What the Form Is For
Texas Form 01-117, the Sales and Use Tax Return – Short Form, is the simplified version of the state's sales and use tax reporting form used by businesses with straightforward tax situations. This form allows eligible businesses to report and pay the 6.25 percent state sales tax, plus any applicable local taxes (up to 2 percent), on retail sales, leases, rentals of tangible personal property, and taxable services conducted in Texas.
The form serves a dual purpose: reporting sales tax (collected from customers on taxable transactions) and use tax (owed on items purchased from out-of-state sellers who didn't collect Texas tax, or on inventory items taken for personal use). Think of it as your monthly, quarterly, or yearly check-in with the Texas Comptroller's office to account for all taxable business activity.
You're eligible to use the short form only if your business has a single location in Texas and you report tax to only one local taxing jurisdiction (the city, county, or special district where your business operates). If you have multiple locations or need to report taxes to multiple jurisdictions, you'll need to use the long form (Form 01-114) instead.
When You’d Use Form 01-117
Regular Filing Schedule
The Texas Comptroller assigns your filing frequency—monthly, quarterly, or yearly—based on the amount of taxes you paid during the preceding state fiscal year (September 1 through August 31).
- Monthly filers: Due by the 20th of the following month
- Quarterly filers: Due April 20, July 20, October 20, January 20
- Yearly filers: Due January 20
Late Filing
Life happens, and sometimes returns get filed late. However, Texas imposes substantial penalties:
- $50 late filing penalty (even if no tax is owed)
- 5% penalty if 1–30 days late
- 10% penalty if over 30 days late
- Interest starts after 61 days (8.50% for 2025)
Amended Returns
If you discover an error:
- Write "AMENDED RETURN" at the top
- Correct figures manually or file electronically via Webfile
- Submit multiple amended returns together for efficiency
- Use long form (01-114) + Form 01-148 if claiming a credit
Key Rules or Details for This Tax Year
Eligibility Requirements
- Must operate from a single Texas location
- Must report to only one local taxing jurisdiction
What Gets Reported
- Item 1: Total sales (before tax)
- Item 2: Taxable purchases without paid tax
Includes:
- Out-of-state purchases
- Inventory used personally
- Promotional giveaways
- Items originally tax-exempt but later used
Timely Filing Discount
- 0.5% discount if filed and paid on time
Electronic Filing Requirements
- Required if ≥ $50,000 in prior tax payments
- Methods: Webfile, EDI, Telefile
Zero Sales Reporting
- Still required even with no activity
- Use Telefile or Webfile for zero returns
Step-by-Step (High Level)
Step 1: Gather Your Records
Collect:
- Sales receipts
- Invoices
- Purchase records
- Exemption documentation
Step 2: Calculate Total Sales
Enter gross receipts (excluding tax) in Item 1.
Step 3: Report Taxable Purchases
Include:
- Out-of-state purchases
- Personal-use inventory
- Promotional items
- Tax-free purchases later used
Step 4: Calculate Tax Due
Apply:
- 6.25% state rate
- Local tax rate
Step 5: Apply Timely Filing Discount
Multiply tax due by 0.005 and subtract.
Step 6: Submit Your Return and Payment
Options:
- Webfile
- EDI
Payment methods:
- EFT
- Credit card
- TEXNET (for large taxpayers)
Step 7: Keep Your Confirmation
- Save confirmation number (electronic)
- Keep copies (paper)
Common Mistakes and How to Avoid Them
Mistake 1: Using the Short Form When Ineligible
Solution: Recheck eligibility each period.
Mistake 2: Forgetting to Report Use Tax
Solution: Track out-of-state purchases consistently.
Mistake 3: Claiming Discount on Late Returns
Solution: File early and set reminders.
Mistake 4: Not Filing with Zero Sales
Solution: File zero return via Telefile or Webfile.
Mistake 5: Incorrect Local Tax Rates
Solution: Verify rates before each filing.
Mistake 6: Poor Recordkeeping
Solution: Maintain records for at least four years.
Mistake 7: Taking Credits on Short Form
Solution: Use long form + credit schedule.
What Happens After You File
Processing Your Return
- Electronic = faster
- Paper = slower
Account Verification
- Compared against prior filings and industry norms
Potential Audit
- Covers 3–4 years
- Focuses on accuracy and documentation
Refund or Credit Processing
- Must file within 4 years
- Interest applies after 61 days
Ongoing Compliance
- Filing frequency may change
Collection Actions for Non-Compliance
Possible consequences:
- Penalties
- Liens
- Permit suspension
- Asset seizure
- Criminal charges
FAQs
Can I file Form 01-117 if I have zero sales for the period?
Yes, absolutely. Even with no sales, you must still file a return to avoid the $50 late filing penalty. If you have zero taxable sales and zero tax due, you can use the Telefile system to file by phone (available 24/7), which is faster than completing a paper form. You may also file a zero return through the Webfile system. The key is to file something—never simply skip filing because you had no activity.
I bought inventory from an out-of-state wholesaler who didn't charge me sales tax. Do I owe use tax on this?
Generally, no, if you purchased the inventory specifically for resale to your customers. Items purchased for resale are exempt from sales and use tax, but you must have provided your supplier with a properly completed Texas Resale Certificate (Form 01-339). However, if you take any of that inventory for your own use, give it away as promotional items, or use it in a manner other than resale, you do owe use tax on those items. Report this on Item 2 of Form 01-117.
What's the difference between sales tax and use tax?
Sales tax is the tax you collect from customers when you sell them taxable goods or services. Use tax is the mirror image—it's tax you owe when you purchase taxable items for use in Texas but the seller didn't collect Texas sales tax (typically because they're located out of state). Both taxes serve the same purpose and use the same rates; they just address different transaction scenarios. Form 01-117 allows you to report both types in a single return.
Can I claim a refund if I overpaid tax on a previous period?
Yes, you have several options. You can take a credit on a future return (though you'll need to file the long form and credit schedule), amend the return for the period where you overpaid, or file a formal refund request with the Comptroller's office. You must act within four years from the date the tax became due and payable. If approved, you'll receive interest on the overpayment beginning 61 days after the original payment date. Keep in mind that if you collected the tax from a customer in error, you must refund it to the customer before the Comptroller can process your refund.
I missed the filing deadline. Should I still file even though I'll be assessed penalties?
Yes, file immediately. While you will face penalties for late filing and payment, the consequences worsen the longer you wait. Filing late is far better than not filing at all. The Comptroller's office can take serious collection actions against businesses that don't file, including estimated billings, liens, permit suspension, and even criminal charges. File your late return as soon as possible, pay what you can, and contact the Comptroller's office if you need a payment plan.
My business location changed to a different city in Texas. Can I continue using the short form?
Yes, as long as you still have only one location and report to only one local taxing jurisdiction. However, you must update your address with the Comptroller's office. Your local tax rate will likely change, so verify it before filing your next return. If you operate multiple locations, you must switch to the long form.
How do I know what my local sales tax rate is?
Use the Sales Tax Rate Locator tool on the Texas Comptroller's website. It provides accurate combined state and local rates by address. Rates may change quarterly, so verify them before each filing.
