How to Dissolve a Nonprofit Corporation in Texas: Steps and Filings

To dissolve a nonprofit corporation in Texas, you need a formal vote, a wind-down period to pay creditors, a distribution of remaining assets to another tax-exempt organization, a Certificate of Account Status from the Texas Comptroller, a Certificate of Termination filed with the Secretary of State, and a final return to the IRS. Miss any step and the organization can keep accruing tax and legal obligations long after it stops operating.

Vote to Dissolve

The process starts with a formal decision by whoever runs the organization. Texas law sets three paths depending on your structure.¹

No members or no voting members, and the organization has assets or has been active: the board adopts a resolution to wind up by the vote required in your governing documents.
No members, no assets, and no prior activity: a majority of the organizers or the board can adopt the resolution.
Members with voting rights: the board first approves a resolution recommending dissolution, then the members vote on it at an annual or special meeting.

Check your bylaws before scheduling the vote, because they may require a higher threshold than the statutory minimum. Document the vote in meeting minutes or a written consent. You will need to certify compliance later when you file with the state.

Wind Up Operations and Pay Creditors

Once the vote passes, the organization enters a winding-up period. The nonprofit stops pursuing its mission and focuses on collecting money owed to it, finishing contracts, and paying debts. Texas law requires a dissolving entity to satisfy all liabilities before distributing anything to other organizations.²

Notify every known creditor in writing that the organization is dissolving, and give them a reasonable deadline to submit claims. Shortcutting this step can expose directors personally to debts that surface later. There is no fixed statutory deadline for winding up, but don’t let it drag. An organization that stops operating without formally terminating can still rack up franchise tax obligations with the Comptroller.

Distribute Remaining Assets

After every debt is paid, leftover property must go to tax-exempt purposes. Texas law prohibits distributing a dissolving nonprofit’s assets to directors, officers, or members. Distribution follows a two-step priority:

Property held subject to a condition requiring its return or transfer on dissolution goes back according to that condition.
Unless the certificate of formation says otherwise, everything else goes only to organizations exempt under Section 501(c)(3) of the Internal Revenue Code or described in Section 170(c), under a formal plan of distribution adopted by the corporation.

If anything remains after the plan is carried out, a district court in the county where the nonprofit’s principal office sits decides where it goes, choosing recipients that match the original charitable purpose. The distribution plan needs the same approval as the initial vote to dissolve, and the board should adopt it before filing to terminate.²

Get a Certificate of Account Status from the Comptroller

This is the step people most often overlook, and skipping it stalls the entire termination filing. Before the Secretary of State will process your Certificate of Termination, you need a Certificate of Account Status from the Texas Comptroller. Getting one takes four steps, in order:³

File all outstanding franchise tax and information reports. Even tax-exempt nonprofits typically must file a franchise tax report (often no-tax-due) and a Public Information Report each year.
Pay any tax, penalties, and interest owed.
File a final franchise tax report covering the period starting the day after your last annual report period ended through a date within 60 days of termination.
Request the certificate by submitting Form 05-359 to the Comptroller or through Webfile. The Comptroller then issues Form 05-305, which you include with your termination filing.

Build in time for this. The Comptroller can take several weeks, and unresolved tax issues will delay it further.

File the Certificate of Termination

The filing that ends your nonprofit’s legal existence is the Certificate of Termination, Form 652, submitted to the Texas Secretary of State along with the Comptroller’s Certificate of Account Status. The filing fee is $5.⁴

Form 652 requires:⁵

The nonprofit’s legal name and its Secretary of State file number.
The name and address of each director. Texas nonprofits generally must have at least three.
A statement identifying the event that triggered dissolution, such as a voluntary decision by the board and members.
A statement that the organization has complied with all winding-up provisions of the Texas Business Organizations Code.
A statement that all property has been transferred or distributed in accordance with Chapters 11 and 22 of the Code.

You can file through SOSDirect, SOSUpload, by mail, by courier, or in person.⁶ Termination takes effect on the filing date unless you specify a delayed effective date on the form. Electronic filing processes fastest.⁷

File Your Final IRS Return

Dissolving at the state level does not close out federal obligations. The IRS requires a final information return, and missing it for three consecutive years automatically revokes your tax-exempt status, creating unnecessary complications even for a defunct organization.

File your final Form 990 (or 990-EZ, or 990-PF for private foundations) by the 15th day of the 5th month after your termination date.⁸ A calendar-year nonprofit that terminated on December 31 owes the return by May 15 of the following year. If you terminated mid-year, count forward about four and a half months from that date.

On the final return, check the “Final Return/Terminated” box in header area B on page 1.⁸ Attach Schedule N, which reports the details of the liquidation, including how assets were distributed and to whom.⁹ Schedule N’s instructions are built into the form itself rather than published separately.

Close the EIN and Other Accounts

The IRS cannot cancel an Employer Identification Number because it is a permanent federal taxpayer ID, but it can deactivate the account. If your nonprofit ever applied for exemption, was part of a group ruling, or filed an information return (which covers nearly every 501(c)(3)), the standard EIN closure process does not apply. The IRS directs you to its exempt-organization termination procedures or to call 877-829-5500.¹⁰

Close every other account tied to the organization: bank accounts, state sales tax permits, payroll accounts, insurance policies, and any property tax exemption registrations with the county appraisal district. Cancel your registered agent if you used a third-party service, because those fees keep accruing. Leave no open account that could generate future obligations for an entity that no longer exists.

1
State of Texas. Texas Business Organizations Code Section 22.302 – Certain Procedures for Approval
2
State of Texas. Texas Business Organizations Code Section 22.301 – Approval of Voluntary Winding Up, Reinstatement, Revocation of Voluntary Winding Up, or Distribution Plan
3
Texas Comptroller of Public Accounts. Reinstating or Terminating a Business
4
Office of the Texas Secretary of State. Business Filings and Trademarks Fee Schedule
5
Office of the Texas Secretary of State. Form 652 – Certificate of Termination of a Domestic Nonprofit Corporation or Cooperative Association
6
Office of the Texas Secretary of State. Business Services
7
Office of the Texas Secretary of State. Filing Options
8
Internal Revenue Service. Termination of an Exempt Organization
9
Internal Revenue Service. Form 990 Schedules with Instructions
10
Internal Revenue Service. If You No Longer Need Your EIN