In Texas, an LLC or corporation can lose its right to transact business through a process called "tax forfeiture." This occurs when the entity fails to file its annual franchise tax report and Public Information Report (PIR) with the Texas Comptroller of Public Accounts, or fails to pay any franchise taxes due.
Once forfeited, the entity loses its legal authority to conduct business in Texas—it cannot enter into contracts, sue in Texas courts, or hold a Certificate of Good Standing.
However, the entity continues to exist for tax and liability purposes. Fortunately, Texas law provides a pathway to reinstate a forfeited entity through the Secretary of State using Form 801, Application for Reinstatement and Request to Set Aside Tax Forfeiture.
This guide explains the reinstatement process, the required steps with the Comptroller, filing fees, timeframes, and what to do if your entity name is no longer available [citation:5].
Understanding tax forfeiture: causes and consequences
Under Chapter 171 of the Texas Tax Code, the Comptroller certifies to the Secretary of State the names of entities that are delinquent in filing franchise tax reports or paying franchise taxes.
The Secretary of State then forfeits the entity's right to transact business in Texas.
Common causes of forfeiture include:
- Failing to file the annual Public Information Report (even if no tax is due)
- Failing to file the franchise tax report (Form 05-163 for no-tax-due entities)
- Failing to pay franchise tax when due (for entities above the no-tax-due threshold)
- Failing to file for multiple consecutive years (this accelerates forfeiture)
Consequences of forfeiture are severe. A forfeited entity cannot:
- Maintain any action, suit, or proceeding in a Texas court (though it can still be sued)
- Obtain a Certificate of Good Standing from the Secretary of State
- File or maintain a assumed name certificate (DBA) in any Texas county
- Revive or extend its corporate existence except through the reinstatement process
Importantly, forfeiture does NOT relieve the entity's owners, managers, or officers from personal liability for debts incurred during the forfeiture period.
In fact, under Texas law, if an entity is forfeited, its members, managers, or directors become personally liable for the entity's debts and obligations incurred during the forfeiture period.
This is one of the most compelling reasons to reinstate as quickly as possible [citation:5].
Step-by-step reinstatement process
Step 1: Determine eligibility for reinstatement
Form 801 (Application for Reinstatement and Request to Set Aside Tax Forfeiture) is the correct form for reinstating an entity that has been forfeited specifically for tax reasons under Chapter 171 of the Tax Code.
Do NOT use Form 801 if:
- The entity was voluntarily terminated (use Form 811)
- The entity was terminated or revoked by the Secretary of State for a reason other than tax forfeiture (use Forms 811 or 814)
- The entity was terminated or revoked by court order (consult an attorney)
- More than 36 months have passed since forfeiture and the entity would otherwise have ceased to exist under its governing documents [citation:5]
You may submit a request to set aside forfeiture at any time after forfeiture so long as the entity would otherwise have continued to exist.
There is no strict deadline, but waiting too long may complicate matters because the entity name may become unavailable or back taxes may accumulate.
Step 2: Clear all franchise tax delinquencies with the Texas Comptroller
Before filing Form 801 with the Secretary of State, you must first resolve all outstanding franchise tax obligations with the Texas Comptroller of Public Accounts.
This is the most critical and sometimes time-consuming step. Contact the Comptroller's Tax Assistance Section at (800) 252-1381 or (512) 463-4600, or email [email protected].
You will need to:
- File all delinquent franchise tax reports (including Public Information Reports for each year you missed)
- Pay any taxes, penalties, and interest due (if your entity exceeded the no-tax-due threshold in any of the delinquent years)
- File any final reports needed to bring your account current
After you have satisfied all franchise tax liabilities, the Comptroller will issue a tax clearance letter.
This letter is a required attachment to Form 801 and confirms to the Secretary of State that the entity has met its tax obligations and may be reinstated.
Without this clearance letter, the Secretary of State will reject your reinstatement application [citation:5].
For entities that were below the no-tax-due threshold, you will still need to file each delinquent Public Information Report.
Late filing penalties apply ($50 to $500 per report), so your total cost to clear may consist solely of penalties even if no tax was due.
