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Sales and Use Tax
Local Tax Sourcing Changes
Rule 3.334, Local Sales and Use Taxes, effective May 31, 2020, implemented several provisions related to local tax collection by remote sellers and marketplace providers. The rule also clarified the definition of a place of business. It made clear that sales personnel must be present for a location to be considered a place of business and that a place of business does not include a computer server, IP address, domain name, website or software application.
The Texas Comptroller of Public Accounts delayed the implementation of the following two provisions to provide taxpayers time to prepare for these changes.
Effective Oct. 1, 2021, local tax sourcing will change as follows:
- Orders received by salespersons while working away from their office will be sourced to the location from where the salesperson works if the location meets the definition of a place of business.
- Orders received by a shopping website or shopping application will be sourced to the Texas customer's location unless fulfilled by the seller's Texas place of business.
For more information about local sales and use tax, please see tax Publication 94-105, Local Sales and Use Tax Collection – A Guide for Sellers (PDF).
Other News and Announcements
Higher Than Normal Call Volume
We are experiencing higher than normal call volume. While we are available Monday through Friday, 8 a.m.-5 p.m. Central Time, shorter wait times normally occur from 8-10 a.m. and 4-5 p.m. Please have your 11-digit taxpayer number ready when you call. For additional information, see our Call Tips and Peak Schedule webpage.
COVID-19 and Sales Tax Help
Our agency is here to help those businesses that are struggling, as a result of COVID-19 restrictions, to remit the full amount of sales taxes they collect from their customers. In some instances, a short-term payment agreement may be available.
We understand that closures or a reduced ability to operate impacts taxpayers’ business finances and operations. But it is important to remind all taxpayers that state and local sales taxes collected from their customers are trust fund revenues and, by law, are not intended to be used by businesses as operating funds. Please keep in mind that the sales taxes that businesses are continuing to collect from consumers in their current ongoing limited operations will be due on the applicable due dates with the expectation of full payment of the taxes that are due.
Taxpayers may be able to enter into short-term payment agreements with possible waiver of penalties. Interest will not be waived. We ask that you file the sales tax returns that are due, make a good faith payment and contact our Enforcement Hotline at 800-252-8880 to learn about your options for remaining in compliance.
We strongly encourage you to use our online tools, tutorials and other resources for tax services, and establish 24/7 account access on Webfile.
We continue to stand with and assist our Texas businesses during these difficult times.
Taxability of COVID-19 Fees and Surcharges Imposed by Businesses
When costs increase, many businesses impose additional charges on customer billings, receipts and invoices. Fees and surcharges charged by Texas businesses related to the COVID-19 pandemic are not governmental fees, but charges that businesses have chosen to pass along to recoup the higher costs of goods and services provided to their customers.
For Texas sales tax purposes, additional fees and surcharges related to the selling price of a taxable item are considered part of the sales price and are subject to tax in the same manner as the item or service being sold. If the item or service sold is taxable, then the related fees or surcharges are also taxable, even if separately stated or identified as a dollar-for-dollar reimbursable expense. See Texas Tax Code Section 151.007, Sales Price or Receipts.
Texas imposes a 6.25 percent state sales and use tax on all retail sales, leases and rentals of most goods, as well as taxable services. Local taxing jurisdictions (cities, counties, special purpose districts and transit authorities) can also impose up to 2 percent sales and use tax for a maximum combined rate of 8.25 percent.
Registering and Reporting Texas Sales and Use Tax
- Apply for a Sales Tax Permit
- Change Mailing Address/Phone Number
- Move or Add a New Business Location
- Close One or More Locations
- Reporting and Payment Requirements
Local Sales and Use Tax Rates
- Use the Sales Tax Rate Locator to search for sales tax rates by address.
- City Rates with local codes and total tax rates
- County Rates with local codes and effective date
- Transit Rates with local codes and effective dates
- Special Purpose Districts (SPD) Rates with local codes and effective dates
- Combined Area Rates with local codes and effective dates
- Quarterly Updates to Rates and City Annexed Areas
- Local Sales Tax Rate History
Due Dates
Taxpayers will be notified by letter after their application for a sales tax permit has been approved whether they will file monthly or quarterly. If a due date falls on a Saturday, Sunday or legal holiday, the next working day is the due date.
Quarterly Filers
For quarterly filers, reports are due on:
- April 20 to report Jan. – March
- July 20 to report April – June
- Oct. 20 to report July – Sept.
- Jan. 20 to report Oct. – Dec.
Monthly Filers
For monthly filers, reports are due on the 20th of the month following the reporting month. For example, the April sales tax report is due May 20.
Yearly Filers
For yearly filers, reports of sales for the previous year are due on Jan. 20.
Payments via TEXNET
Taxpayers required to pay electronically via TEXNET must initiate their payment above $100,000 by 8 p.m. CT on the banking business day prior to the due date in order for the payment to be considered timely. For payments of $100,000 or less, a payor has until 10:00 a.m. (CT) on the due date to initiate the transaction in the TEXNET System.
Taxpayers will be notified by letter when their business meets the threshold to be required to pay electronically via TEXNET.
Discounts, Penalties, Interest and Refunds
Discounts
- Permitted sales taxpayers can claim a discount of 0.5 percent of the amount of tax timely reported and paid.
- Sales taxpayers who prepay can claim 0.5 percent for timely filing and paying, plus 1.25 percent for prepaying. See Prepayment Discounts, Extensions and Amendments FAQs.
Penalties
- A $50 penalty is assessed on each report filed after the due date.
- If tax is paid 1-30 days after the due date, a 5 percent penalty is assessed.
- If tax is paid over 30 days after the due date, a 10 percent penalty is assessed.
Interest
- Past-due taxes are charged interest beginning 61 days after the due date.
- To calculate interest on past-due taxes, visit Interest Owed and Earned.
Additional Resources
Industry-Specific Sales and Use Tax
- Agriculture and Timber Industry Information
- Animal Rescue Groups and Nonprofit Animal Shelters
- Providers of Cable Television, Internet Access or Telecommunications Services
- Licensed Customs Broker Export Certification System (LCBECS)
- Qualified Research Exemption
- Qualifying Data Centers Exemption
- Residential Use of Gas and Electricity
- Telecommunication Services
Local Sales and Use Tax Allocation
- Allocation Payment Distribution Schedule and Message of the Month
- Allocation Payment Detail by local jurisdiction
- Allocation Payment Historical Summary by local jurisdiction
- Allocation Comparison Summary Reports
- Other Reports Available to Local Jurisdictions
- Marketplace Providers Local Sales Tax Allocation Report