What Texas Form 01-117 (2019) Is For
Texas Form 01-117 is the Texas Sales and Use Tax Return – Short Form used by permitted businesses to report taxable sales, tax collections, and use tax owed to the Texas Comptroller. It applies to sellers with relatively simple reporting requirements. The form enables the combined reporting of local and state taxes.
Even if a business has no taxable sales or no tax owed, it still needs to file this tax return for each designated filing period. By filing, one can continue to abide by Texas's sales and use tax regulations. Even in cases where payment is not necessary, failure to file may result in penalties.
Form 01-117 is one of several Texas tax forms used to administer sales tax and use tax obligations. It is generally intended for businesses operating from a single location. Businesses with multiple outlets or varying local tax rates may need a different form.
When You’d Use Texas Form 01-117
Businesses use Form 01-117 to file regular Sales and Use Tax returns based on their assigned filing schedule. Most taxpayers file monthly or quarterly, while some smaller businesses file annually. The Texas Comptroller assigns the filing frequency when the permit is issued.
This form is also used when filing late sales tax returns. Texas does not waive filing requirements just because a company did not operate. Once the deadline has passed, late filing penalties take effect right away.
Errors on previously filed returns can also be fixed using Form 01-117. For that period, the original filing is replaced by an amended return. Timely corrections reduce fines and interest.
Key Rules or Details for 2019
Texas imposes a 6.25 percent state sales tax, with local taxes increasing the combined Local Sales and Use Tax rate to a maximum of 8.25 percent. Local taxes may include city, county, transit authority, and special-purpose district taxes. Local rate changes can occur quarterly.
Every permit holder must file a sales tax return for each assigned filing period, even if no taxable sales occurred. Failing to file results in a mandatory $50 penalty per return. This penalty applies regardless of whether the tax payment is made on time.
Economic nexus rules require certain remote sellers to collect and remit Texas sales and use tax once threshold requirements are met. Click-through nexus and affiliate nexus rules may also create filing obligations. These rules expanded enforcement for online and multistate sellers in 2019.
Step-by-Step (High Level)
Step 1: Confirm Filing Information
Check the return for the taxpayer number, the reporting period, and the business address. Verify that the filing period corresponds with the designated filing schedule set by the Texas Comptroller. Any changes to your address should be reported to the IRS before filing.
Step 2: Report Taxable Sales
Figure out the total taxable sales for the reporting period, not including sales tax that was collected. Do not count exempt sales because they have a valid sales tax exemption certificate. Only give the price before taxes.
Step 3: Report Local Taxes
Enter taxable sales subject to local taxes using the appropriate local jurisdiction codes. The amounts must be the same across all local tax categories for Form 01-117. If sales occurred in multiple local tax areas, another form may be required.
Step 4: Report Taxable Purchases
Determine the amount of use tax due on taxable purchases for which no sales tax was received. This covers purchases made from out-of-state vendors and remote sellers. When delivery fees apply to taxable items, report them as taxable.
Step 5: Apply Discounts and Credits
Apply the timely filing discount only if filing returns and payments are submitted by the due date. Include prepayment discounts only when eligibility requirements are met. Unsupported credits may be disallowed.
Step 6: Submit and Pay
Submit the completed sales tax return using an approved filing method. Ensure tax payment is initiated by the deadline. Late payments trigger penalties and interest.
Common Mistakes and How to Avoid Them
- Skipping zero-sales returns: File a No Tax Due Report every reporting period, even with zero sales, and use calendar reminders so automatic penalties and enforcement actions are avoided.
- Including collected tax in taxable sales: Report taxable sales based on pre-tax prices only, and keep sales tax collected in separate accounting fields so reported totals are not inflated.
- Miscalculating local taxes after rate changes: Verify the current combined state and local rates before each filing, as jurisdiction rates can change throughout the year.
- Omitting use tax on untaxed purchases: Review invoices for taxable items bought without Texas sales tax and report use tax so liabilities do not surface later in an audit.
- Missing documentation for exemptions or deductions: Keep valid exemption certificates and supporting records for reported exemptions and deductions to reduce audit risk and avoid assessments.
What Happens After You File
The Texas Sales and Use Tax Return is processed and posted to the taxpayer's account by the Texas Comptroller following submission. Compared to paper submissions, electronic filings are usually processed more quickly. Records of confirmation ought to be kept.
As part of regular tax compliance checks, some returns may be selected for audit. Audits examine taxable sales tax reporting and related paperwork. Inadequate record-keeping increases the likelihood of an audit.
Collection actions may be taken against you if problems are not resolved. Liens, permit suspensions, and enforced tax payments are a few examples. Early communication lowers the risk of escalation.
FAQs
Who must file Texas Form 01-117?
Form 01-117 must be filed by any business that has a Texas sales tax permit and only has to report simple information. This typically applies to businesses with a single location that pay the same local taxes.
Do businesses need to file if they have no sales?
Yes, filing is required for every assigned filing period. Failing to file results in a $50 late filing penalty. This applies even when no sales tax is due.
How are late filings penalized?
A $50 penalty is assessed per return for late filings. Late tax payments are subject to additional penalties. After the statutory grace period has passed, interest starts to accrue.
How is use tax reported on Form 01-117?
Use tax is reported by listing taxable purchases made without paying sales tax. This commonly involves remote sellers and out-of-state vendors. The tax is included in the total tax due.
Can Form 01-117 be amended?
Yes, errors are corrected by filing an amended return using Form 01-117. The amended return replaces the original filing. Additional taxes, penalties, or refunds may be due.
How do Texas rules compare to those of other states?
The Streamlined Sales Tax system and Texas Sales and Use Tax rules are not the same. For example, Utah's sales tax has different rules for simplifying and filing.
What records should businesses keep?
Businesses should retain sales records, purchase invoices, exemption certificates, and filed tax returns for at least four years. These records support audits and claims for refunds.
