Question 1

Do I need a Comptroller tax certificate to terminate a Texas corporation?

Accepted Answer

Yes, and it is the step that most often holds a Texas termination up. Business Organizations Code Section 11.101(b) provides that a certificate from the comptroller showing all taxes administered under Title 2 of the Tax Code have been paid must be filed with the certificate of termination if the entity is taxable under Chapter 171 of the Tax Code. Form 651 carries the matching block, headed Tax Certificate (Required), reciting that a certificate from the comptroller of public accounts is attached. The Comptroller describes this as the only situation in which a Certificate of Account Status is required at all. Practically, that means the Comptroller controls your timeline, not the Secretary of State.

Question 2

How do I request the Certificate of Account Status for a Texas termination?

Accepted Answer

Four things have to be done before the Comptroller will issue it. File every outstanding annual Franchise Tax and Public or Ownership Information Report. File any required Final Franchise Tax Report, covering from the day after the last annual report accounting period end date through a date within 60 days of the termination date. Pay all tax, penalty and interest. Then file, pay and close every other Comptroller tax account. Only then do you request the certificate, either through Webfile under Account Self-Service by selecting Request a Certificate for Termination, or on paper using Form 05-359. Paper is mandatory rather than optional for several categories, including combined-group members, entities that have been franchise tax active for less than a year, limited liability partnerships, and entities under an active audit.

Question 3

Which form replaces articles of dissolution in Texas?

Accepted Answer

Secretary of State Form 651, Certificate of Termination of a Domestic Entity, revision 09/26. Texas has no instrument named articles of dissolution for a for-profit corporation, so searching for that name turns up nothing on the Secretary of State catalog. Section 11.101(c) sets what the certificate has to contain: the entity name, the name and address of each governing person, the file number the Secretary of State assigned, the nature of the event requiring winding up, a statement that the entity complied with the winding up provisions of the code, and anything else the code requires. For a for-profit corporation, governing person means a director, or each shareholder in a close corporation managed by shareholders.

Question 4

How much does it cost to file a Texas certificate of termination?

Accepted Answer

Forty dollars. Section 4.152(9) of the Business Organizations Code sets the fee for filing a certificate of termination at $40, the Secretary of State fee schedule lists the same $40 against Form 651, and the face of the form and its instructions both print $40. All four agree, which is unusual enough to be worth saying. Expedited processing is a separate optional charge of $50 for standard expedite, $500 for next day and $750 for same day. The $40 covers a Texas entity other than a nonprofit corporation or cooperative association; those file Form 652 at $5, and an out-of-state entity withdrawing its Texas registration uses Forms 608, 609 or 612 at $15.

Question 5

Who has to approve winding up a Texas corporation?

Accepted Answer

Section 21.502 gives three alternative procedures and you only need one. All shareholders may consent in writing. Or, where the corporation has not commenced business and has not issued any shares, a majority of the organizers or of the board may simply adopt a resolution. Or the board adopts a resolution recommending the winding up and directing that it go to the shareholders at an annual or special meeting, every shareholder entitled to vote gets written notice saying winding up is a purpose of that meeting, and the shareholders then approve it. Because a voluntary winding up is a fundamental action under Section 21.364(a)(2), the statutory default at that vote is holders of at least two thirds of the outstanding shares entitled to vote. Check the certificate of formation, which under Section 21.365(a) may specify a lower portion so long as it is not less than a majority.

Question 6

Does Texas require notice to creditors before a corporation terminates?

Accepted Answer

Yes. Section 11.052(a)(2) directs a domestic entity in winding up to send a written notice of the winding up to each known claimant against it, and the only entity the subsection lets off is a general partnership. So a corporation has no election here, unlike states where creditor notice is something the company may give if it wants the shorter claims tail. The notice runs to known claimants; Texas does not add a publication requirement in that subsection. Section 11.053 then bars distribution to shareholders until liabilities and obligations have been discharged or adequately provided for. Money owed to a creditor or owner who cannot be located after reasonable diligence has to be reduced to cash and deposited with the Comptroller under Section 11.352.

Question 7

How long do claims survive against a terminated Texas corporation?

Accepted Answer

Three years, with a way to shorten it. Section 11.356(a) keeps a terminated filing entity in existence until the third anniversary of the effective date of termination, but only for five purposes: suing and being sued in its own name, survival of an existing claim, holding and liquidating property, distributing property under Section 11.053, and settling affairs left unfinished. Section 11.359(a) then extinguishes an existing claim unless an action is brought on it by that third anniversary. A terminated entity can compress the window using the accelerated procedure in Section 11.358, which requires notice by registered or certified mail, return receipt requested, to the claimant at their last known address, setting a deadline no earlier than the 120th day after the notice was mailed.

Question 8

Can a Texas certificate of termination take effect on a later date?

Accepted Answer

It can, and that is where the Comptroller certificate can trip you. Section 11.102 provides that the existence of a filing entity terminates on the filing of the certificate of termination, and Form 651 lets you instead pick a delayed date not more than 90 days after signing, or make it conditional on a future event. The catch is shelf life. The Comptroller says the Certificate of Account Status is valid through December 31 of the year it was issued, while the Secretary of State requires it to be good through the effective date of filing. A delayed effective date that crosses into January can therefore outlive the certificate attached to it, so sequence the two deliberately. Form 651 needs no notarization; it is signed by an officer under Section 20.001 under penalty of perjury.

Texas Articles of Dissolution

Find out where you stand in Texas

Introduction

Key Things to Know

Key decisions before you file

Customize your Articles of Dissolution Template with DocDraft

Texas Requirements for Articles of Dissolution

Comptroller Tax Certificate Filed With the Termination

Only the Termination Certificate Counts, Not a Website Printout

Final Franchise Tax Report Before the Certificate Issues

Form 651 Certificate of Termination of a Domestic Entity

Forty Dollar Fee, No Short Form

Two Thirds of Outstanding Shares, or One of Two Shortcuts

Mandatory Written Notice to Each Known Claimant

Three Year Survival and the 120 Day Accelerated Procedure

Frequently Asked Questions