Step 3: Check name availability
One of the most overlooked but critical requirements: the reinstatement cannot be filed if the entity name is no longer distinguishable in the records of the Secretary of State from the name of any existing domestic or foreign filing entity, any fictitious name under which a foreign entity is registered, or any name reservation.
In other words, if another entity has taken your LLC or corporation name while you were forfeited, you cannot simply reinstate under the old name.
You have two options in this situation:
- If written consent for the use of the name can be obtained from the other entity, attach the consent to your reinstatement application.
- If consent cannot be obtained, you must first amend your certificate of formation (or application for registration, for foreign entities) to change your legal name to an available name. The amendment must be submitted at the same time as the application for reinstatement [citation:5].
To check name availability, use the Texas Secretary of State's business name database search tool.
If your name is unavailable, consider filing a Certificate of Amendment (Form 424 for LLCs, Form 414 for corporations) to change your name before reinstating.
Step 4: Complete and file Form 801
Form 801 requires the following information:
- Item 1 — Entity legal name (as stated in your original certificate of formation)
- Item 2 — Secretary of State file number (recommended for faster processing)
- Item 3 — Date of forfeiture (if unknown, call the SOS at (512) 463-5555 to obtain the date)
- Item 4 — Certified statements (by signing, you certify that the entity has paid all taxes, filed all reports, and is otherwise eligible for reinstatement) [citation:5]
The application must be signed by a person authorized to apply for reinstatement.
For an LLC, the signer must have been a member or manager at the time of forfeiture.
For a corporation, the signer must have been an officer, director, or shareholder at the time of forfeiture.
The filing fee for Form 801 is $75, unless the entity is a nonprofit corporation (nonprofits pay no fee for reinstatement following tax forfeiture).
Fees can be paid by personal check, money order, LegalEase account, or prefunded SOS client account.
Submit the completed form in duplicate along with the filing fee and the required tax clearance letter from the Comptroller [citation:5].
Submission methods:
- Mail: Secretary of State, P.O. Box 13697, Austin, Texas 78711-3697
- Fax: (512) 463-5709 (must include Form 807 Payment Form)
- In person: James Earl Rudder Office Building, 1019 Brazos, Austin, Texas 78701
Step 5: Update registered agent information if needed
Note that neither tax filings nor the reinstatement application can be used to update your registered agent or registered office information.
If your registered agent has changed or your registered office address is no longer accurate, you must file a separate Change of Registered Agent/Office (Form 408) at the same time as your reinstatement.
The fee for Form 408 is $150. Failure to maintain a current registered agent can lead to future forfeiture [citation:5].
Processing time and what to expect after filing
The Secretary of State processes reinstatement applications within 5-10 business days for mail filings and 2-3 business days for filings submitted through SOSDirect (if available for reinstatements).
Once approved, the Secretary of State will issue a Certificate of Reinstatement, which sets aside the tax forfeiture retroactively, meaning the entity is considered to have been in good standing continuously.
You can then request a Certificate of Good Standing if needed for banking, contracts, or lending.
Penalties for submitting false information
Form 801 requires certified statements regarding the accuracy of the information provided. Under Section 171.363 of the Tax Code, a person commits a felony of the third degree if they are an employee, officer, or agent of a taxable entity and knowingly enter or provide false information on any report, return, or other document filed under Chapter 171, including an application for reinstatement.
This is a serious criminal penalty, so ensure all information is accurate [citation:5].
Preventing future forfeiture
Once reinstated, the entity must file all future franchise tax reports and Public Information Reports on time to avoid another forfeiture.
The annual deadline is May 15th. Consider setting up automatic calendar reminders, using a registered agent service that offers compliance monitoring, or authorizing a tax professional to file on your behalf.
Many entities are forfeited not because they cannot pay taxes but because they simply forget to file the no-tax-due report.
A simple annual filing habit can prevent the entire reinstatement process.
Key takeaway: Reinstatement is not automatic. You must take proactive steps to clear tax delinquencies before filing Form 801.
The process can take several weeks or even months if you have multiple years of unfiled reports.
However, once reinstated, all rights and privileges of the entity are restored retroactively.
If your entity has been forfeited for more than a year, consult with a Texas business attorney before filing, as there may be additional complications such as name conflicts, personal liability issues, or interactions with other state agencies.