Sales Tax is Fun! |

Travis McAshanCompany
Apr 2010

The Overview

Dealing with things like sales tax can be a real pain but it’s necessary and the government deserves their due. After all you are operating by the rules right?!? All in all, state sales tax isn’t all that hard to handle and with a little planning you can be up and running with a slick system in no time. I’ve cobbled together some resources to help you get started.

1. Obtain Taxpayer Number

If you don’t already have a Sales Tax Permit, that’s the very first step. Go check out this really helpful page (http://window.state.tx.us/taxinfo/sales/new_business.html) to get started. However, in order to get your taxpayer number if you’ve lost it, you’ll need to contact the office in your state. For Texas the number to call is 800-531-5441 or locally at 512-475-0466.

2. Determine Tax Rate

Again, this is information you will need to get from your local tax representative. Where I’m located it breaks down like this but obviously this will change depending on your location.

Jurisdiction Name: TRAVIS CO ESD 6
Local Code: 5227604
Jurisdiction Type: SPD
Tax Rate: 0.0100000

Jurisdiction Name: LAKE TRAVIS LIB DISTRICT
Local Code: 5227560
Jurisdiction Type: SPD
Tax Rate: 0.0025000

Jurisdiction Name: STATE SALES TAX
Jurisdiction Type: STATE
Tax Rate: 0.0625000

Total Tax Rate:
0.0750000

3. Determine What Services Require Sales Tax

The best way to do this is again to give the tax office a call. However, if you’re brave you can go to the State Comptroller’s website and look up your services in one of three helpful places.

Tax Code Statutes
State Sales and Use Tax Code

4. Determine Filing Period

Here is the rule about quarterly vs yearly vs monthly filing… By law, all sales tax permit holders are required to file monthly, quarterly, or yearly, depending on the amount of their state sales tax liability during a reporting period. If the tax liability is more than $1,500 per quarter, file monthly. If the tax liability is less than $1,500 per quarter but at least $1,000 a year, file quarterly. If the tax liability is less than $1,000 per year, file returns annually. Once each year, we review all accounts to confirm filing status.

5. File Return (by mail or online)

If you owe money, you can either mail in your return or do a webfile. All you need is your taxpayer number and the filing period.

Toll-Free Number: (888) 434-5464
– or –
Webfile URL: http://window.state.tx.us/webfile/

6. Don’t Be Late!

If you file a late return and/or make a late tax payment, you are liable for interest and penalty charges. If you file a sales tax return after the due date, the discount is not allowed. Taxpayers are required to file sales tax returns by the due date. By law, taxpayers are assessed a $50 late filing penalty after more than two returns are received with a postmark date later than the due date. Once a taxpayer has filed late three or more times, the penalty is automatically assessed on every subsequent late filing. The late filing penalty is assessed even if there is no tax due during the period covered by the report.

If the tax liability is paid 1-30 days late, there is a 5% (.05) penalty applied to the amount of sales tax paid after due date. If the tax liability is paid 31-60 days late, there is a 10% (.10) penalty applied to the amount of sales tax due. If the payment is over 60 days late, the penalty is 10% of the amount of sales tax due plus interest. Calculate interest at the rate published online. Additionally, delinquent taxpayers may be referred to an outside collection agency which subjects them to a collection fee. If you pay your full tax liability on time but do not file your return on time, you may still be liable for a penalty for filing a late return as noted above.

If you fail to file a sales tax return timely, you may receive a Notice of Tax/Fee Due that estimates the amount of sales tax due for the filing period. This is an estimate only. The estimated figure will be replaced with the actual amount of tax due once a return is filed. A return must be filed even if you had no sales. If you do not file and pay your sales tax on or before 20 days after we issued this estimate, you are also liable for an additional 10% penalty on the outstanding tax. So you could be assessed a twenty (20) percent penalty on the tax due plus any applicable collection fees and interest.

Helpful Resources:

State Comptroller Website
State Comptroller Sales Tax Information
Sales Tax and Your New Business
Texas Sales Tax Rates
Texas Sales Tax Webfile URL
Seller’s and Purchaser’s Responsibilities

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