Why Did My Texas LLC Get Forfeited?
Texas LLC terminated? Let’s talk about how that happened…
It’s very easy to lose your Texas LLCs and corporations active status if you’re not careful. Here’s what you need to know about the situation, and how you can fix it. And we are happy to help you if assistance is required.
What went wrong:
Texas LLCs and corporations are very inexpensive to maintain, but, an annual tax return and public information disclosure is required.
When you don’t file these returns, the Comptroller’s office notifies the Secretary of State, and your business entity is forfeited.
Why didn’t they notify me?
Before your entity is forfeited, they did contact you. I guarantee they sent you not fewer than six pieces of mail to the registered address for your entity that tell you a return is due, how to file it, that the return is late and that they are going to forfeit. Either you missed the notices, or if you used a third party to set up your business entity, they were not sending you the notices.
Should I fix it?
Texas will make an assumption that you did owe tax when you don’t file a return. That assumption is based on the industry that you said you were part of when you started the LLC or corporation. When you don’t file, and don’t respond, the state assumes that you should have filed and paid the tax, and then they file for you.
Once they file for you, they turn the account over to a private collection agency.
If you have any one of the following situations, you should absolutely fix the matter as soon as possible:
Collection agency notice that you owe franchise tax
You’ve done business in the name of the LLC or corporation, and some product or service liability might exist
You owe any kind of taxes in the name of the LLC or corporation, other than the franchise tax
You have a business need for a LLC or corporation that has an established business history
How do I get it fixed?
Most LLCs that are set up never file the first franchise tax return and are forfeited between sixteen and twenty months after first established. Once you’ve had your LLC forfeited, you can either reinstate it, or form a new one (although you can’t get the same name again).
Reinstatement requires that you file ALL of the overdue franchise tax and public information returns with the Comptroller’s office and pay a $50/year late fee. Once you’ve done that, you ask the Comptroller’s office for a clearance letter, which you then use to file with the Secretary of State for reinstatement. There is a fee to the Secretary of State for reinstatement.
If you didn’t owe tax on your overdue franchise tax returns, and you have your WebFile ID number, you can file these returns online and pay the late fees online as well. If you don’t have your WebFile ID, you have to go to a Comptroller local office in person to file the no tax due returns.
Of course, if you owed franchise tax for any of the overdue years, you must pay that amount before you can reinstate.
We can help
Navigating the process of reinstatement and getting caught up on returns can take a lot of time and effort if you don’t know the system. My Tax Guy In Houston handles these matters routinely, and would be happy to assist you. Please contact us to get started.