If you’re selling digital services and products to customers in Texas, then you might be liable for TX sales tax. We’ve compiled over 10 years of experience in tax compliance to create this comprehensive guide, which covers how to file Texas sales tax returns online and stay compliant with the state's regulations.
We’ve scoured the Texas Comptroller's website to provide you with all the necessary information about sales tax for businesses in one place.
How to file sales tax returns in Texas
Sales and taxes should be reported and filed using US dollars. If you’ve made any transactions in Texas in a different currency, be sure to convert those to USD using official currency exchange rates.
When to file and pay
The timing for filing your return depends on your average monthly sales tax liability, and the Texas Comptroller of Public Accounts will assign you a filing frequency (monthly, quarterly, or yearly) after you are registered based on the amount of taxable sales you make in the state.
Texas sales tax returns and payments must be remitted at the same time; both have the same due date. The Texas Comptroller of Public Accounts requires all sales tax filing to be completed by the 20th of the month following the assigned filing period. Due dates falling on a weekend or holiday are adjusted to the following business day.
TX sales tax filing deadlines
For businesses collecting less than $500 per month in sales tax, returns should be filed quarterly. If you collect between $500 and $20,000 per month, returns should be filed monthly. If your business collects more than $20,000 per month, returns should be filed on a semi-monthly basis.
| Filing Frequency | Reporting Period End | Report Due Date | | :--------------: | :-------------------------: | :-------------------------: | | Monthly | Varies | 20th of the following month | | Quarterly | March 31 | April 20 | | Quarterly | June 30 | July 20 | | Quarterly | September 30 | October 20 | | Quarterly | December 31 | January 20 (following year) | | Yearly | December 31 (Previous Year) | January 20 |
Important note: Zero returns
Even if you didn’t make any sales in Texas during your reporting period, you must still file a "zero return." This follows the exact same process as a normal return, just with no tax liability to report. Failure to submit a zero return can result in penalties and interest charges.
How to prepare your Texas sales tax return
Before you start working on your sales tax return, you'll need to collect all the sales information for your tax period. The Texas Comptroller's online tax return system will guide you, but generally, you'll need the following details:
Sales transactions
Every business needs to know how much it sold—both in gross sales and in taxable sales—and to whom the business sold it. You are also required to collect and pay sales tax for any personal property sold to residents of Texas, with certain exceptions (e.g., if the buyer has a resale certificate or the item isn't considered taxable).
In addition to your gross Texas sales (total sales revenue from buyers in Texas, regardless of taxability), filing a sales tax return requires the following information:
- Taxable sales by type: Different types of products are subject to different tax rules and amounts.
- Non-taxable sales by type: Examples include sales to resellers, non-taxable labor, and certain non-taxable foods.
- Deductions: This might include items such as delivery charges.
- Total collected sales tax: The total amount of sales tax you collected from customers during the filing period.
If a business has employees, an office, or a warehouse located in Texas and is selling taxable goods and/or services, it must collect sales taxes, file returns, and pay the appropriate amount to the state.
Special taxing jurisdictions in Texas
In addition to state sales taxes, Texas sellers must manage local sales taxes. Whenever you make a sale to a buyer located in a town/city that charges more than the base state tax rate, you must collect the extra taxes for that district.
There are numerous sales tax districts in Texas, which can make preparing a Texas sales tax return daunting. For more information, see the Texas Comptroller's publications.
How to complete a Texas sales tax filing
The final step is to file and remit tax. The Texas Comptroller offers various methods and platforms for filing a TX sales tax return depending on how big your business is, i.e. how much sales tax your business has collected and remitted in the past. Please check the Comptroller website’s guidelines for methods of reporting and paying sales tax.
The most common method is an online filing system where you can enter your information to generate the return. You can log in to the Texas Comptroller's online services portal. If you prefer to do it offline, Form 01-114 is still available for download.
How to pay
Tax payments must be in US dollars and can be made directly at the time of filing. Once you’ve completed the return, you’ll remit the total calculated sales taxes minus any monthly prepayments you’ve already made (if applicable).
Payment options include:
- Direct transfer from your bank account (EFT)
- Credit card (with a processing fee)
- Check
- Money order
Some high-grossing businesses might be required to pay by electronic funds transfer (EFT). If you have further questions about your payment options, head to the Texas Comptroller’s payment info page.
Late filing penalties and interest
Hopefully, you won't need to worry about this section because you're filing and remitting Texas sales tax on time. However, in the real world, mistakes happen.
If you miss a sales tax filing deadline, file your return as soon as possible. Failure to file returns and remit collected tax on time may result in penalties and interest charges, and the longer you wait to file, the greater the penalty and the greater the interest.
The Texas Comptroller of Public Accounts does offer a timely filing discount for sales tax filers. Publications from the Texas Comptroller offer the most accurate details pertaining to interest, penalties, and fees associated with the charges.
If you miss a Texas sales tax filing deadline due to unavoidable circumstances like weather or an accident, you might be eligible for an extension from the Texas Comptroller. Be prepared to provide evidence to support your request. Furthermore, if you are considering buying a business, it's crucial to contact the Texas Comptroller beforehand to check its sales and use tax standing. You will be responsible for any existing tax debts after the purchase is complete.
Getting third-party help with sales tax filing
While you can file directly with the Texas Comptroller, manual filing is difficult, especially for larger businesses with many transactions across different districts. Outsourcing to experts like accountants, bookkeepers, or sales tax automation companies is common. They understand Texas sales tax law and can help you navigate its complexities.
Quaderno offers a service to simplify your sales tax compliance. Besides generating detailed tax reports with all necessary data, Quaderno can handle the filing process for you. By connecting to your sales data, Quaderno manages the submission of your sales tax returns to the Texas Comptroller, ensuring timely and accurate filing. This saves time and provides peace of mind.
For further reading that will help you stay compliant and successful as a remote seller, check out our Business Guide to Sales Tax in Texas.
Sales tax filing in other states
Note: At Quaderno we love providing helpful information and best practices about taxes, but we are not certified tax advisors. For further help, or if you are ever in doubt, please consult a professional tax advisor or the tax authorities.
