Did your registered agent receive a notice of forfeiture from the Texas Comptroller of Public Accounts? I have noticed a trend while working through forfeited entities with the state of Texas. A recurring theme is the registered agent is a bookkeeping or tax service but the Texas LLC is forfeited by the Texas Comptroller. There seems to be a disconnect regarding who is responsible for filing the annual reports to the state of Texas.
When LLC formation documents are filed with the state of Texas, there has to be a registered agent assigned to the entity and on record with the Texas Secretary of State. A registered agent is a person or office of the entity whom may be served any process, notice, or demand required or permitted by law to be served on the entity. The registered office may the same as the entity’s place of business. Some LLC’s use the same bookkeeping or tax service used to file their initial LLC formation paperwork as their registered agent. This is where the discrepancy between what the business entity and the bookkeeper or tax service believe should be the duties of the registered agent.
The registered agent has a duty to forward any correspondence to the business’ point of contact. If the bookkeeper filed the initial paperwork for the LLC and there was not an agreement to file tax returns or annual information reports, it is the business’ responsibility to file or engage a third party to prepare and file their state public information reports. One of the following actions are taking place leading to the state of Texas forfeiting an entities’ right to conduct business in the state:
- Registered agent with the Secretary of State receives the correspondence and is not forwarding the correspondence.
- The business is receiving the correspondence but thinks the registered agent bookkeeper or tax service is working with the Texas Comptroller.
- The business owner is confused because no tax is due and doesn’t know what to do.
There are several LLC formation companies who provide LLC formation services but these are not tax compliance services. It is important for a business to understand the state of Texas filing requirements. For 2026 & 2027, the no tax due threshold is $2,650,000.00. If you have sales less than this amount, you do not have to file a franchise tax return BUT you do have to file a Public Information Report with the Texas Comptroller. There is no fee for a late Public Information Report filing however this does not mean the report can be skipped. The following steps are taken by the Texas Comptroller if the report is not filed by May 15th:
- Texas Comptroller sends out a warning regarding the late report
- If the entity does not file within 45 days of the warning, the Texas Comptroller forfeits the entities’ right to conduct business in the state.
- After 120 days, the Texas Comptroller will notify the Texas Secretary of State of the forfeiture, and the entity is terminated in the state of Texas.
- At this point the entity’s name is up for grabs. If another entity claims the name, the forfeited entity has to change their name.
As you can see missing a report when there was no tax due causes major legal problems for entities.
If a business does not have a tax department, it is crucial to hire a third party to file their state returns. Since most businesses file federal tax returns, they should discuss adding state Public Information Reports reports to their tax filing packages.
Any business owner can check the status of their entity with Texas Comptroller by navigating to the Texas Franchise Tax Account Status check below:
https://comptroller.texas.gov/taxes/franchise/account-status/search
For more information on how to reinstate your entity, refer to my reinstatement page.