Tag: Texas Reinstatement

  • Why a Missing Texas Tax Clearance Letter Request Kills a Reinstatement

    Why a Missing Texas Tax Clearance Letter Request Kills a Reinstatement

    Tax Clearance Letter Request and the Golden Ticket

    Is your Texas business involuntarily terminated or in a forfeited existence status with the Secretary of State?  Those two terms are as bad as they sound for a Texas business.  When researching to figure out how to get your entity back in good standing, you will come across the terms tax clearance letter and reinstatement.  Some of the information is not clear about this process.  I will discuss the Texas tax clearance letter request process and how the Tax Clearance Letter is the golden ticket to reinstating your Texas business entity.

    How does a Texas business become forfeited or terminated?

    All business entities in Texas must file one or more of the following annually by May 15:

    • Texas Franchise Tax Report – the filing threshold is $2,650,000 for 2026.  Depending on the type of entity, one of the following information reports must be filed along with the annual Texas Franchise Tax Report.
      • Public Information Report (PIR) – corporations, limited liability companies (LLC), limited partnerships, professional associations, and financial institutions.
      • Owner Information Report (OIR) – all other Texas business entity types.
    • If the business entity’s annual revenue is below the $2,650,000 threshold, only the information reports must be filed by May 15 to stay in compliance.

    If any other above filing requirements are not met, the business entity will become forfeited with the Texas Comptroller and eventually Involuntarily Terminated with a forfeited existence with the Secretary of State.

    Tax Clearance Letter Request

    To get back in good standing, the business must first file all past due annual reports as detailed above and pay any late fees and penalties.  Once this is completed, the business entity has to submit a request with the Texas Comptroller to verify they are current on all annual filings and fees.  The Comptroller then produces a Tax Clearance Letter (Form 05-377).   Once the Tax Clearance Letter is received, the business can then submit it along with the Secretary of State form to reinstate the entity.

    Tax Clearance Letter Facts

    The application for reinstatement with the Texas Secretary of State will get rejected if the Tax Clearance Letter is not included with the application.  The Secretary of State explicitly states, An application of reinstatement must be accompanied by a tax clearance letter from the Texas Comptroller of Public Accounts stating that the entity has satisfied all franchise tax liabilities and may be reinstated.  The application fee for reinstatement is $75 and you will have to reapply if the Tax Clearance Letter is not submitted.

    If the application gets rejected and the business has not filed the past due annual reports, the Comptroller will continue to assess late fees and penalties, the business can be denied the right to sue or defend itself in a Texas court, and each director or officer of the entity can be held liable for debt of the business.  This is why the Tax Clearance Letter request is so important.  You may think you are ready to complete the reinstatement application, but if the Texas Comptroller account is not current, the reinstatement cannot happen.

    Online Reinstatement Research

    If you search for reinstatement help online, you will see a lot of companies advertising to reinstate your LLC.  Some of these services do not include filing the franchise tax and information reports. The filing company expects you to have completed the back filings.   You as the business owner have to submit the Tax Clearance Letter request and send the Tax Clearance Letter to the filing company to complete the reinstatement process.  

    My firm handles the reinstatement process from beginning to end.  I pull the Comptroller records to determine which reports are due and how much is owed in penalties and late fees.   I then submit the Tax Clearance Letter request and send it along with the application for reinstatement to the Secretary of State.  The complete package.  I will do the heavy lifting to give you peace of mind.

    Request an Entity Status Review

    Submit your entity details through the secure intake form for a direct review by a Texas CPA. Andris Financial Services examines public state records and emails a diagnostic breakdown of missing filings along with a flat fee proposal the same business day!

    Visit the Texas Comptroller to get more information regarding Form 05-391 Tax Clearance Letter Request and Reinstatements.

    Get more Tax Clearance Letter Request information
  • Is Your Texas LLC Closed or Terminated?

    Is Your Texas LLC Closed or Terminated?

    Find out why termination is not always a bad thing.

    How does an entity enter delinquency status?

