How to File and Report Sales Tax in Texas

Businesses in Texas with a sales tax permit must report and send the sales tax they collect to the Texas Comptroller of Public Accounts. This process involves understanding deadlines, correctly calculating the tax owed, completing the appropriate forms, and submitting the return and payment.

Required Information and Filing Deadlines

The Texas Comptroller assigns each business a filing frequency—either monthly, quarterly, or annually—based on the amount of sales tax collected. Businesses with higher tax liabilities are typically required to file more often. Monthly and quarterly returns are due on the 20th day of the month following the end of the reporting period. For example, taxes collected in April are due by May 20th.

To complete the return, you must gather specific figures from your accounting records: Total Texas Sales, Taxable Sales, and Taxable Purchases. Total Texas Sales represents all revenue generated within the state, regardless of taxability. Taxable Sales is the portion of your total sales subject to state and local sales tax. Taxable Purchases are items your business bought for its own use without paying tax at the time of purchase, on which you must now remit use tax.

The standard form for this process is the Texas Sales and Use Tax Return, with Form 01-114 being the most common version for regular filers. A simplified version, Form 01-117, is available for businesses that qualify for the short form.

Completing the Sales and Use Tax Return

The Texas Sales and Use Tax Return follows a specific sequence to calculate the amount due. First, enter your Total Texas Sales for the reporting period. This figure encompasses all sales made in the state and serves as the baseline from which deductions are made to arrive at the taxable amount.

Next, you will report your Taxable Sales, which is derived from your total sales after subtracting any exempt sales, such as sales for resale or to exempt organizations. You must also report any Taxable Purchases. These are items that were purchased tax-free but were subsequently used by the business in a taxable manner, requiring the payment of a use tax.

You will multiply your taxable sales and taxable purchases by the applicable combined state and local tax rates. Texas has a state sales tax rate, and various local jurisdictions levy their own taxes, which must be accounted for based on the location of the sales. The sum of these calculations determines your total tax due before any credits or discounts.

Businesses that file their return and pay the tax on time can claim a discount of 0.5% of the tax due. An additional prepayment discount of 1.25% is available to monthly and quarterly filers, making the total possible discount 1.75%. After applying any discounts, the form will show the final amount due.

How to Submit Your Return and Payment

The primary method for submission is through the Comptroller’s online portal, WebFile. To use this system, you must first create an account and log in using your taxpayer number. The portal is designed to guide you through the filing process.

Within the WebFile portal, you will proceed to the payment section after entering your tax information. The system offers several electronic payment options. You can authorize an electronic funds transfer (EFT) directly from your bank account or pay by credit card, though this option typically involves a processing fee. After submitting, you will receive a confirmation number for your records.

For those not required to file electronically, submission by mail is an alternative. This involves sending the completed and signed paper tax form to the mailing address specified by the Comptroller’s office. A check or money order for the full amount due must be included and postmarked by the due date to be considered timely.

Post-Filing Actions and Record Keeping

After submitting your return and payment, save a copy of the filed return and the payment confirmation. The Texas Comptroller requires businesses to maintain all records related to sales tax for a minimum of four years. These documents are necessary to support the figures reported on your returns in the event of an audit or inquiry from the state.

If your business had no sales and collected no tax during a reporting period, you are still required to file a “zero return.” This informs the Comptroller that you are still in business but had no taxable activity. Failing to file a zero return can result in a $50 penalty for each late-filed report.

If you discover an error on a return that has already been filed, you must file an amended return to correct it. This process is handled through the Comptroller’s office and can be initiated through the WebFile portal. Depending on the nature of the error, the amendment may result in additional tax being due to the state or a credit being issued to your account. Promptly correcting any inaccuracies helps maintain compliance and avoids potential interest and penalties on underpayments.