Texas Periodic Reporting

Although nonprofit organizations (NPOs) may apply and obtain exemption from filing a Texas Franchise Tax Report, a periodic report must be filed every four (4) years in order to maintain its corporate status in “good standing.”

If this status is not maintained, the NPO and its officers and directors could be at risk. If (Heaven forbid) something should happen where the corporate “veil” is assumed to be in place protecting individuals who govern and/or manage the NPO and it is not (because of this lack of good standing corporate status), individuals could be held personally liable.
The Texas Secretary of State sends a renewal notice, to its registered agent, when this four-year period is to expire in the near future. (Every registered corporate entity has a registered agent on file with the Secretary of State.) However, as is often the case for NPOs, the registered agent is no longer involved with the organization so when they get this renewal notice, they disregard it. As a result, the status lapses and the NPO doesn’t even know this.
A NPO can check its corporation’s status with the Texas Comptroller of Public Accounts.
If your status is not in good standing, it can be changed fairly easily. This is accomplished by filing a particular form and paying a relatively small fee.

If you have any questions, please contact me at bsims@sstcpa.com.