Texas Sales Tax Guide
Chapter 5: Filing and paying Texas sales tax
You're registered with the Texas Comptroller of Public Accounts and you've begun collecting sales tax. Congratulations! Remember, those tax dollars don't belong to you. As an agent of the state of Texas, your role is that of intermediary transferring tax dollars from consumers to state and local tax authorities. Let's take a deeper look at how filing Texas sales tax returns impacts your business.What does it mean to file an Texas sales tax return?
Technically speaking, filing Texas sales tax returns is a two-step process comprised of submitting the required sales data and remitting the collected tax dollars (if any) to state and local tax authorities.
In most states, there are a number of options for submitting sales tax data to the state. Business owners may complete a Texas sales tax filing form and mail it to the Texas Comptroller of Public Accounts or they can file electronically online. In all states, filing online is recommended.
The filing process forces the business owner to detail their total sales, the amount of sales tax they have collected, and from where. The Texas Comptroller of Public Accounts wants to be kept up to date on your business growth (or lack thereof) to make sure they are getting the tax dollars due. By completing ongoing filing of monthly, quarterly, or semi-annual, or annual Texas sales tax returns, they stay abreast of your growing company.When am I required to file my sales tax return?
The Texas Comptroller of Public Accounts will assign you a filing frequency. Typically, this is determined by the size of your business. State governments typically ask larger businesses to file more frequently. Visit our Texas filing due dates page for more information.Am I required to file and pay my Texas sales tax at the same time?
Texas sales tax returns must be filed and paid at the same time and are governed by the same due date.I want to webfile my Texas sales tax. What are my options?
Avalara has built the TrustFile product to allow business owners a quick and easy way to prepare and webfile Texas sales tax returns. Users can sign up and use the service to prepare Texas returns free for 30-days.
Filers may also file directly with the Texas Comptroller of Public Accounts by visiting their site and entering your transaction data manually. This is a free service, but preparing Texas sales tax (breaking it down by jurisdiction) can be time consuming - especially for larger sellers.Can a 3rd party file my sales tax on my behalf?
Yes! Many business owners recognize they are not a tax professional and therefore, choose to outsource their sales tax sales and use tax filing to services like Avalara TrustFile or to an accountant or bookkeeper. This is a normal business practice that can save business owners time and help them avoid costly mistakes due to inexperience and a lack of deep knowledge about Texas sales tax code.What happens if I file or pay my sales tax return late?
Filing a late sales tax return or making a late sales tax payment to the Texas Comptroller of Public Accounts may result in penalties and fines. A return due after October 11, 2011 but filed late will be assessed a $50 late filing penalty. The penalty is assessed regardless of whether any tax was due. Like other states, Texas requires all registered businesses to file zero-tax returns.
For the first 30-days the outstanding tax liability is late, a 5% penalty of the tax due is applied. Should the late period extend to a second 30-day period, the penalty increases to 10% of the tax due. Beyond 60-days, the penalty remains at 10% and interest is added to the outstanding balance.
Failure to rectify outstanding tax liability may result in the business being referred to a collection agency and assessed a collection fee.
As a reminder to file returns, the Texas Comptroller of Public Accounts may issue you a Notice of Tax/Fee Due. This notice is an estimate of the outstanding tax you owe. Should you again fail to file a Texas sales tax return, you may be assessed a penalty of an additional 10% on the outstanding tax liability.
Do I need to file a return if I didn't collect any sales tax in Texas?
Yes! Once you've successfully registered for and been issued a Sales Tax Permit, you are required to file at the completion of each assigned collection period regardless of whether any sales tax was collected. This is what is known as a "zero-tax filing".
Failure to submit a required zero-tax filing can result in penalties imposed on your business by the Texas Comptroller of Public Accounts so don't take this responsibility lightly.If I close my business, do I need to file a final sales tax return?
Yes! The Texas Comptroller of Public Accounts requires all businesses to "close their books" by filing a final sales tax return. This also holds true for business owners selling or otherwise transferring ownership of their business.Does the Texas Comptroller of Public Accounts offer a discount for filing on time?
Vendor discounts are rebates offered to tax filers by state tax jurisdictions to compensate filers for the effort involved with collecting, filing, and remitting sales tax in a timely manner. Such discounts are frequently cited as outdated by those who see them as a tax loophole for big businesses. With online buying and SaaS services like Avalara TrustFile, the days of managing receipts, balancing books, and writing checks to the state have long since been replaced by computer automation.
The Texas Comptroller of Public Accounts currently offers a vendor discount (also known as a dealer collection allowance) of 0.5%. Quarterly and monthly filers who prepay 90% of the total sales tax due for the entire reporting period can earn an additional 1.25% vendor discount from the Texas Comptroller of Public Accounts. with a maximum of no maximum and a minimum of no minimum.