So You Received a Texas Notice of Forfeiture. Here’s What You Need to Do Today

You're on the Texas Comptroller's Website and you read the words, "FRANCHISE TAX INVOLUNTARILY ENDED!!"

YIKES!!! What does this mean? Will I be sued? Is my business falling apart?

Step 1. Calm down.

If your Texas LLC has this status, yes, it does mean that something has occurred, but it can be fixed. Ultimately, your registration was ended because you have some type of tax forfeiture or administrative forfeiture. The most common reason for this is a failure to submit your annual franchise report and pay any related fees or taxes.

When your business status is terminated, you lose limited liability protection, the primary benefit of creating an entity like an LLC.

There are significant implications for this so even though I said calm down, do not blow this off. Failure to become reinstated means that:

• If someone sues you, your personal assets are on the line.

• You will not be able to sue anyone in a business capacity.

• You will not be able to open any business accounts

• You may forfeit opportunities for certain contracts

These are just a few of the potential consequences. So if you have found yourself in this position, how can you fix it?

To reinstate your business you must satisfy all the state tax filing requirements. This usually entails the following steps.

1. File your annual franchise tax and Information Report forms. 

2. Pay the taxes, penalties, and interest payments due.

3. Complete and submit the Tax Clearance Letter Request for Reinstatement (Form 05-391). It can be submitted online or by mail.

4. Submit these items to the Texas Secretary of State.
   Note the filing due dates to avoid late penalties.

5. Turn in the Tax Clearance Letter (Form 05-377)that you receive from the Comptroller's office.

6. Turn in the Secretary of State Reinstatement forms, and pay the related filing fees. 

Do you need help getting your business reinstated?

Communicating with the state and walking through all of the paperwork can be both scary and frustrating. Our firm helps LLCs and Corporations get back in status and stay protected.

The first step is scheduling a Reinstatement Strategy Session where we answer your questions about what entity forfeiture is and the specific ways we help businesses get back on track.