How to Complete and File Form 05-166: Texas Franchise Tax Affiliate Schedule

Texas Form 05-166, the Franchise Tax Affiliate Schedule, is filed by the designated reporting entity of a combined group to list every member of that group on a single franchise tax return. It is not a standalone filing. It attaches to the group’s main franchise tax report and captures each affiliate’s legal name, Texas taxpayer number, FEIN, accounting period, and pre-elimination gross receipts figures so the Comptroller can tie the whole corporate family to one return.

Who Files the Schedule

Only the reporting entity files Form 05-166, and it files on behalf of the entire combined group. Texas Tax Code §171.1014 requires affiliated entities engaged in a unitary business to file one combined report rather than separate returns.¹ The group counts as one taxable entity for franchise tax purposes, and Form 05-166 is the schedule that names every member.

An affiliated group exists when one entity holds more than 50 percent of the voting power or beneficial ownership in another, directly or indirectly. The same threshold applies to partnerships, trusts, and LLCs, measured by capital, profits, or membership interest.² Without that common ownership tie, there is no combined group and no reason to file this schedule.

The reporting entity is the parent company if the parent is itself part of the combined group. If the parent has no Texas nexus or otherwise falls outside the group, the member with the greatest Texas business activity during the first reporting period takes the role.³ That entity handles filings, payments, refund claims, and communication with the Comptroller for the whole group, and elections it makes (cost of goods sold versus compensation, for example) bind every member.¹

Passive Entities Are Left Off

A passive entity does not belong on the schedule even if it shares common ownership with the group. Under Texas Tax Code §171.0003, an entity qualifies as passive only if it is a general partnership, limited partnership, or non-business trust with at least 90 percent of its federal gross income coming from passive sources such as dividends, interest, capital gains on real property or securities, royalties from mineral interests, or distributive shares of partnership income, and no more than 10 percent from an active trade or business.⁴ Rental income does not count as passive for this test. A passive entity files its own franchise tax report and stays off Form 05-166.

Information to Pull Together First

For the reporting entity and every affiliate, have this ready before opening the form:

Legal name exactly as filed with the Texas Secretary of State or the entity’s jurisdiction of formation. Mismatches stall processing.
The 11-digit Texas taxpayer number assigned by the Comptroller.
The federal employer identification number, which is used in place of a Texas taxpayer number when an affiliate has none.⁵
Accounting period beginning and ending dates in MM/DD/YY format.
Gross receipts everywhere, gross receipts in Texas, and gross receipts subject to throwback in other states, all before intercompany eliminations.
Cost of goods sold or compensation for each affiliate before eliminations, depending on which deduction the group elected.

Filling Out the Form

Download the current version from the Comptroller’s franchise tax forms page.⁶ The header takes the reporting entity’s taxpayer number, name, and report year. Enter those first so the schedule ties cleanly to the main return.

The body is a grid, one row per entity. Put the reporting entity in the first row. Then list each affiliate’s legal name, Texas taxpayer number (or FEIN if no taxpayer number exists), and accounting period dates. The form has a circle to blacken if the entity is disregarded for franchise tax purposes and a separate designation for entities without Texas nexus.⁵ Mark these accurately. An out-of-state affiliate with no Texas physical presence or economic activity still belongs on the schedule but must be flagged as having no nexus.

For each affiliate, enter the gross receipts fields (throwback receipts, everywhere, Texas) and cost of goods sold or compensation. All figures are pre-elimination at this stage. The Comptroller’s system uses them to verify the combined apportionment calculation on the main return.

Verify every taxpayer number and FEIN digit by digit. Transposed numbers are the most common mistake on this schedule, and they either cause the return to reject or send payments and credits to the wrong account. If the group has more affiliates than rows, attach additional copies of Form 05-166.

What Form 05-166 Attaches To

Form 05-166 goes in as part of a package. The main report depends on how the group calculates taxable margin:⁶

Long Form (05-158-A and 05-158-B) for most combined groups using cost of goods sold, compensation, or the 70-percent-of-revenue method.
EZ Computation (05-169) when total annualized revenue falls at or below the Comptroller’s threshold.

