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 taxable entity has fulfilled all its Texas Franchise Tax obligations and is eligible to terminate its legal existence or withdraw its registration in the state of Texas.
The Certificate of Account Status is required before the Texas Secretary of State will issue a termination certificate or accept withdrawal filings. Failure to obtain this certificate does not affect an entity's ability to file franchise taxes or remain legally active under Texas tax law.
This form applies to corporations, limited liability partnerships, limited liability companies, professional associations, and other organizations that are liable for the Texas franchise tax. It serves as evidence that all tax obligations under the Texas Tax Code have been satisfied; however, it does not replace mandatory tax filings or tax reports.
When You’d Use Texas Form 05-359
When a business owner intends to terminate the existence or registration of a Texas entity formally, they use Texas Form 05-359. Once all necessary franchise tax returns have been filed and any outstanding taxes have been paid, the form must be filed.
Dissolving a Texas entity, withdrawing a foreign entity, completing a merger or conversion, or completing the winding-up procedure after business operations have concluded are among the circumstances that call for filing. Entities that ceased operating in prior years but have not yet completed the termination process must also use this form.
Late or amended filing issues must be resolved before the certificate will be issued. If franchise tax returns were filed incorrectly or late, amended reports must be submitted and processed. The Comptroller will not issue a Certificate of Account Status until all tax accounts reflect compliance.
Key Rules or Details for 2025
According to the Texas Tax Code, all franchise tax obligations must be met before a certificate is issued. This means filing all Texas Franchise Tax Reports, paying any accrued interest and penalties, and addressing any potential compliance issues.
Essential rules to understand include the following:
- The Certificate of Account Status expires on December 31 of the year it is issued.
- A new certificate is required if termination documents are not filed before the expiration date.
- Certain entities are not eligible to file electronically using the franchise tax Webfile.
- Combined or affiliated group members require manual review by the Comptroller.
Entities with total revenue below the no-tax-due threshold must still file final franchise tax returns. Filing requirements apply even when no tax payment is owed. Programs such as Texas Education Freedom Accounts do not remove franchise tax responsibilities.
Certain entities may require additional documentation, such as clarification on gross receipts, positions on private letter rulings, or prior filings involving entries in the Research and Development Activities Credits Schedule.
Step-by-Step (High Level)
Step 1: Complete all required franchise tax filings
Together with the final Texas Franchise Tax Report and any necessary schedules, including the EZ Computation method if applicable, file all yearly and past-due reports. To prevent processing problems, ensure that filings align with the proper reporting periods.
Step 2: Resolve all outstanding tax obligations
Pay all franchise tax liability, penalties, and interest in full before requesting clearance. Confirm payments are posted to the Comptroller account.
Step 3: Submit Texas Form 05-359
Use the exact legal name, taxpayer number, and end date that are in the Comptroller's records to fill out and send in Form 05-359. When possible, use Webfile; when necessary, send the form by mail.
Step 4: Receive the Certificate of Account Status
After the Comptroller verifies compliance, obtain the Certificate of Account Status. While mailed requests typically require manual processing, webfile requests can produce the certificate instantly.
Step 5: File termination documents with the Secretary of State
Pay the relevant filing fee and send the certificate to the Texas Secretary of State along with the necessary termination or withdrawal filing. Keep copies of the filing confirmation and certificate for your records.
Common Mistakes and How to Avoid Them
- Submitting Form 05-359 before all franchise tax returns are filed: File every required franchise tax and information report first; even one missing report will block issuance of the Certificate of Account Status.
- Using an incorrect termination date: Match the final report to the actual date operations ended. If the date is wrong, amend the filing to avoid delays.
- Ignoring the certificate’s expiration date: Plan the request around the termination filing; a Certificate of Account Status becomes invalid after December 31 and may require re-filing if it expires before submission.
- Confusing Form 05-359 with Form 05-391 or a reinstatement tax clearance request: Use Form 05-359 for a termination-related Certificate of Account Status; Form 05-391 and reinstatement requests serve different purposes.
- Trying to file electronically when paper filing is required: Submit Form 05-359 by mail when paper filing rules apply (such as certain combined group situations) to avoid rejection.
What Happens After You File
After Texas Form 05-359 is submitted, the Texas Comptroller reviews the entity’s tax accounts to confirm that required tax reports and Texas Franchise Tax filings are complete and that any tax liability has been resolved. If the account is clear, the Comptroller issues the Certificate of Account Status, which serves as the approval needed to proceed with ending the entity’s status.
Once the Certificate of Account Status is issued, it must be submitted with the certificate of termination or withdrawal filing to the Texas Secretary of State, along with the required filing fee. If the Comptroller finds missing tax filings or unpaid tax payment amounts, the request is delayed until corrections are made in accordance with the Texas Tax Code.
FAQs
Who must file Texas Form 05-359?
Any taxable entity ending its Texas existence or registration must file this form to obtain a Certificate of Account Status.
Is there a filing fee for Texas Form 05-359?
The Texas Comptroller does not charge a filing fee, but the Texas Secretary of State charges a filing fee for termination documents.
What is the difference between Form 05-359 and Form 05-391?
Form 05-359 is used for termination, while Form 05-391 is used for reinstatement through an Application for Reinstatement.
Can Texas Form 05-359 be filed on a mobile device?
Franchise tax Webfile may be accessed on a mobile device, but functionality varies depending on browser and entity type.
Do entities with no revenue still need to file final reports?
Yes. Final franchise tax returns are required even when no tax payment is due.
What if the entity is part of a combined or affiliated group?
Entities in a combined or affiliated group must file by paper and undergo manual review before a certificate is issued.
Can a third party file on behalf of the business?
Yes, a law firm, tax professional, or government solutions provider may submit filings on behalf of the business owner.