Texas LLC Status Says “Forfeited Existence”: What It Means and How to Reinstate

Two agencies, two records, two sets of words

Texas keeps two separate records about your LLC, and they use different words.

The Secretary of State’s record shows whether the entity exists. Its glossary sorts status words into two groups. The active ones are “In Existence, Report Due, RA Notice Sent, Forfeited Rights, and Delinquent.” The inactive ones include “Forfeited Existence,” “Involuntarily Dissolved or Involuntarily Terminated,” “Voluntarily Dissolved or Voluntarily Terminated,” and several others. The glossary also notes that this field “is not necessarily an indication of whether the entity actively engages in business activity.”

The Comptroller’s record shows the company’s franchise tax account. The Comptroller says its “Franchise Tax Account Status,” which it notes was “previously referred to as ‘Good Standing,’” shows “the status of an entity’s right to transact business in Texas.” The Comptroller also says that status page is a summary, and that reinstating or terminating a business requires a certificate made for that purpose.

One more label shows up in owner forums: “Franchise Tax Involuntarily Ended.” We did not find that phrase on the Comptroller’s current pages. We did find it in a 2014 Secretary of State presentation on involuntary terminations, which lists the status with the Secretary of State as “forfeited existence” and the status with the Comptroller as “franchise tax involuntarily ended.” If that is the label you see on the Comptroller side, it points to the same franchise tax track.

Status decoder: what each word means and what to do

The table uses the Secretary of State’s glossary for the meaning of each status. The last column comes from the Secretary of State’s Form 801 and Form 811 instructions, except the RA Notice Sent row, which comes from Business Organizations Code Section 11.251.

If you are not sure which cause applies, the Form 811 instructions say to verify the reason for the inactive status with the Secretary of State at (512) 463-5555 before you choose a box.

Forfeited vs involuntarily terminated: two tracks, two forms

The two inactive statuses sound alike, but they come from different laws and use different forms. The Form 801 instructions say not to use Form 801 if “the existence or registration was terminated or revoked by the secretary of state for a reason other than tax forfeiture.” The Form 811 instructions say not to use Form 811 if “the entity’s existence or registration was forfeited under the Tax Code.”

The involuntary termination track is in Section 11.251 of the Business Organizations Code. The Secretary of State may terminate a filing entity that, after notice, has not corrected a failure to “file a report within the period required by law or pay a fee or penalty prescribed by law when due and payable” or to “maintain a registered agent or registered office in this state as required by law.” The failure has to be corrected before the 91st day after the notice was mailed. An unpaid or dishonored fee for filing the certificate of formation has a shorter window: it has to be corrected before the 16th day.

The time rule is where the two tracks differ most. Section 11.254(a) says a filing entity reinstated under the Tax Code “is considered to have continued in existence without interruption from the date of forfeiture.” In the text of Section 11.254 we read, that sentence carries no three-year condition. Section 11.253(d), which covers involuntary terminations, gives the same treatment only “if a filing entity is reinstated before the third anniversary of the date of its involuntary termination.” The Secretary of State’s FAQ describes the involuntary case the same way: no time limit to reinstate, but continuity only within 36 months.

What the forfeiture costs while it lasts

The status is not only a label. Several things change while the company sits in it.

The company cannot carry on its business. The Business Organizations Code defines a “terminated entity” to include one whose existence was “forfeited pursuant to the Tax Code, unless the forfeiture has been set aside” (Section 11.001(4)). Section 11.356(b) says a terminated filing entity “may not continue its existence for the purpose of continuing the business or affairs for which the terminated filing entity was formed” unless it is reinstated. Section 11.356(a) keeps it alive for three years only for limited purposes, such as bringing or defending lawsuits and settling its affairs.

Courts are limited. Section 171.252 says a company whose privileges are forfeited “shall be denied the right to sue or defend in a court of this state.” The Tax Code has more detail on this in Sections 171.253 and 171.254, and a lawyer should read those against your facts.

Personal liability can attach, with conditions. Section 171.255(a) says that if privileges are forfeited “for the failure to file a report or pay a tax or penalty,” each director or officer is liable “for each debt of the corporation that is created or incurred in this state after the date on which the report, tax, or penalty is due and before the corporate privileges are revived.” Under Section 171.255(c), a director or officer is not liable for a debt if the director or officer shows that it was created over their objection, or without their knowledge when reasonable diligence would not have revealed it. Section 171.2515(b) applies these rules, including Section 171.255, to other taxable entities such as LLCs. The statute uses the words “director or officer,” and how that reaches an LLC’s members or managers is a question for a Texas attorney.

