Foreign or Out-of-State Entities
Transacting Business in Texas: A foreign entity that is transacting business in Texas must file an application for registration with the Texas Secretary of State. Whether an activity constitutes "transacting business" in Texas is often difficult to answer. Texas statutes do not define “transacting business;” however, Texas Business Organizations Code (BOC) § 9.251 lists activities that are not considered transacting business. Case law and Attorney General Opinions are useful in determining whether or not an entity is “transacting business” in Texas. The secretary of state cannot issue opinions on whether an entity is transacting business in Texas or needs to file an application for registration.
The level of a foreign entity’s activity in Texas that subjects it to franchise taxes is lower than the level of activity that subjects it to registration requirements. An entity that is doing business in Texas for purposes of franchise taxes may not necessarily be “transacting business” in Texas for purposes of registration with the secretary of state. If you need assistance in determining whether a foreign entity is subject to franchise taxes, you can submit a “Texas nexus questionnaire” (Form AP-114) to the comptroller of public accounts. Based on the answers to the questionnaire, the comptroller will issue an opinion about whether the entity is doing business in Texas for franchise tax purposes. For more information, visit the comptroller's website or contact
Business Activity Research Team
Texas Comptroller of Public Accounts
P.O. Box 13003
Austin, Texas 78711
(800) 252-1381.
Statutes:
Forms for Applications for Registration:
- Foreign For-profit Corporation Form 301 ( Word, Acrobat)
- Foreign Nonprofit Corporation Form 302 (Word, Acrobat)
- Foreign Professional Corporation Form 303 (Word, Acrobat)
- Foreign Limited Liability Company Form 304 (Word, Acrobat)
- Foreign Professional Limited Liability Company Form 305 (Word, Acrobat)
- Foreign Limited Partnership Form 306 (Word, Acrobat)
- Foreign Limited Liability Partnership Form 307 (Word, Acrobat)
- Renewal of Limited Liability Partnership Application for Registration Form 308 (Word, Acrobat)
- Out-of-State Financial Institution Form 309 (Word, Acrobat)
- Foreign Professional Association Form 311 (Word, Acrobat)
- Foreign Business Trust, Real Estate Investment Trust (REIT), or other entity Form 312 (Word, Acrobat)
Foreign Entities can also register through SOSDirect.
Penalties for Transacting Business in Texas without Registering: If a foreign entity transacts business in Texas without registering,
- the entity cannot maintain an action, suit, or proceeding in a Texas court until it registers;
- the attorney general can enjoin the entity from transacting business in Texas;
- the entity is subject to a civil penalty equal to all fees and taxes that would have been imposed if the entity had registered when first required; and
- if the entity has transacted business in the state for more than ninety (90) days, the secretary of state may condition the filing of the registration on the payment of a late filing fee equal to the registration fee for each year or part of year of delinquency.
Tax Delinquencies: If an entity has failed to file franchise tax reports and/or pay franchise taxes, it is invited to contact the comptroller of public accounts to determine if the entity qualifies to enter into a Voluntary Disclosure Agreement. For more information, read the comptroller's tax publications or contact:
Business Activity Research Team
Texas Comptroller of Public Accounts
P.O. Box 13003
Austin, Texas 78711-3003
(800) 688-6829