What the Form Is For
The Texas Franchise Tax No Tax Due Report (Form 05-163) was a simplified annual or final report that certain businesses filed with the Texas Comptroller of Public Accounts when they owed no franchise tax for a given reporting period. This form allowed qualifying entities to fulfill their franchise tax reporting obligations without calculating complex margins or deductions. For the 2012 report year specifically, businesses used this form to certify that they met one of five qualifying conditions that exempted them from owing franchise tax, while still maintaining their good standing with the state.
The franchise tax itself is a privilege tax imposed on entities formed in Texas or doing business in the state. While sole proprietorships and certain partnerships aren't subject to this tax, most corporations, limited liability companies, professional associations, banks, and other legal entities must file annually. The No Tax Due Report served as a streamlined alternative to the more detailed Long Form or EZ Computation reports when no tax was actually owed.
Important Update: The Texas Legislature passed Senate Bill 3 in July 2023, which discontinued Form 05-163 beginning with the 2024 report year. Entities that previously filed this form now follow different procedures, though the historical information about Form 05-163 remains relevant for understanding past filing requirements and for entities that may need to file amended reports for prior years.
When You’d Use This Form
Qualifying Conditions
During the years when Form 05-163 was active (through report year 2023), businesses would file this form instead of the standard franchise tax returns in five specific situations. For 2012, you would have used this form if your entity met any of these qualifying conditions:
Annual Reports
Your annualized total revenue was at or below the no tax due threshold of $1,030,000 for reports due in 2012-2013. This threshold represented the revenue ceiling below which Texas didn't require franchise tax payment, though filing was still mandatory. If your business operated for less than a full year, you had to annualize your revenue by dividing total revenue by the number of days in your accounting period, then multiplying by 365 to determine eligibility.
Qualifying Passive Entities
Your entity met the strict definition of a passive entity under Texas Tax Code Section 171.0003, meaning it primarily held assets for investment purposes and didn't actively conduct business operations.
Qualifying Real Estate Investment Trusts
Your entity qualified as a REIT meeting specifications in Texas Tax Code Section 171.0002(c)(4), following federal REIT requirements and primarily generating income from real estate investments.
Zero Texas Gross Receipts
Your entity had no receipts from business done in Texas during the reporting period, meaning all income came from out-of-state sources.
New Veteran-Owned Businesses
In later years (not applicable to 2012), qualifying new veteran-owned businesses during their initial five-year period could file this form.
Filing Situations
Late Filing
If you missed the May 15 deadline, you could still file Form 05-163 after the due date, though you'd face a $50 late filing penalty even when no tax was due. This penalty applied regardless of whether your revenue was below the threshold.
Amended Filing
You could file an amended No Tax Due Report to correct errors in your original filing, such as mathematical mistakes, incorrect entity information, or to change your margin computation method from a previously filed Long Form or EZ Computation report.
Key Rules or Details for 2012
Filing Requirements
Electronic Filing Requirement
For reports originally due on or after January 1, 2016, Texas law required electronic filing through the Comptroller's Webfile system. Paper returns were only accepted if you requested and received a waiver from the electronic filing requirement.
Information Report Requirement
Filing Form 05-163 alone didn't satisfy all your franchise tax obligations. You also had to file either a Public Information Report (Form 05-102) or an Ownership Information Report (Form 05-167).
Special Rules
Combined Groups Exception
If your entity was part of a combined group filing a consolidated franchise tax report, you couldn't file a separate No Tax Due Report based solely on your individual revenue.
Revenue Annualization
When your accounting period covered more or less than 12 months, you had to annualize total revenue to determine threshold eligibility.
Tiered Partnership Rules
Upper-tier entities making tiered partnership elections couldn't use the no tax due threshold to qualify for Form 05-163.
Deadlines
Due Date
Annual franchise tax reports were due May 15 each year. You could request a six-month extension to November 15.
Step-by-Step (High Level)
1. Determine Your Eligibility
Calculate your annualized total revenue and compare it to the threshold or confirm other qualifying conditions.
2. Gather Required Information
Collect:
- Texas taxpayer number
- Federal EIN
- Accounting period dates
- State of formation
- Registered agent details
3. Complete the Form
Enter entity details, select filing type, choose qualifying condition, and sign appropriately.
4. File the Information Report
Submit either:
- Form 05-102 (Public Information Report), or
- Form 05-167 (Ownership Information Report)
5. Submit by the Deadline
File electronically or ensure paper submission is properly approved and timely.
6. Maintain Records
Keep documentation for at least four years.
Common Mistakes and How to Avoid Them
Missing Required Filings
Failing to File the Information Report
Always file PIR or OIR alongside Form 05-163.
Calculation Errors
Incorrect Revenue Annualization
Always annualize revenue correctly before comparing to the threshold.
Filing Errors
Filing When Combined Group Reporting Required
Do not file separately if part of a combined group.
Missing the Electronic Filing Requirement
File electronically unless a waiver is approved.
Confusing No Tax Due with Tax Under One Thousand Dollars
Use the correct form if revenue exceeds the threshold—even if tax is zero.
Timing Issues
Filing Late and Missing the Information Report
Late filings trigger penalties even when no tax is owed.
What Happens After You File
Processing and Verification
The Comptroller reviews your report and updates your compliance status.
Public Record Updates
Public Information Reports are forwarded to the Secretary of State and become publicly accessible.
Business Standing
Your entity maintains good standing, which is essential for legal and financial operations.
Final Filings
If terminating your entity, a certificate of account status may be issued.
Follow-Up Actions
The Comptroller may contact you regarding discrepancies or missing data.
Ongoing Obligations
You must file again for the next report year unless requirements change.
FAQs
Can I file Form 05-163 if my revenue is slightly above the threshold but I know my tax will be zero?
No. If your annualized total revenue exceeds the threshold, you must file the Long Form or EZ Computation Report even if your calculated tax is zero. Form 05-163 is strictly limited to entities that meet the revenue threshold or other qualifying conditions.
What's the difference between the Public Information Report and the Ownership Information Report?
Corporations, LLCs, and similar entities file the Public Information Report (Form 05-102), which becomes public record. Trusts and certain other entities file the Ownership Information Report (Form 05-167), which remains confidential.
I missed the May 15 deadline but don't owe any tax. Will I still be penalized?
Yes. A $50 late filing penalty applies regardless of whether tax is owed. You must still file both the No Tax Due Report and the required information report.
Can I switch from the Long Form to Form 05-163 by filing an amended report?
Yes. If you later determine eligibility, you can file an amended Form 05-163 and potentially request a refund for overpaid taxes within the allowable time limits.
My business operates in multiple states. How do I determine if I have zero Texas gross receipts?
You must apply Texas sourcing rules. Revenue is considered Texas-based depending on where goods are delivered or services are performed. Only businesses with no Texas-sourced income qualify.
Do I need to file Form 05-163 every year if my revenue stays below the threshold?
For report years before 2024, yes. Starting in 2024, the form was discontinued, and qualifying entities no longer need to file franchise tax reports but must still submit information reports.
What happens if I file Form 05-163 but the Comptroller determines I wasn't eligible?
You will be required to file the correct report and may face penalties, interest, and additional tax liabilities. Always verify eligibility before filing.
Note: Form 05-163 was discontinued beginning with the 2024 report year. For current reporting obligations, consult the Texas Comptroller's website or contact Taxpayer Services.
Texas Comptroller of Public Accounts