Reinstating does not erase that liability. Section 171.255(d) says the liability “is not affected by the revival” of the charter and privileges. Section 11.254(b) says reinstatement after a tax forfeiture “has no effect on any issue of the personal liability of the governing persons, officers, or agents” for the period between forfeiture and reinstatement. Section 11.253(d) says the same for an involuntary termination.

The name is not held for you. Section 171.315 says a company asking to set aside the forfeiture must check whether its name is still available and, if not, amend its certificate to change it. The Form 801 instructions say the amendment has to be submitted at the same time as the application.

How to reinstate a forfeited Texas LLC

The Comptroller’s reinstatement page sets the order of the tax steps, and the first two have to be finished before the tax clearance letter is requested. The name check and the separate registered agent filing come from the Form 801 instructions. If you have not reached this status yet and are holding the Comptroller’s warning letter, our guide to the Texas notice of intent to forfeit covers that stage.

1. 1File all outstanding annual franchise tax reports and Public Information Reports with the Comptroller. The Comptroller says the Public Information Report is due even when the company is at or below the no tax due threshold.
2. 2Pay any tax, penalty and interest due.
3. 3Request the tax clearance letter through Webfile, or with Form 05-391, Tax Clearance Letter Request for Reinstatement. If you made payments, the Comptroller says to wait 2 to 3 business days before requesting it.
4. 4Check that the LLC’s name is still available. If it is not, prepare an amendment with a new name to file at the same time.
5. 5File Form 801 with the Secretary of State through SOSPortal, with the tax clearance letter (Form 05-377) and the $75 fee. For an LLC, it is signed by a member or manager at the time of forfeiture.
6. 6If the registered agent or registered office also needs to change, file that separately. The Form 801 instructions point to Form 401.

Two documents are easy to confuse here. The tax clearance letter (Form 05-377) is for reinstating. The Certificate of Account Status (Form 05-305, requested with Form 05-359) is for terminating a business. The Secretary of State’s FAQ also says a printout of the Comptroller’s Franchise Tax Account Status page cannot be used to terminate an entity. For an LLC that was involuntarily terminated, the steps are similar, but the final filing is Form 811 with the registered agent section filled in.

Where the notices go, and how to keep those addresses current

Both tracks start with a notice in the mail, or by email for the Comptroller. The statutes do not tell us how often a missed notice is the reason a company ends up here, but they do show where each notice is sent.

Comptroller notices go to the company’s address of record. Section 171.256(c) says the notice of forfeiture is mailed to “the address named in the corporation’s charter as its principal place of business or to another known place of business,” or sent electronically to the contact information the company gave the Comptroller. Section 171.256(d) says the notice and the record of its mailing date “constitute legal and sufficient notice of the forfeiture.” For entities formed since 2022, the Form 205 instructions say the initial mailing address on the certificate of formation “is the address that will be used by the Comptroller of Public Accounts for sending tax information and correspondence to the entity.”

Secretary of State notices can go to a different address. Section 11.251(a) says notice of a termination problem is mailed to “the entity’s registered office or principal place of business as shown on the records of the secretary of state.” In its 2014 presentation, the Secretary of State listed returned mail sent to the registered agent at the registered office as one of the allegations that starts its 90-day notice.

The Comptroller’s Webfile help says to enter “the address where Texas franchise taxpayer notices should be mailed,” and to allow up to 7 days for updates to display everywhere on Webfile. The two slots follow different rules. The Form 205 instructions say the mailing address “may be a post office box or street address.” The Form 811 instructions say the registered office must be a street address where the registered agent can be personally served during business hours, and it “may not be solely a mailbox service or telephone answering service.” The instructions allow even a post office box in the first slot, so a mailbox-service address can go there. It cannot be your registered office.

Our guides to the Texas annual report, the Texas franchise tax and Public Information Report, and the five address fields on the Public Information Report cover the filings that keep a company out of this status. Our free address checker shows how an address you plan to use is classified before you put it in either slot.