Texas Franchise Tax: Forfeitures & Reinstatements

If you missed the deadline to file your 2016 Texas franchise tax (Calendar Year 2015), you may have received a notice of forfeiture. Don’t panic! While this issue does need to be resolved as soon as possible, the process is fairly simple.

Let’s take a step back. What is the Texas franchise tax? Formally, the Texas franchise tax is a “privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas” (Texas State Comptroller). What does that mean? Basically, it’s a business tax for the state of Texas.

So, what does it mean to receive a forfeiture? Essentially, if you miss the deadline to file your Texas franchise tax, your business will be forfeited (no longer in good standing) under the Texas Tax Code. Luckily, you can reinstate your business at any time.

Reinstating Your Texas Franchise

To reinstate your business, you simply need to complete a few quick steps. This process involves two stages with two different government offices, the Texas State Comptroller and the Secretary of State.

Stage 1 | Texas State Comptroller

  1. File that required Texas franchise tax report that you missed
    Quick Tip: You can save yourself an extra step by filing your 2017 franchise tax (due May 15) at the same time, ensuring you don’t run into this problem next year!
  2. Pay all franchise taxes, as well as any penalties or interest you may have acquired
  3. Request a tax clearance letter—this letter proves that your entity has met all compliance obligations and is eligible for reinstatement

*You can complete these steps online via WebFile or by mail.

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Stsge 2 | Secretary of State

  1. Submit your tax clearance letter from the Texas State Comptroller
  2. File an application for reinstatement using Form 801
  3. Complete your payment along with Form 807

*You can complete these steps online via SOSDirect or by mail.

TX Franchise Tax Secretary of State

That’s it! Once you’ve completed all the necessary steps, your business will return to good standing. And don’t forget, your 2017 Texas Franchise Tax (Calendar Year 2016) must be filed by May 15, 2017. Need extra help? Give us a shout!

Contributed by:
Kristen Windes
Accounting Manager