What Texas Form 05-359 (2011) Is For
Texas Form 05-359 is used to request a Certificate of Account Status from the Texas Comptroller of Public Accounts. This certificate confirms that a taxable entity has fulfilled all state-level tax obligations before ceasing its legal existence or registration in the State of Texas.
The Certificate of Account Status functions as a tax clearance document. The Texas Secretary of State requires this certificate before accepting termination, withdrawal, or merger filings. Without it, the entity’s legal status remains active, and franchise tax obligations continue to be applicable.
Form 05-359 applies to limited liability companies, limited liability partnerships, and entities taxed as corporations. Nonprofit entities that qualify for exempt status are generally not required to obtain this certificate.
When You’d Use Texas Form 05-359 (2011)
A business owner files Form 05-359 when permanently closing or legally terminating a business registered in Texas. This includes dissolving a Texas LLC, withdrawing a foreign entity, or completing a merger that results in the termination of an entity’s registration in Texas.
The form is filed only after all required tax reports and tax payments have been completed. This includes filing the final Franchise Tax Report and resolving any balances related to franchise tax, sales tax, or use tax.
The changed filing doesn't apply directly to Form 05-359. If a request is turned down, the entity must correct the problem and resubmit a new request. Taking action too late can result in ongoing tax debts, fines, and the potential for administrative dissolution.
Key Rules or Details for 2011
Texas Form 05-359 (2011) requires full compliance with state tax obligations for the applicable tax year. The Comptroller of Public Accounts will not issue a tax clearance certificate until all the necessary filings are complete.
Key requirements include:
- Filing all required Franchise Tax Reports, including the final report.
- Paying all outstanding tax payment obligations, penalties, and interest.
- Reporting total revenue accurately through the final reporting period.
- Ensuring all tax accounts are current and not under audit.
The certificate issued is valid only through December 31 of the year it is granted. If termination is not completed by that date, a new request is required. This can create additional filing obligations if a new tax year begins.
Certain entities are required to file on paper rather than through the franchise tax Webfile. These include entities under audit, entities in combined reporting groups, and entities with a history of compliance issues.
Step-by-Step (High Level)
The termination process follows a specific sequence that must be completed in order.
- File all outstanding franchise tax and related tax reports.
- Pay all balances owed, including franchise tax, sales and use tax, and penalties.
- File the final Franchise Tax Report within 60 days of ceasing operations.
- Submit Form 05-359 to request the Certificate of Account Status.
- Receive the Certificate of Status issued as Form 05-305.
- File termination documents with the Texas Secretary of State and pay the filing fee.
Once termination is approved, the business name is removed from active state records. Federal tax obligations and other state registrations must be handled separately.
Common Mistakes and How to Avoid Them
- Requesting the certificate before filing the final Franchise Tax Report: File the final report first so the Comptroller can issue clearance based on a complete filing.
- Submitting the wrong certificate type: Obtain the termination-specific certificate rather than a general Certificate of Status so the filing meets dissolution requirements.
- Letting the certificate expire before submitting termination paperwork: Coordinate the timing so that the certificate remains valid when the termination documents are filed.
- Forgetting to close sales tax or use tax accounts: Close or update any remaining sales and use tax accounts to prevent termination delays due to open tax obligations.
- Assuming termination removes other obligations: Address the remaining debts and ongoing obligations, including real estate matters, federal tax filings, and any court proceedings related to prior operations.
What Happens After You File
The Texas Comptroller of Public Accounts reviews the entity's tax history after submitting Form 05-359. The Certificate of Account Status is granted if all conditions are satisfied. The entity's legal status ends when the termination is authorized, and the certificate is submitted to the Texas Secretary of State. Franchise tax obligations cease on the specified termination date.
Documents must be kept for at least a few years. Prior tax years may still be examined by the Comptroller, especially if there are inconsistencies in the reported total revenue or tax filings. Other registrations, such as those about employer withholding or sales and use tax, must be closed independently. Even after termination, failure to comply may result in further notices.
FAQs
Who must file Texas Form 05-359?
Most taxable entities registered with the Texas Secretary of State, including Texas LLCs and limited liability partnerships, are required to file unless they qualify for exempt status.
Is Form 05-359 the same as a Tax Clearance Letter?
Indeed, for termination purposes, the Certificate of Account Status obtained through Form 05-359 serves as a tax clearance letter.
Does termination affect federal tax obligations?
No, federal tax responsibilities remain and must be resolved separately with the IRS.
What if the business never earned revenue?
Before being terminated, entities with zero total revenue must still file the necessary tax reports and obtain tax clearance.
How does reinstatement work after forfeiture?
Depending on the entity's past, reinstatement usually necessitates a Tax Clearance Letter Request for Reinstatement and may involve Form 05-391.
Does termination in Texas affect other states?
Yes, entities registered in other jurisdictions, such as with the California Secretary of State, must file separate withdrawal documents.
