taxes

TEXNET and Electronic Payment of Taxes and FeesDefinitions and Frequently Asked Questions

Definitions

Automated Clearing House (ACH)
A central distribution and settlement point (in Texas, the Federal Reserve Bank in Dallas) for the electronic clearing of debits and credits between financial institutions. Every day, millions of ACH transactions take place - with funds debited from, or credited to, the balances of participating financial institutions, which in turn post those transactions to their customers' accounts.
Addenda Record
An addenda record is sent with an ACH entry and contains an 80-character free-form field for information required by the Comptroller to identify the payment. In electronic tax collection, there is a standardized format for the addenda record known as TXP.
Settlement
Settlement occurs when funds are actually transferred from the taxpayer's bank to the Comptroller's bank account.
Settlement Date
The business day on which funds are transferred is the settlement date. This date should not be later than the due date for that tax.

Frequently Asked Questions

Who must pay electronically?

State law requires taxpayers who paid $10,000 or more in a payment category during the preceding state fiscal year to electronically transmit payments to the Comptroller's office by:

The Comptroller's office will inform taxpayers who meet this threshold at least 60 days prior to the due date. Learn what thresholds apply to your tax.

If payments for a tax category total $10,000 or more in subsequent years, payments must continue to be made electronically. Some taxpayers may have to pay electronically for several tax types. For example, if a company pays $10,000 for both sales and use tax and franchise Tax, both taxes must be paid electronically.

Taxpayers who paid $100,000 or more in a tax category in the prior fiscal year must make their electronic payments by TEXNET. The $100,000 threshold is applicable to all tax types. If payments for the tax category continue to total $100,000 or more in subsequent years, taxpayers must continue to pay using TEXNET.

The law imposes a 5% penalty on payments not in compliance with electronic payment requirements. This penalty applies to each filing period where payment is not made electronically.

How do I get started?

Refer to File and Pay for details on all electronic payment options.

The TEXNET Electronic Funds Transfer Payment Instruction Booklet (PDF) contains complete instructions enrolling and using TEXNET.

What is Automated Clearing House (ACH) Debit?

In an ACH debit transaction, the taxpayer authorizes the TEXNET system to debit a selected bank account.

The taxpayer must enter the payment information into the TEXNET system by touch-tone telephone, the TEXNET website or Webfile. The system will prompt the taxpayer to enter a settlement (fund transfer) date. This date must be no later than 6:00 p.m. (CT) on the banking business day before the due date.

In payment warehousing, the taxpayer can choose a settlement date up to 30 days in the future. The taxpayer may inquire, change or delete the information by phone or TEXNET, as long as it's done before 6:00 p.m. (CT) on the banking business day before the settlement date.

On the settlement date, the designated bank account will be debited for the entered payment amount.

After receiving the payment information, the system will automatically issue a trace number to identify the completed payment.

Refer to Schedules of Electronic Funds Transfer Due Dates (PDF) and the TEXNET Electronic Funds Transfer Payment Instruction Booklet (PDF) for more information.

What is ACH Credit with addenda?

To use this method of payment, you must be enrolled in TEXNET.

In an ACH credit transaction, the taxpayer initiates payment through their financial institution.

The taxpayer originates an ACH Credit transaction in either CCD+ or CTX format through their financial institution for settlement on or before the payment due date. The addenda record(s) must be in the standard TXP format.

This payment option allows the payment and related information to be transferred together; however, it is prone to errors if the addenda record is improperly formatted. Inaccurate information could result in the inability to apply the payment on time. This may be considered a late payment and could result in the loss of timely filing and/or prepayment discounts or the assessment of a late filing penalty.

For complete instructions on ACH Credit payments, refer to the TEXNET Electronic Funds Transfer Payment Instruction Booklet (PDF)

Do I still file my regular tax returns?

Yes, tax returns must be filed by the due date with the Comptroller of Public Accounts. Certain tax types must be filed electronically if you paid more than $50,000 in tax in the prior fiscal year. Learn what thresholds apply to your tax.

If I pay electronically, can I file my return electronically?

Yes. The Comptroller's office has several programs that meet electronic filing requirements. Refer to File and Pay for more information.

How do I report a change in my bank account?

ACH debit taxpayers can report a change in bank account numbers online at TEXNET or by calling 800-636-4003.

For other changes, contact us at 800-531-5441, ext. 3-3010.

What if the due date falls on a holiday or weekend?

Same day settlement of an ACH transaction is not available. When a due date falls on a weekend or holiday, you must originate the ACH transaction no later than the banking business day before the weekend or holiday.

For example; if the due date falls on Labor Day, you must originate the payment no later than 6:00 p.m. (CT) the previous Friday to avoid being assessed a late payment penalty.

Review the due dates for filing or reporting taxes and fees.

Refer to Schedules of Electronic Funds Transfer Due Dates (PDF) for payment deadlines.

What if I miss the 6:00 p.m. deadline?

When ACH Debit transactions are not entered into the TEXNET system before 6:00 p.m. (CT) on the banking business day before the due date, or when ACH Credit with addenda transactions are not originated for settlement on the due date, the following options are available:

  • Provide payment information to the TEXNET Hotline by telephone at 800-531-5441, ext. 3-3010. This is necessary to identify the payment.
  • Select TEXNET as a payment option in Webfile. You will be informed that your payment will be late and provided instructions on how to complete a wire transfer. When given this prompt, hit Continue and TEXNET will be notified that you will be sending your payment via wire transfer. Continue as usual until you receive your confirmation.

Once you have notified TEXNET using one of the above options, you must initiate the wire transfer from your financial institution.

Please include the taxpayer number in the wire. For more information please review the TEXNET Electronic Funds Transfer Payment Instruction Booklet (PDF).

What is the penalty for late payment?

Late electronic payments are subject to the same penalties and loss of timely filing and/or prepayment discounts as any other late payment. There is a separate 5% penalty for failure to pay electronically as required.

What if the payment is late, but myself and my financial institution are not responsible for the delay?

If a payment is received after the due date and the taxpayer and their financial institution do not think they are responsible for the delay, one of the following items must be furnished as appropriate proof of an attempt to transfer funds:

  • the trace number provided by TEXNET when ACH Debit was used;
  • the bank-assigned ACH trace number when ACH Credit with addenda was used; or
  • the Federal Reserve Bank wire transfer reference number when backup procedures were used.

If the Comptroller's office determines that the taxpayer did attempt to transfer payment in a timely manner, payment records can be corrected upon receipt of appropriate documentation. Please call the TEXNET Hotline at 800-531-5441, ext. 3-3010 for assistance.

Questions

For questions regarding electronic payment, please contact the Electronic Reporting Section or call 800-531-5441, ext. 3-3630.

For questions regarding TEXNET payments, please call the TEXNET Hotline at 800-531-5441, ext. 3-3010.