What Texas Form 05-359 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 business entity has satisfied its franchise tax and related tax obligations with the State of Texas. The certificate is commonly required before an entity can formally end its legal status or registration.
Business entities must obtain this certificate before the Texas Secretary of State will process documents related to termination, withdrawal, merger, or conversion. The requirement is established under the Texas Business Organizations Code and applies to entities taxed as corporations, including limited liability companies and limited liability partnerships.
This form does not terminate a business by itself. It only authorizes the Comptroller of Public Accounts to confirm that the entity’s tax accounts are in good standing so that the Secretary of State may approve changes to the entity’s legal status.
When You’d Use Texas Form 05-359
A business owner would use Texas Form 05-359 when an entity plans to cease business operations in Texas or formally end its registration. This includes winding up domestic entities or withdrawing foreign entities that no longer conduct business transactions in the state.
Typical situations where the form is required include administrative dissolution, voluntary termination, mergers where an entity ceases to exist, and conversions to exempt status. The certificate may also be required during certain court proceedings, such as Chapter 11 reorganizations, when an entity’s legal status must be verified.
The form is filed after all required tax reports and tax returns have been submitted and all tax payments have been made. It must be requested before filing termination or withdrawal documents with the Texas Secretary of State.
Key Rules or Details for 2019
Texas Form 05-359 cannot be approved unless the entity has fully satisfied its franchise tax obligations. This includes filing all required franchise tax reports and information reports and paying any outstanding tax, penalty, or interest amounts. The Comptroller reviews the entity’s total revenue and filing history before issuing a certificate.
The Comptroller issues the Certificate of Account Status as Form 05-305. This certificate is valid only through December 31 of the year it is issued. Entities must complete their filing with the Secretary of State before the certificate expires; otherwise, a new request will be required.
Certain entities are not eligible for online submission through the franchise tax Webfile. All other eligible entities may request the certificate electronically. The certificate does not replace other tax filings. Businesses may still be responsible for sales tax, use tax, federal tax filings, and other obligations unrelated to franchise tax.
Step-by-Step (High Level)
Before submitting Texas Form 05-359, the business entity must ensure its tax accounts are fully compliant.
The process generally includes the following steps:
- File all outstanding franchise tax reports, including any required final report.
- Submit all required information reports based on the entity type.
- Pay all outstanding tax obligations, including penalties and interest.
- Verify the entity’s Franchise Tax Account Status through the Texas Comptroller’s office.
- Request the Certificate of Account Status using Form 05-359 through online submission or by mail.
- Receive Form 05-305 confirming tax clearance.
- File termination or withdrawal documents with the Texas Secretary of State, along with any required filing fee.
Entities that file online typically receive the certificate immediately, provided no issues are identified. Paper requests require manual processing and may take several weeks to complete.
Common Mistakes and How to Avoid Them
- Requesting Form 05-359 before all tax reports are filed: Confirm every required report is filed and processed, even when no tax is due, so approval is not blocked by missing filings.
- Using the wrong final Franchise Tax Report period: Set the final report period based on the date business operations ended, rather than the dates of formation or termination filings.
- Missing the December 31 certificate expiration date: File termination documents before the certificate expires, so additional reports are not triggered for the next tax year.
- Submitting online when the entity is not eligible: Confirm Webfile eligibility in advance and use mail filing when combined group rules or account complexity restrict electronic submission.
- Skipping a final compliance review before requesting clearance: Verify account status, reports, payments, and information reports so follow-up notices do not delay the certificate request.
What Happens After You File
Once Texas Form 05-359 is submitted, the Texas Comptroller of Public Accounts reviews the entity’s tax clearance status. If all requirements are met, the Comptroller issues a Certificate of Account Status confirming that the entity has satisfied its franchise tax obligations.
The certificate must then be submitted to the Texas Secretary of State along with the appropriate termination or withdrawal forms. The Secretary of State reviews the filing to confirm compliance with the Business Organizations Code and finalizes the change to the entity’s legal status.
After termination or withdrawal is approved, the entity is no longer required to file franchise tax reports. However, unresolved business debts, sales and use tax liabilities, or federal tax obligations may still be applicable.
FAQs
Who must file Texas Form 05-359?
Any business entity registered or formed in the State of Texas that plans to terminate, withdraw, or merge must request a Certificate of Account Status if it is subject to franchise tax.
Is Form 05-359 a tax return for Texas?
Texas Form 05-359 is not a tax return. It is a request for a tax clearance certificate that confirms all required tax reports and tax payments have been completed.
Can an inactive business request a Certificate of Account Status?
An inactive business may request the certificate only after filing all required franchise tax reports. Inactivity does not eliminate reporting requirements.
Is there a filing fee for Texas Form 05-359?
The Comptroller charges no filing fee for requesting the certificate. Separate filing fees may apply when submitting termination documents to the Texas Secretary of State.
Can corporate attorneys or representatives submit the form on behalf of their clients?
Authorized representatives, including corporate attorneys and designated agents, may submit the request on behalf of the business entity if proper authorization is on file.
