax Code Section 171.1016 explicitly prohibits entities filing the EZ Computation from claiming franchise tax credits. This includes research and development credits, historic structure rehabilitation credits, and business loss carryforwards.
Combined Group Reporting
If your entity is part of an affiliated group engaged in a unitary business, you may need to file as a combined group. Combined group members must use the same computation method.
Information Reports Required
All entities filing the EZ Computation must also file either:
- Form 05-102 (Public Information Report), or
- Form 05-167 (Ownership Information Report)
Electronic Filing Requirements
All No Tax Due Reports originally due after January 1, 2016, must be filed electronically. EZ Computation reports can be filed electronically or on paper, though electronic filing is strongly encouraged.
Step-by-Step (High Level)
Step 1: Gather Your Financial Information
Before starting Form 05-169, compile your federal income tax return, general ledger, and revenue calculations.
Step 2: Determine Eligibility for EZ Computation
Calculate your annualized total revenue and confirm it does not exceed $20 million.
Step 3: Complete Taxpayer Information Section
Enter your taxpayer number, legal name, address, and classification codes.
Step 4: Enter Accounting Period Dates
Use your federal accounting period ending in the previous calendar year.
Step 5: Calculate Total Revenue
Include all revenue categories and align with federal return data.
Step 6: Apply Statutory Exclusions
Subtract allowable exclusions such as certain dividends and flow-through funds.
Step 7: Calculate Apportionment Factor
Determine Texas receipts vs. total receipts.
Step 8: Compute Tax Due
Apply the 0.331% rate after apportionment.
Step 9: Complete and File Required Information Report
Prepare the appropriate information report based on entity type.
Step 10: Submit Report and Payment
File via Webfile or by mail and retain copies for records.
Common Mistakes and How to Avoid Them
Mistake 1: Failing to Annualize Revenue for Short Periods
Mistake 2: Using the Wrong Accounting Period Dates
Mistake 3: Claiming Ineligible Exclusions from Revenue
Mistake 4: Incorrectly Calculating Texas Gross Receipts
Mistake 5: Filing EZ Computation When Ineligible
Mistake 6: Missing the Information Report
Mistake 7: Paying Late While Filing on Time
What Happens After You File
Processing Timeline
Electronic submissions typically process within 2–4 weeks; paper returns may take longer.
Payment Processing
Electronic payments post quickly; paper checks take more time.
Certificate of Account Status
You can request official confirmation of compliance after processing.
Notice of Tax Due or Discrepancy
You may receive notices requiring correction or additional payment.
Audit Selection
Returns may be selected for audit based on risk factors.
Refund Processing
Refund claims must meet deadlines and are processed separately.
Future Year Requirements
You must continue filing annually while your entity is active.
FAQs
Can I use the EZ Computation if my business has multiple revenue streams or operates in several states?
Yes, as long as your annualized total revenue does not exceed $20 million, regardless of complexity.
If I file the EZ Computation this year, am I required to use it in future years?
No, you can choose your filing method each year based on your situation.
What happens if I discover an error after filing my EZ Computation report?
You can file an amended report by mail with a detailed explanation.
My business is organized in Delaware but operates in Texas. Do I need to file?
Yes, out-of-state entities conducting business in Texas must file.
I filed on time but forgot to pay. What happens?
Late payment penalties and interest will apply.
Can I file the EZ Computation electronically?
Yes, and it is strongly encouraged for faster processing.
Our entity was formed in November 2016. What accounting period applies?
Your first report is due May 15, 2017, with the accounting period based on your federal year-end.
