Sales and Use Tax

Sales Tax Help

Our agency is here to help those businesses that are struggling to pay the full amount of tax they collected from their customers, as a result of COVID-19 restrictions. For businesses that find themselves in this situation, our agency is helping in the form of short-term payment agreements and, in most instances, waivers of penalties and interest.

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 and avoiding interest and late fees on taxes due.

We understand the closures and/or reduced ability to operate was unexpected and sudden, impacting 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 future due date with the expectation of full payment of the taxes that are due.

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

Local Sales and Use Tax Rates

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 $25,000 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 $25,000 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