A combined group also files Form 05-177 (Common Owner Information Report) if it has business loss carryforward credits.⁵ Separately, each affiliate organized in Texas or with Texas nexus files its own Public Information Report (Form 05-102) or Ownership Information Report (Form 05-167).⁷ Missing one of those individual reports for an affiliate is a common trigger for follow-up notices.

Deadline and Extensions

The franchise tax report, with Form 05-166 attached, is due May 15 each year. If May 15 falls on a weekend or holiday, the deadline rolls to the next business day.⁸

Extensions are requested on Form 05-164 or through WebFile, and the request plus any required payment has to be in by May 15. For most entities, an extension runs to November 15. Entities required to pay franchise tax by electronic funds transfer (those that paid $10,000 or more in the prior state fiscal year) get a first extension only to August 15 and must request a second extension by that date to reach November 15.⁹ Entities that paid $500,000 or more must make extension payments through TEXNET rather than WebFile.

How to Submit

WebFile, accessed through the Comptroller’s eSystems portal, is the standard method. You register, then file and pay in the same session. Submissions must be finished by 11:59 p.m. Central Time on the due date. Approved third-party tax software can also transmit returns electronically. An entity required to file electronically that submits on paper instead pays an additional 5 percent penalty.¹⁰

Paper filings go to:

Texas Comptroller of Public Accounts
P.O. Box 149348
Austin, TX 78714-9348¹¹

A paper return has to be postmarked on or before the due date to be timely.

What a Late or Incomplete Filing Costs

The Comptroller charges a flat $50 penalty on every report filed after the deadline. Late tax payments carry an additional 5 percent penalty within 30 days of the due date and 10 percent after 30 days. Interest starts running 61 days after the due date.⁸

The bigger exposure is forfeiture. The Comptroller must forfeit an entity’s right to transact business in Texas for failure to meet franchise tax filing requirements. A notice goes out first, giving at least 45 days to cure. If the entity does not file in that window, it loses the right to sue or defend itself in Texas courts, and each officer and director becomes personally liable for the entity’s debts.¹² For a combined group, an affiliate schedule that leaves out a member or carries a wrong taxpayer number can trigger automated notices and hold up the whole group’s return.

Groups That Owe No Tax Still File

A combined group with annualized total revenue at or below $2,650,000 owes no franchise tax.⁸ It still files a return and still attaches Form 05-166 listing every affiliate. The schedule is a reporting requirement, not a tax computation, and skipping it because no tax is owed is one of the faster routes to a forfeiture notice.

Records to Keep

Hold onto the completed affiliate schedule, the main report, and all supporting documentation for at least four years from the filing date. The Comptroller can assess additional tax within four years of the date tax becomes due or the report is filed, whichever is later. Keep records showing how each affiliate’s gross receipts and nexus status were determined; the Comptroller can request tax and financial records for every group member, including entities without Texas nexus.³

1
Texas Statutes. Texas Tax Code 171.1014 – Combined Reporting; Affiliated Group Engaged in Unitary Business
2
State of Texas. Texas Tax Code 171.0001 – Definitions
3
Legal Information Institute. 34 Texas Admin Code 3.590 – Margin: Combined Reporting
4
State of Texas. Texas Tax Code 171.0003 – Passive Entity Defined
5
Texas Comptroller of Public Accounts. Form 05-166 Texas Franchise Tax Affiliate Schedule
6
Texas Comptroller of Public Accounts. Texas Franchise Tax Report Forms for 2025
7
Texas Comptroller of Public Accounts. Texas Franchise Tax Public Information Report (PIR) and Ownership Information Report (OIR) Filing Requirements
8
Texas Comptroller of Public Accounts. Franchise Tax
9
Texas Comptroller of Public Accounts. Franchise Tax Extensions of Time to File
10
Texas Comptroller of Public Accounts. File and Pay
11
Texas Comptroller of Public Accounts. Texas Franchise Tax Forms
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Texas Comptroller of Public Accounts. Franchise Tax Account Status