There’s quite a bit of confusion around how filing your annual Texas Franchise Tax Public Information Report (“PIR”) with the Texas Comptroller affects your records with the state and control of an entity. The content of the PIR although reflected in the records of the Texas Secretary of State (“SOS”) does not amend the Certificate of Formation of the Company in accordance with the Texas Business Organizations Code (“TBOC”). As a result, an LLC formed with manager “A” that later files a PIR solely listing managers “X” and “Y” without any LLC action otherwise, would result in the SOS’s website show the managers as manager “A”, “X” and “Y” although manager “A” had been the only properly elected manager.
To properly change the managers of an LLC in the SOS’s records, the company must file a separate certificate of amendment with the SOS directly. The PIR should be used only to update addresses for the company and managers, update the registered agent, or update the company’s principal place of business.
The PIR is submitted annually to the Texas Comptroller and is required for taxable entities operating or organized in the State of Texas, and formed as corporations, limited liability companies, limited partnerships, professional associations, and financial institutions. The PIR provides information to the Comptroller about the entity’s officers, directors, ownership, or other authorized parties. There are serious consequences for those entities who fail to file the PIR within 120 days of its due date, such as forfeiting your right to carry on any business in the state. Even if your entity’s annualized revenue is less than $2.47M, and you are no longer required to file the No Tax Due Report due to Senate Bill 3’s passage and the updated Comptroller requirements, you still have to file a PIR to continue to transact business within the state.
Unlike the PIR, a certificate of amendment should be filed, regardless of your revenues, to keep the SOS apprised of any material changes to the structure or authorized parties of your entity. Preparation and filing of a certificate of amendment for an LLC should be in accordance with the TBOC and the company’s operating agreement. Currently, the filing fee is $150.00, and you can enter any changes on the amendment form, and then submit it to the SOS electronically. If you are likely to take out any financing in the near future, your lender will require your organizational documents and structure match what’s on record with the SOS. Not having the correct information on file with the SOS could lead to missed notices and other critical information, as well as parties being held responsible who are no longer associated with an entity. So it is critical that your records with the SOS are up to date.
In summary, to keep your records current and avoid serious repercussions with the respective state agencies make sure to file your PIR and any certificates of amendment timely.
If you have any questions or would like assistance with your filings, please feel free to reach out and we can help at smacpherson@patellegal.com.