If you’re trying to reinstate a Texas LLC after a franchise tax forfeiture, the document you need from the Comptroller is a Tax Clearance Letter, not a Certificate of Account Status. The Texas Certificate of Account Status for LLC reinstatement is a common misnomer: the Certificate of Account Status is the document the Comptroller issues when an entity is terminating or withdrawing from Texas, while reinstatement after a tax forfeiture requires a separate Tax Clearance Letter confirming the LLC has resolved all outstanding franchise tax obligations.1Texas Comptroller of Public Accounts. Reinstating or Terminating a Business Once you have that letter, you file Form 801 with the Secretary of State along with a $75 fee to bring the LLC back to active status.
Tax Clearance Letter vs. Certificate of Account Status
Two different Comptroller forms sit behind these two documents, and picking the wrong one is one of the most common reasons a reinstatement stalls. Form 05-391, Tax Clearance Letter Request for Reinstatement, is the form you want. Form 05-359, Certificate of Account Status to Terminate a Taxable Entity’s Existence in Texas, is used only when winding the entity down.1Texas Comptroller of Public Accounts. Reinstating or Terminating a Business
The Tax Clearance Letter itself is what the Secretary of State requires as proof under Business Organizations Code Section 11.202 that the entity has satisfied all franchise tax liabilities.2Texas Public Law. Texas Business Organizations Code Section 11.202 – Procedures for Reinstatement Without it, the reinstatement application will not be processed.
What You Have to Clear Before the Comptroller Will Issue the Letter
The Comptroller will not issue a Tax Clearance Letter until the account is fully current. That means every required franchise tax report filed and every dollar of tax, penalties, and interest paid.3Texas Comptroller of Public Accounts. Requesting Tax Certificates and Tax Clearance Letters
Zero revenue does not remove the filing obligation. An LLC with no Texas gross receipts still has to file either the EZ Computation Report or the Long Form, reporting zero on the gross receipts line, along with a Public Information Report or Ownership Information Report. Entities whose annualized total revenue is at or below the no-tax-due threshold do not owe tax and no longer need to file a No Tax Due Report, but the Public Information Report is still required.4Texas Comptroller of Public Accounts. No Tax Due Reporting for Report Year 2024 and Later
Late payments carry a 5 percent penalty within the first 30 days after the due date and 10 percent after that. Statutory interest starts on the 61st day at a rate the Comptroller sets each year.5Texas Comptroller of Public Accounts. Penalties for Past Due Taxes For an LLC forfeited several years ago, the accumulated total across multiple missed periods can be substantial.
Penalty Waiver
The Comptroller does grant penalty waivers, but eligibility is narrow. All reports must already be filed and all tax paid, and if the business received a waiver within the past two years, it generally will not get another absent extenuating circumstances. The maximum waiver covers a single annual report period.6Texas Comptroller of Public Accounts. Penalty Waivers Requests are made on Form 89-224. One thing to know before you plan around a waiver: the Comptroller cannot grant one to a business with an inactive registration, so the waiver has to be worked out while bringing the account current, not after.
How to Request the Tax Clearance Letter
Form 05-391 asks for the LLC’s exact legal name as it appears in state records, the 11-digit Texas Taxpayer Number, and the federal EIN. Mismatches between what you enter and what the Comptroller has on file are a frequent source of delays. Cross-check the numbers against prior Comptroller correspondence or the online account lookup before submitting.
Taxpayers and preparers who have a franchise tax WebFile (XT) number, or who have previously used WebFile for franchise tax, can submit the request electronically. If the system confirms every requirement is met, it produces a PDF Tax Clearance Letter you can file directly with the Secretary of State. Entities that cannot use WebFile mail a paper Form 05-391 to the Comptroller’s Austin office, and mailed requests take considerably longer.3Texas Comptroller of Public Accounts. Requesting Tax Certificates and Tax Clearance Letters
Filing Form 801 With the Secretary of State
With the Tax Clearance Letter in hand, the next filing is Form 801, Application for Reinstatement and Request to Set Aside Tax Forfeiture. The Tax Clearance Letter must be attached to the application.7Texas Secretary of State. Form 801 Instructions – Application for Reinstatement and Request to Set Aside Tax Forfeiture The filing fee is $75 for LLCs and other taxable entities; nonprofit corporations pay no fee.8Texas Secretary of State. Business Filings and Trademarks Fee Schedule
Check Name Availability First
Under Business Organizations Code Section 5.053, an entity name must be distinguishable from every other entity name, registered foreign entity, or reserved name on file with the Secretary of State.9Texas Secretary of State. Name Filings FAQs If another business claimed a similar name during the forfeiture period, the reinstatement application will have to include a name change. Running the Secretary of State’s online entity search before filing avoids a rejection.
No Deadline to Reinstate
There is no fixed deadline for reinstating after a tax forfeiture. A filing entity forfeited under the Tax Code may reinstate at any time as long as it would otherwise continue to exist, provided the reports are filed, the balance is paid, and the reinstatement application is submitted with the Tax Clearance Letter.10Texas Secretary of State. Terminations and Reinstatements FAQs Waiting has costs, though: penalties and interest keep growing, and anyone continuing to transact business in the LLC’s name during the forfeiture period is exposed to personal liability for those obligations.
What Reinstatement Fixes, and What It Doesn’t
If the LLC is reinstated before the third anniversary of its involuntary termination, the statute treats it as though it continued in existence without interruption from the date of termination.11State of Texas. Texas Business Organizations Code Section 11-253 – Reinstatement by Secretary of State After Involuntary Termination That relation-back can preserve the validity of contracts and obligations entered into while the LLC was forfeited.
The statute is equally clear about what reinstatement does not do: it has no effect on any issue of personal liability of the LLC’s managers, officers, or agents during the period between forfeiture and reinstatement.11State of Texas. Texas Business Organizations Code Section 11-253 – Reinstatement by Secretary of State After Involuntary Termination Personal guarantees signed or individual liability incurred during the gap survive reinstatement. Miss the three-year window and the entity loses the continuous-existence treatment altogether, which can leave contracts made during the forfeiture period on weaker footing.
Once the Secretary of State issues the certificate of reinstatement, the LLC is back to active status and regains its legal protections going forward, with the ability to contract, sue, and be sued in its own name.