How to File the Texas No Tax Due Report

Entities conducting business in Texas are generally subject to the state’s annual franchise tax, which is levied on a taxable entity’s margin. For many businesses with lower revenues, this calculation results in zero tax owed. For filings due in 2024 and beyond, the process for these businesses has changed.

The Texas Comptroller has discontinued the No Tax Due Report (Form 05-163). This change means that even if an entity owes no franchise tax, it can no longer use that specific form to satisfy its state reporting duties. Instead, these businesses must now submit different information reports to remain compliant with state law.

Eligibility for No Tax Due Status

An entity’s qualification for a no tax due status primarily depends on its total revenue. For the 2024 and 2025 reporting years, a taxable entity whose annualized total revenue is at or below $2.47 million is not required to pay any franchise tax. The calculation of “annualized total revenue” includes all revenue from the entity’s entire business, not just revenue generated within Texas.

This revenue figure is reported on a gross basis, before the deduction of costs of goods sold or other operational expenses. It encompasses most common forms of income, such as sales of goods, services, and rental income. Entities must calculate this figure from their accounting records for the prior calendar year to determine if they fall below the threshold.

Other specific situations also result in a no tax due status but have distinct filing requirements. For instance, qualifying new veteran-owned businesses are exempt from paying franchise tax during their initial five-year period. While they are not required to file a tax-due report, they must still submit an annual Public Information Report or an Ownership Information Report. Similarly, passive entities, such as certain partnerships with at least 90 percent of their federal gross income from passive sources, also owe no tax. These entities must file either the EZ Computation Report or the Long Form to meet their state obligations and are not required to file a Public Information Report or an Ownership Information Report.

Information and Forms Needed to File

With the discontinuation of the No Tax Due Report, entities must file either a Public Information Report (PIR) or an Ownership Information Report (OIR). The specific form required depends on the business structure. Corporations, Limited Liability Companies (LLCs), limited partnerships, professional associations, and financial institutions are required to file the Public Information Report, Form 05-102.

The Public Information Report requires providing the following information, which becomes public record:

• The entity’s 11-digit Texas Taxpayer Number
• Its legal name as registered and its Federal Employer Identification Number (EIN)
• The names, titles, and mailing addresses for all officers, directors, or managing members
• A list of any parent or subsidiary entities, including their state of formation and ownership percentage

For other taxable entities that do not fit the definitions above, such as general partnerships or certain trusts, the required filing is the Ownership Information Report (OIR), Form 05-167. This report requires the business’s name, taxpayer number, and the names, addresses, and ownership percentages for each owner. Social security numbers should not be entered on this form; if an owner does not have a federal employer identification number, the field should be left blank.

How to Submit Required Information Reports

The primary and preferred method for submitting the Public Information Report or Ownership Information Report is through the Texas Comptroller’s WebFile system. This online portal provides instant confirmation upon successful submission. To use WebFile, you will need your 11-digit Texas Taxpayer Number and a specific WebFile number that begins with the letters ‘XT’. This XT number is unique to franchise tax filings and is printed on the notices sent by the Comptroller’s office.

The deadline for submitting these reports is May 15 each year; if this date falls on a weekend or holiday, the deadline moves to the next business day.

Alternatively, businesses can download the appropriate PDF form from the Comptroller’s website. After completing the form, it must be mailed to the address specified in the form’s instructions. The mailed report must be postmarked on or before the May 15 deadline to be considered timely. Failure to file the required report on time can result in a $50 late filing penalty, and further delays can jeopardize the business’s good standing with the state.