    In 2024, the state of Texas eliminated the No Tax Due report for franchise tax.  This led to many business owners failing to file their required annual Public Information Report.  If this annual report is not filed, the Comptroller will send out an intent to forfeit notice.  One of the following is the reason for this notice:

    • Failure to file franchise tax returns
    • Failure to pay franchise tax due to the Texas Comptroller
    • Failure to file the annual Public Information Report (PIR) or Owner Information Report (OIR)

    The Change to Forfeited Status

    If the reports are not filed or taxes are left unpaid after the notice is sent, the status of the LLC is updated to forfeited. This status means your Texas LLC is no longer is in good standing with the state and has lost its liability protection.  Legally the entity still exists, but it has lost the liability protections such as the following:

    • right to sue or defend in a court of this state
    • directors or officers of the LLC are liable for a debt of the corporation

    To get back in good standing, the LLC must file any delinquent franchise tax returns, pay any penalties and late fees, and file the Public Information Reports.

    Involuntary Termination and Reinstatement

    A Texas LLC is involuntarily terminated after the Secretary of State administratively ends the entity. This occurs after the forfeiture is not resolved.  

    To get an LLC back in good standing after getting involuntarily terminated by the Secretary of State, the process is called reinstatement.  The entity must request a Tax Clearance Letter from the Texas Comptroller.  The Comptroller will confirm whether the LLC has paid all taxes and fees and all tax returns are filed and current.  A request to set aside the tax forfeiture is then filed with the Secretary of State along with the Tax Clearance Letter to get back in good standing. The filing fee is $75.00.

    Voluntary Termination and Closed LLC

    The confusion among some business owners is the term termination.  The process to close or dissolve an LLC is called termination but this termination is voluntary and initiated by the business owner unlike the involuntary termination following forfeiture.

    If a business owner wants to dissolve or close their LLC in Texas, they must request a Certificate of Account Status with the Comptroller.  The Comptroller will certify that all taxes are paid and all state tax returns are filed.  Once the certificate is received, the LLC must file a certificate to terminate the LLC with the Secretary of State.  The certificate of termination request has to state why the LLC is being dissolved.  The application will be rejected if this is not included.  The filing fee for the certificate of termination is $40.00.

    Below is a summary of the actions needed for each step listed above.

    StatusAction NeededResulting Status
    Forfeited LLCPay Fees/File Franchise Tax Returns/File Public Information ReportActive
    Involuntarily Terminated LLCRequest Tax Clearance Letter/File to Set Aside ForfeitureActive
    Terminate/Dissolve/ Close LLCRequest Certificate of Account Status/File Certificate of TerminationFranchise Tax Ended

    Next Steps: How to Resolve Your Texas LLC Status

    Whether you need to revive your forfeited business or cleanly shut down an inactive entity, resolving your status with the State of Texas requires a specific multi-step administrative process.

    • Step 1: Account Audit & Delinquency Review – Review your Texas Comptroller WebFile ledger to identify all unfiled Franchise Tax Reports, Public Information Reports (PIR), and outstanding statutory late fees.
    • Step 2: File All Past-Due Reports – Prepare and submit all missing annual franchise tax filings up through the current report year (or final report year for dissolutions).
    • Step 3: Secure Your Official State Tax Clearance
      • To Reinstate: Request Form 05-377 (Tax Clearance Letter for Reinstatement).
      • To Terminate: Request Form 05-359 (Certificate of Account Status for Termination).
    • Step 4: Submit Final Filings to the Texas Secretary of State – File your tax clearance document with the Secretary of State along with Form 801 (Application for Reinstatement) or Form 651 (Certificate of Termination).

    Closed or Terminated LLC FAQ

    Can I dissolve a Texas LLC that is already forfeited?

    No. The Texas Secretary of State rejects termination filings for forfeited entities. You must first resolve all back franchise tax reports, pay any penalties with the Comptroller, and secure Form 05-359 (Tax Clearance Letter) before filing your Certificate of Termination.

