As the saying goes, “you cannot escape death or taxes.”
Word to the wise..file you franchise tax return with the Texas Comptroller of Public Accounts by the deadline or bad things can happen. If your company generated less than $1,080,000.00 in the 2015 reporting year ($1,110,000.00 for 2016 and 2017 reporting years), then it is not required to pay any franchise tax – but you still have to submit the No Tax Due Report by May 16, 2016.
What happens if you fail to submit your report? Any or all of the following:
- your company can be forfeited, and you lose the liability protection provided by a company, exposing officers and directors of the company to personal liability for the company’s debts and other actions;
- if your company status is forfeited, your personal assets can be seized, not to mention the company’s assets;
- you will have to pay a penalty to both the Texas Comptroller’s Office and the Secretary of State’s Office; and
- you will have to reinstate the company with both the Texas Comptroller’s Office and the Secretary of State’s Office, a process that’s tedious and time consuming.
I had a representative from the Texas Comptroller’s office visit my offices this afternoon looking for an individual that was a former client of mine. Unbeknownst to me, this client had failed to file his franchise tax returns with the state. I must admit that this was the first visit from the Texas Comptroller’s office that I’ve had in my entire time practicing law. The representative informed me that the State wanted to talk to him directly because they were getting ready to start seizing his assets – yes, this does actually happen. I then asked said representative whether the Texas Comptroller’s Office waits until a company has failed to file for several years before commencing those proceedings. “No” she quickly responded, “I’ve started this process on companies that are 4 months delinquent.”