Important - File Franchise Tax Returns, Even If No Tax Is Due!

Old Harris County Courthouse

It is important to file your franchise tax returns, even if no tax is due.

Most people form entities, such as corporations, in an attempt to protect themselves from personal liability for business debt.  However, if the corporate privileges are forfeited for failure to file a franchise tax report, or failure to pay taxes or penalties, you may open yourself up to liability.

All Officers and Directors of a corporation that had their corporate privileges forfeited are liable for each debt of the corporation that is incurred during that period of forfeiture.  In other words, the Officers and Directors will be treated as if they were partners with the corporation. (Title 2. State Taxation, Chapter 171. Franchise Tax, §171.255, Liability of Director and Officers, V.A.T.S.)

Additionally, if the corporate privileges are forfeited for failure to file, the corporation shall not be entitled to sue or defend in a court of law.  (Title 2. State Taxation, Chapter 171. Franchise Tax, §171.252, Effects of Forfeiture, V.A.T.S.)

So even if you owe no taxes, please make sure that you file the franchise tax return!

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