    What is the difference between “Inactive/Forfeited” and “Forfeited Existence”?

    “Inactive/Forfeited” is a Comptroller status meaning your tax reports are delinquent and your right to transact business or use Texas courts is suspended. “Forfeited Existence” is a Secretary of State action that happens roughly 120 days later, officially dissolving the legal charter and exposing owners to personal liability.

    Why shouldn’t I just abandon my LLC and let the state shut it down?

    Under Texas Tax Code § 171.255, once an entity is forfeited, directors and officers can be held personally liable for debts, taxes, and penalties incurred during forfeiture. The Comptroller also keeps the unfiled reports and late penalties permanently attached to the organizers.

    What does “Franchise Tax Ended” mean on the Comptroller website?

    It means the active franchise tax account has been closed. This occurs when the business completed a formal dissolution.

    Who issues the Tax Clearance Letter?

    The Texas Comptroller issues the Tax Clearance Letter (Form 05-377), not the Secretary of State. Once the Comptroller verifies all back returns and fees are satisfied, you submit that certificate to the Secretary of State alongside your reinstatement forms.

    If you file bankruptcy on a Texas business LLC, will it show up on the Texas Secretary of State website?

    No. Bankruptcy is governed entirely by federal law and handled through the U.S. Bankruptcy Courts, not state filing offices. The Texas Secretary of State does not track, receive, or display federal bankruptcy filings or automatic stays on its entity search portal.

    Need Help Resolving Your Texas Entity Status?

    Navigating past due franchise tax reports, statutory forfeiture penalties, and state clearance letters can be time consuming and detailed process. Any missed step can derail a property sale, delay a closing, or leave your business stuck in administrative limbo for weeks.

    I handle the entire administrative process from start to finish beginning with auditing your Comptroller ledger, preparing required back filings, obtaining your official tax clearance letter, and filing with the Secretary of State so you can regain good standing or cleanly close out your business records.

    (Note: I provide administrative tax compliance and state filing services. I do not provide legal advice or internal dispute resolution.)

    Request an Entity Status Review

    Submit your entity details through the secure intake form for a direct review by a Texas CPA. Andris Financial Services examines public state records and emails a diagnostic breakdown of missing filings along with a flat fee proposal the same business day!

    Visit the Texas Comptroller to view your account status.

    View Your Account Status
  • Is Your Texas Asset at Risk? The High Cost of Forfeited Out of State Entities

    Is Your Texas Asset at Risk? The High Cost of Forfeited Out of State Entities

    Why Out of State Owners are Getting Forfeited (And How to Fix It)

    Operating an out of state business in Texas offers tremendous commercial opportunity, but out-of-state owners frequently run into strict regulatory compliance hurdles.

    If your business was formed in another state such as Delaware, Nevada, Wyoming, or California and conducts business in Texas, the Texas Secretary of State (SOS) legally classifies your company as a foreign entity.

    When a foreign entity fails to maintain annual compliance with the Texas Comptroller of Public Accounts, the state revokes its registration. For out-of-state owners holding Texas real estate, managing commercial contracts, or securing financing, a forfeited status creates immediate legal and financial exposure.

    What Triggers the Requirement to Register in Texas?

    Under the Texas Business Organizations Code (BOC), a foreign entity must submit an Application for Registration (Form 304 for LLCs or Form 301 for for-profit corporations) and pay the state filing fee ($750 for most for-profit entities; $25 for nonprofits). The state provides a 90-day grace period to complete this registration after initially transacting business in Texas.

    While the statute does not provide a single definition of transacting business, Texas Business Organizations Code § 9.251 specifically outlines activities that do not constitute transacting business. Common exceptions include:

    • Maintaining, defending, or settling an action, lawsuit, arbitration, or administrative proceeding.
    • Holding meetings of managerial officials, directors, owners, or members.
    • Maintaining bank accounts in Texas.
    • Securing or collecting debts, or enforcing rights in property securing those debts.
    • Creating or acquiring indebtedness, mortgages, or other security interests in real or personal property.
    • Owning, without more, real or personal property located in Texas.
    • Conducting an isolated transaction completed within 30 days that is not part of a repeated series of similar transactions.

