The Texas franchise tax is a tax imposed on each taxable entity chartered/organized in Texas or doing business in Texas. The annual franchise tax report is due May 15, for entities that became subject to franchise tax in the previous year. Texas franchise tax applies to partnerships (except general partnerships directly and solely owned by natural persons), corporations, LLCs, business trusts, professional associations, business associations, joint ventures and other legal entities.
Is Your Company in Good Standing?
A Certificate of Account Status will indicate if a taxable entity doing business in Texas is in good standing with its franchise tax reports and payments. Most lenders will require a Certificate of Good Standing as a condition for any real estate or financing transaction. You can easily check the status of your entity at the Texas State Comptroller’s website.
3 Steps to Reinstate for Non-Filing of Texas Franchise Taxes.
When an entity fails to file a franchise tax report and/or pay franchise taxes, the secretary of state forfeits it under the Texas Tax Code. If you discover your entity has been forfeited for failure to file franchise taxes, the situation can be remedied in 3 easy steps.
STEP 1 - File your delinquent franchise tax form(s) with the Texas Comptroller. For more information on franchise filing instructions and forms select the following link Texas State Comptroller Franchise Tax Information.
STEP 2 - Request a Tax Clearance Letter from the Comptroller’s office (see form). The Tax Clearance letter will be issued, upon request, by the Comptroller's office after all franchise tax reports and information reports due through the date of reinstatements are filed, and all franchise tax, penalty and interest due on those reports are paid.
STEP 3 - File an application for reinstatement with the Texas Secretary of State, Form 801. The fee is $75.00 and you must include the clearance letter from the Texas Comptroller of Public Accounts stating that the entity has satisfied all of its franchise tax obligations and is eligible for reinstatement.
Upon completion of these three steps, the Secretary of State will issue Certificate of Reinstatement. With this certificate the entity will be in position to legally engage in real estate and financing transactions, including a commercial property tax loan.