Stayin' Alive: Annual Filing Requirements for Texas Entities

Every LLC, corporation, and limited partnership formed or registered in Texas must make annual filings with the Texas Comptroller of Public Accounts to stay alive. Unlike Delaware, California, Florida, and Ohio, where annual public information reports are filed with the Secretary of State, both franchise tax and information report filings in Texas are due to the Comptroller. The filing deadline is May 15 each year.

Letters from the Texas Comptroller of Public Accounts are Not Junk

If you recently received a letter from the Texas Comptroller regarding your business entity, do not discard it. It is likely a notice of delinquencies that can still be cured without detriment to your entity's standing.

Continued inaction can have severe consequences. If deficiencies are not cured, the Comptroller may forfeit your entity’s rights to conduct business in Texas, placing the entity in what is commonly referred to as tax forfeiture, as further discussed below. You can check your entity’s status with the Comptroller here.

Texas Annual Filing Requirements

Annual Comptroller filings are the only periodic filings required to maintain an entity’s rights to conduct business in Texas. The required filings include a public information report and, if revenues exceed the tax year’s filing threshold (currently $2.65 million), a franchise tax return and payment. There is no fee for timely filings.

Prior to 2024, entities below the franchise tax threshold filed “No Tax Due” reports. These are no longer required, but the public information report remains mandatory. If nothing has changed since the prior filing, a box can be checked to carry forward that data, but the filing itself is still necessary.

Filing Responsibility

Responsibility for an entity’s annual Texas Comptroller filings should be considered and specifically assigned. Companies that act as registered agents and handle formations or amendments do not generally file annual information reports. Because information reports are filed with the Comptroller, they appear tax-related, but the content is not financial, placing responsibility in an odd category. It is important not to assume your organization’s tax professional will handle annual Texas information report filings, particularly in years when a franchise tax return is unnecessary. If your entity’s tax professionals do manage these filings, it is equally important to ensure they have current information to report. Changes in officers and addresses are not routinely communicated to CPAs, and outdated management information is frequently carried over from year to year.

The XT Number

Reports are to be filed through the Comptroller’s online system. Paper filings may still be accepted but have longer processing times. To create an electronic filing account, the entity’s "XT" number and Texas Taxpayer number are required. The Taxpayer number is public and can be found online. The XT number, however, is a PIN and is not readily available online. An entity principal with knowledge of its financial records may be able to obtain the XT number by calling the Comptroller, but outside counsel and corporate filing companies cannot. They can only prompt the Comptroller to send a new letter containing the number, which takes time.

Migration to Secretary of State Records

Information from the public information report filed with the Texas Comptroller migrates to the Secretary of State's records. This serves as a mechanism to update previously reported officers, directors, managers, or managing members without a formal amendment or change filing with the Secretary of State.

Accurate reporting is important, as the Comptroller filing populates the then-current public record of an entity's leadership. Care should be taken to report current and correct content. This includes the company’s address and the names, business addresses, and titles of the entity’s governing persons. Titles matter. An individual who is both a member and a manager of an LLC likely has the title of “Manager” rather than “Managing Member,” which connotes ownership that need not be publicly disclosed.

The reports also identify entities owning at least ten percent (10.00%) of the filer and entities in which the filer owns at least ten percent (10.00%) of the equity interests. If an entity has raised capital or restructured in the prior year, changes could be necessary. Consequences of Noncompliance Tax forfeiture carries serious penalties in and of itself, including potential default under loan covenants or other contractual obligations to maintain an entity in good standing. Until cured with the Comptroller, tax forfeiture also has litigation-related consequences and, most critically, can result in personal liability for entity principals. Entity principals face personal liability for obligations incurred while the entity's rights are forfeited. This exposure arises as soon as the Comptroller acts, regardless of whether the Secretary of State terminates the entity’s Texas charter. The limited liability protection that the entity was formed to provide can be compromised, leaving owners, officers, and managers personally exposed.

Tax forfeiture by the Comptroller can also lead to forfeiture by the Secretary of State. The entity must then revive with the Comptroller before it can reinstate with the Secretary of State. Reinstatement after forfeiture of a charter or foreign registration with the Secretary of State is a two-step process (one could say a Texas two-step) that can take multiple business days. This is problematic if forfeiture is discovered on the eve of a closing or other time-sensitive situation (particularly if the XT number has been misplaced). The entity’s name is not reserved during the period of forfeiture and may no longer be available when the entity needs to reinstate. If your entity’s life is goin’ nowhere with the Comptroller, somebody can help you resuscitate it. Treat correspondence from the Comptroller with urgency, stay current on annual filings, and address any delinquencies before they escalate. For further information, please contact Susan George Broach.