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Texas Franchise Tax — Which Forms Should I File?


Who Must File

To confirm whether your business entity is subject to the franchise tax, review the list of taxable entities from our FAQs.


Entities subject to the franchise tax include:

  • partnerships
  • corporations
  • limited liability companies (LLCs)
  • professional and business associations
  • joint ventures
  • business trusts
  • other legal entities

Franchise tax does not apply to...

  • sole proprietorships, except single member LLCs filing as a sole proprietor for federal income tax purposes;
  • general partnerships directly and solely owned by natural persons;
  • entities exempt under Texas Tax Code Chapter 171 Subchapter B;
  • passive entities as defined in Texas Tax Code Section 171.0003; or
  • unincorporated political committees (effective for reports originally due on or after Jan. 1, 2012).

Required Information Report

Entities meeting the requirements of 171.0003 as passive entities do not file an information report.

All other entities that file a franchise tax report must also file an information report (Forms 05-102 or 05-167).

Corporations, LLCs and financial institutions must file Form 05-102, the Public Information Report (PIR).

All other entity types, including professional associations, must file Form 05-167, the Ownership Information Report (OIR).

Note: A separate PIR or OIR must be submitted for each member of a combined group, unless the member does not have nexus in Texas.


Franchise Tax Report Options

A franchise tax report must be filed, even if no tax is due.

There are three options for tax reporting:

See below for more information on these options. More detailed information is provided in the Franchise Tax Report Instructions.


No Tax Due Information Report (Form 05-163)

Form 05-163 can be filed if the entity:

Combined groups: The reporting entity of a combined group using the No Tax Due Information Report must also file Form 05-166, the Texas Franchise Tax Affiliate Schedule, listing each member of the combined group, as well as the reporting entity.

Additional Reporting Requirement for Combined Groups with Temporary Credit: The reporting entity of a combined group with a temporary credit for business loss carryforward preserved for itself and/or its affiliates must submit common owner information by the due date of the report. This information must be submitted to satisfy franchise tax filing requirements, even if the combined group is not claiming the credit on the current year's report. Submit the common owner information electronically at window.texas.gov/commonowner/.

* The no tax due threshold for franchise tax reports originally due in 2008 and 2009 is $300,000. In report years 2010 and 2011, the no tax due threshold is $1 million. In report years 2012 and 2013, the no tax due threshold is $1,030,000. In report years 2014 and 2015, the no tax due threshold is $1,080,000.


E-Z Computation (Form 05-169)

An entity, including a combined group, can file using the E-Z Computation if it has annualized total revenue of $10 million or less.

Taxable entities that file using the E-Z Computation may not:

  • deduct cost of goods sold;
  • deduct compensation;
  • take any economic development credits;
  • take any temporary credits; or
  • carry over that year's credit for business loss carryforward to a future period.

The report must be filed even if the amount of total tax due is less than $1,000 and no tax is due. Corporations, LLCs and financial institutions filing using E-Z Computation must also file the Public Information Report. All other entities must file the Ownership Information Report (Form 05-167).

Tiered Partnership Election: Upper and lower tier entities will qualify for the E-Z Computation only if the lower tier entity would have qualified for the E-Z Computation before total revenue is passed to the upper tier entities. All upper and lower tier entities making a tiered partnership election must also submit Texas Franchise Tax Tiered Partnership Report (Form 05-175).

Combined Groups: The reporting entity for a combined group using the E-Z Computation must also file a Texas Franchise Tax Affiliate Schedule (Form 05-166), listing each member of the combined group, including the reporting entity.

Additional Reporting Requirement for Combined Groups with Temporary Credit: The reporting entity of a combined group with a temporary credit for business loss carryforward preserved for itself and/or its affiliates must submit common owner information by the due date of the report. This information must be submitted to satisfy franchise tax filing requirements, even if the combined group is not claiming the credit on the current year's report. Submit the common owner information electronically at window.texas.gov/commonowner/.


Long Form (Forms 05-158A and 05-158B)

Any entity that does not elect to file using the E-Z Computation, or that does not qualify to file a No Tax Due Information Report, should file the Long Form report.

The report must be filed even if the amount of total tax due is less than $1,000 and no tax is due. Corporations, LLCs and financial institutions filing Form 05-158A and 05-158B must also file the Public Information Report (Form 05-102). All other entity types must file the Ownership Information Report (Form 05-167), in order to satisfy filing requirements.

Tiered Partnership Election: All upper and lower tier entities making a tiered partnership election must also submit the Texas Franchise Tax Tiered Partnership Report (Form 05-175).

Combined Groups: The reporting entity for a combined group must also file Form 05-166, Texas Franchise Tax Affiliate Schedule, listing each member of the combined group, including the reporting entity.

Additional Reporting Requirement for Combined Groups with Temporary Credit: The reporting entity of a combined group with a temporary credit for business loss carryforward preserved for itself and/or its affiliates must submit common owner information by the due date of the report. This information must be submitted to satisfy franchise tax filing requirements, even if the combined group is not claiming the credit on the current year's report. Submit the common owner information electronically at window.texas.gov/commonowner/.


Follow these guidelines when mailing your franchise tax report:

  • Use an 11-digit Texas taxpayer number;
  • Do not send copies of IRS returns;
  • Send original forms (If you must send copies, send the best quality available.);
  • Do not staple or paper clip documents together;
  • Do not send a payment form if no payment is due;
  • Do not send a copy of your extension request or affiliate list when filing the return.

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