Authority/Reference(s) Texas Government Code §2252.903; Texas Government Code §403.055; Texas Government Code §403.0551
Revision Date June 1, 2015

Policy

Texas statutes prohibit state agencies from issuing a payment or entering into a contract with an entity that is indebted to the state unless arrangements are made to pay off the debt. State debt includes tax delinquency, child support delinquency, student loan default, or any other indebtedness. Contract staff must verify the status of the Franchise Tax Account:

  • not earlier than the seventh calendar day before the effective date of a contract with a provider;
  • and annually, during the month of August.

The Texas franchise tax is a privilege tax imposed on each taxable entity formed or organized in Texas or doing business in Texas. DFPS staff must conduct a franchise tax account status check to verify whether or not a contractor has the right to transact business in Texas, unless the check is not applicable per this policy.

Active status

Active status means that an entity is current in all of its franchise tax responsibilities at the time the search is run. An active status certifies that the entity has the right to transact business in Texas, or that the entity is exempt from the state franchise tax. An entity remains active through the date of the next franchise tax report or until payment is due for that entity.

The Texas Comptroller of Public Accounts requires that franchise taxes be paid in May and settled by July 15th.

The franchise tax applies to partnerships (general, limited and limited liability), corporations, LLCs, business trusts, professional associations, business associations, joint ventures, and other legal entities.

Forfeited status

Forfeited status means an entity has not met all of its franchise tax filing requirements.

Governmental Entities

This check does not have to be performed for governmental entities.