Texas sales tax: due dates and the $50 late-report penalty

Not tax advice. This is general information for Texas small business owners, written in plain English. Rules change, and your situation may differ. Check with the Texas Comptroller or a tax professional before acting on it.

If you hold a Texas sales tax permit, you file a sales and use tax return on a schedule the Comptroller assigns you. Miss the deadline and there's a $50 penalty for each late report. The part that surprises people is that the $50 applies even when you owe no tax at all.

What the return is

The Texas Sales and Use Tax Return (Form 01-114) reports your total Texas sales, taxable sales, taxable purchases, and the state and local tax due for each business location. The state rate is 6.25%, and local cities, counties, transit authorities and special districts can add up to 2%, for a combined maximum of 8.25% (Texas Comptroller, Sales and Use Tax). The form itself says a return must be filed even if no tax is due.

When it's due

After your permit is approved, the Comptroller tells you by letter whether you file monthly or quarterly. Some businesses file yearly.

• Monthly: due the 20th of the next month. For example, April is due May 20.
• Quarterly: due April 20, July 20, October 20 and January 20.
• Yearly: due January 20.

If the 20th lands on a weekend or legal holiday, the due date moves to the next working day. Returns filed through Webfile must be in by 11:59 p.m. Central Time on the due date (Texas Comptroller, File and Pay).

The $50 late-report penalty

Per the Comptroller, a $50 penalty is assessed on each report filed after the due date, and it applies "even if no taxes are due for the reporting period" (Penalties for Past Due Taxes; Texas Tax Code §151.703). Late tax payments carry further penalties: 5% if paid 1 to 30 days late and 10% if paid more than 30 days late. Interest starts 61 days after the due date.

The on-time discount

File and pay on time and you can take a discount of 0.5% of the tax you report. File late and you lose it.

Do you have to file online?

That depends on how much tax you paid in the prior state fiscal year (September 1 to August 31). At $50,000 or more, paper returns aren't allowed, and failing to file or pay electronically when required adds another 5% penalty (Filing requirements). Most small sellers use Webfile, the Comptroller's online system.

A simple monthly routine

1. Put the 20th on your calendar, plus a reminder 5 days before.
2. Run your QuickBooks sales tax report for the period.
3. Check total sales, taxable sales and anything you bought tax-free and used yourself (that's "taxable purchases").
4. File in Webfile, even if the total is $0, and save the confirmation.

Want this done for you? We're building Texas Sales Tax, Done For You. A bot prepares the return from QuickBooks Desktop (QuickBooks Online coming soon), and nothing is filed until you approve it. Join the list to hear when it opens.