programs Criminal Investigation Division

The state sales and use tax rate is 6.25 percent, but local taxing jurisdictions (cities, counties, special purpose districts, transit authorities) may also impose sales and use taxes up to a combined 2 percent for a maximum combined total rate of 8.25 percent. Refer to Local Sales and Use Tax Collection – A Guide for Sellers for additional information on local sales and use tax administration.

Crimes and Punishment

Criminal offenses involving the sales and use tax include both felonies and misdemeanors. Conduct punishable as a felony includes:

Failure to Remit Taxes Collected

Intentionally or knowingly failing to remit sales taxes collected when the unremitted amount is $1,500 or more may be prosecuted as a first-degree felony if the amount (either individually or in the aggregate) equals or exceeds $200,000 (Tax Code Section 151.7032). Cases involving unremitted amounts less than $1,500 are misdemeanors.

Falsifying Records

Intentionally or knowingly committing various fraudulent acts with respect to books and records required to be made or kept by law may be prosecuted up to a third-degree felony (Tax Code Section 151.7102).

House Bill 11 Offenses

The 80th Legislature passed House Bill 11 in 2007, dramatically expanding the Comptroller's ability to identify, audit and, when appropriate, prosecute tobacco and liquor retailers who collect sales taxes but do not remit the proper amounts to the state. Largely through enhanced electronic reporting requirements, the Comptroller identified more than $665 million due the state between fiscal 2009 and fiscal 2015.

Learn more about this sales tax law enforcement mechanism.

House Bill 11 Criminal Cases

HB 11 amended the Alcoholic Beverage and Tax codes to require distributors and wholesalers who sell ale, beer, wine, cigarettes, cigars and tobacco products to Texas retailers to report those sales monthly to the Comptroller’s office. These distributors and wholesalers must also report those data electronically, unless they demonstrate the inability to do so.

HB 11 data allow the Comptroller to compare wholesale purchases that retailers have made of these products with the sales they are required to report. Because both datasets are typically received electronically, discrepancies can be more easily and rapidly identified. Rapid identification is essential so that the Comptroller's auditors can begin working to mitigate losses and recoup any revenue owed to the state.

In some cases, audit documentation may suggest that the taxpayer had criminal intent to evade taxes. If so, the Criminal Investigation Division reviews and evaluates the case for the possible filing of criminal charges.

Other Consequences

Sales tax permits may be suspended or revoked, and former permit holders may be denied new permits if the Comptroller is not satisfied that the holder will comply with the sales tax statutes or Comptroller rules in the future (Tax Code Sections 151.203 and 151.204).

Venue

Sales tax cases are prosecuted in the counties in which any element of the offense occurs.