    If your entity’s operations extend beyond these statutory safe harbors such as maintaining physical operations, hiring Texas-based employees, holding active rental income property, or executing ongoing retail/service contracts formal registration is required.

    The Penalties for Unregistered or Forfeited Foreign Entities

    Operating without registration or allowing your registration to lapse carries severe consequences:

    1. Cumulative Statutory Late Fees: Under the Texas Business Organizations Code, an entity that transacts business in Texas without registering is liable to the state for an amount equal to the registration fee ($750) for each calendar year (or partial year) it operated without active registration, plus statutory late penalties.
    2. Loss of Court Access: A foreign entity cannot maintain any action, suit, or proceeding in a Texas court until it registers and restores active standing.
    3. Injunction by the Texas Attorney General: The Attorney General may enforce compliance and enjoin an unregistered entity from conducting any business within the state.
    4. Transaction Halts: Title companies, escrow officers, and commercial lenders regularly check the Texas Comptroller’s franchise tax database. If your entity status shows as forfeited, lenders will pause loan closings, and title companies will refuse to clear deed transfers or refinancing packages until full reinstatement is verified.

    How to Reinstate a Forfeited Foreign Entity in Texas

    Restoring a revoked or forfeited foreign entity requires a structured, multi-agency procedure between the Texas Comptroller of Public Accounts and the Texas Secretary of State.

    Step 1: Resolve Comptroller Tax Compliance & Clear Delinquencies

    The Secretary of State will not process a reinstatement until the Texas Comptroller confirms all reporting obligations are satisfied.

    • File All Delinquent Reports: You must submit all past-due Texas Franchise Tax reports and Public Information Reports (PIR) for every delinquent year.
    • Understand Comptroller Penalties: If your annualized total revenue is at or below the state’s no tax due threshold, you only need to submit the missing Public Information Report (PIR) for each report year. The Comptroller does not assess a $50 late-filing penalty for late filed zero revenue PIRs. However, if your entity exceeded the revenue threshold, all calculated tax, applicable statutory late fees, and interest must be paid in full.
    • Obtain Form 05-377 (Tax Clearance Letter): Once all reports are processed and accounts are current, submit a formal request to the Comptroller for Form 05-377, Tax Clearance Letter for Reinstatement.

    Step 2: Prepare the Correct Secretary of State Reinstatement Filing

    Once the Comptroller issues your Form 05-377 Tax Clearance Letter, file the appropriate reinstatement documents with the Secretary of State:

    • Form 801 (Application for Reinstatement): Used if the foreign entity’s registration was revoked specifically for tax forfeiture under Chapter 171 of the Texas Tax Code.
    • Form 811 (Application for Reinstatement and Set Aside of Revocation): Used if the revocation occurred for non-tax administrative reasons, such as failing to maintain an active registered agent or registered office in Texas.

    Step 3: Pay State Filing Fees

    The state filing fee for Form 801 is $75. If you are facing an urgent real estate closing, banking deadline, or legal proceeding, expedited processing is available through the Secretary of State for an additional fee to secure prompt approval.

    Restore Your Texas Business Entity Standing

    Resolving a forfeited foreign entity involves navigating state agency backlogs, preparing delinquent reports correctly, and coordinating state clearance.

    I provide direct CPA representation to handle the entire reinstatement process from start to finish. I work with the Texas Comptroller to file past due reports, remove state holds, secure Form 05-377 Tax Clearance, and file formal reinstatement paperwork with the Texas Secretary of State.

    If your out of state LLC or corporation has been forfeited or revoked in Texas, contact Andris Financial Services today to review your entity status and restore active standing.

    Request an Entity Status Review

    Submit your entity details through the secure intake form for a direct review by a Texas CPA. Andris Financial Services examines public state records and emails a diagnostic breakdown of missing filings along with a flat fee proposal the same business day!