The Texas franchise tax late filing penalty is a flat $50 for every late report, plus 5% of any unpaid tax if you miss the May 15 deadline and another 5% if the tax is still unpaid 30 days later. Interest on the unpaid tax starts 60 days after the due date at 7.75% for 2026. The $50 applies even if your revenue is below the no-tax-due threshold and you owe nothing.1State of Texas. Texas Tax Code 171.362 – Penalty for Failure to Pay Tax or File Report
What the Penalty Actually Costs
The structure has two layers. The flat piece hits every late report, regardless of tax owed. The percentage piece scales with your liability.
- $50 flat penalty on any late report, including a late no-tax-due report or Public Information Report.1State of Texas. Texas Tax Code 171.362 – Penalty for Failure to Pay Tax or File Report
- 5% of the unpaid tax if filed or paid after May 15.
- An additional 5% (total 10%) if the report still isn’t filed or the tax still isn’t paid 30 days after the due date.
- A $1 minimum on the percentage portion, so any tax balance produces at least some penalty on top of the $50.
For the 2026 report year, entities with annualized total revenue of $2.65 million or less fall under the no-tax-due threshold. Those businesses still owe a Public Information Report or Ownership Information Report, and filing it late triggers the same $50 penalty as a report with tax due.2Texas Comptroller of Public Accounts. Texas Franchise Tax Report Forms
When Interest Starts and How Much
Interest begins accruing 60 days after the tax is due. The rate equals the Wall Street Journal prime rate plus 1%, set on the first business day of each calendar year. The 2026 rate is 7.75%. For comparison, the 2025 rate was 8.50%.3Texas Comptroller of Public Accounts. Interest Owed and Earned
Interest runs on the unpaid tax itself, not on the penalties. Across multiple delinquent years, the combination of 10% penalties and compounding interest grows quickly.
How to File the Late Report and Pay
Late franchise tax reports go through the Comptroller’s Webfile portal at comptroller.texas.gov. You’ll need your 11-digit Texas Taxpayer Number from prior Comptroller correspondence and a Webfile number to log in.4Texas Comptroller of Public Accounts. Franchise Tax
Entities above the no-tax-due threshold file either the Long Form (Form 05-158-A) or, if they qualify, the EZ Computation Report (Form 05-169). Everyone also files a Public Information Report or Ownership Information Report, whether or not tax is owed.2Texas Comptroller of Public Accounts. Texas Franchise Tax Report Forms
Payment can go by electronic funds transfer from a bank account or by credit card. The credit card processing fee is $1 for payments up to $100 and 2.25% plus $0.25 for anything larger, so a bank transfer usually costs less on a sizable balance.5Texas Comptroller of Public Accounts. Pay with Credit Card Save the confirmation number Webfile generates as your proof of filing.
Asking for a Penalty Waiver
The Comptroller can waive the penalty if you have a reasonable explanation, but you have to clear several bars first. Your business must be current on all other state tax filings and payments, and your registration with the Secretary of State must be active.6Texas Comptroller of Public Accounts. Penalty Waivers
Several things disqualify a request outright:
- You received a penalty waiver within the past two years, absent extenuating circumstances.
- The Comptroller has already started collection activity, such as freezing a bank account, seizing assets, or sending the account to a third-party collector.
- More than four years have passed since the tax became due and payable.
If you qualify, the maximum waiver covers one annual report period. Explain the specific circumstances that caused the late filing and what you’ve put in place to keep it from happening again. For entities with multiple delinquent years, the Comptroller offers a Voluntary Disclosure Agreement through its Business Activity Research Team that can cover more periods than a standard waiver.6Texas Comptroller of Public Accounts. Penalty Waivers
What Happens If You Keep Ignoring It
Penalties and interest are the manageable part. If you let a delinquency drag on, the Comptroller sends a notice of forfeiture. You have 45 days from that notice to file the missing reports and pay all tax, penalties, and interest. Miss that window and your entity’s corporate privileges are forfeited.7State of Texas. Texas Tax Code 171.251 – Forfeiture of Corporate Privileges
A forfeited entity loses the right to sue or defend itself in any Texas court.8State of Texas. Texas Tax Code 171.252 – Effects of Forfeiture If a customer stops paying, you can’t collect in court. If someone sues the business, you can’t put up a defense.
The liability shield also drops. During forfeiture, each officer and director becomes personally liable for business debts created or incurred in Texas after the report, tax, or penalty was due and before privileges are revived. That liability includes the franchise tax and penalties that come due during the forfeiture period, and the statute treats each officer and director as a general partner with respect to those debts. The only defense is narrow: the debt was created over your objection, or it was created without your knowledge and reasonable diligence wouldn’t have revealed it.9State of Texas. Texas Tax Code Chapter 171 – Franchise Tax – Section: Liability of Director and Officers
Reinstating After Forfeiture
Bringing a forfeited entity back takes two agencies. Start with the Comptroller: file every delinquent franchise tax report and pay all tax, penalties, and interest. Then submit Form 05-391 (Tax Clearance Letter Request for Reinstatement) by mail or through Webfile. The Comptroller issues a Tax Clearance Letter (Form 05-377) once your franchise tax obligations are satisfied.10Texas Comptroller of Public Accounts. Reinstating or Terminating a Business
Take that clearance letter to the Secretary of State and file Form 801, the Application for Reinstatement, with a $75 filing fee. Nonprofit corporations pay no fee. If another business claimed your entity’s name during the forfeiture period, you’ll also need to file a name change amendment to your certificate of formation at the same time.11Office of the Texas Secretary of State. Form 801 – Instructions for Application for Reinstatement and Request to Set Aside Tax Forfeiture
One thing Form 801 won’t do: update your registered agent or office. If either has changed, file a separate Form 401 after reinstatement is complete.