What Texas Form 01-117 (2020) Is For
Texas Form 01-117 is a short-form sales and use tax return used by certain single-location businesses to report state and local sales tax to the Texas Comptroller of Public Accounts. It facilitates the regular tax returns and tax collections mandated by the Texas Tax Code. When local sales tax is restricted to the tax districts of the primary location, it is intended for simple reporting.
When sellers failed to collect tax at the time of purchase, the return shows gross receipts, taxable sales, and use tax on a taxable good or service. For applicable tax districts, these figures establish the tax base that is used to compute the accurate sales tax rate and combined tax rates. The Texas Franchise Tax Report and other franchise tax filings are not the same as this one.
When You’d Use Texas Form 01-117
When the Texas Comptroller gives the account the short form and the business meets the requirements, the taxpayer uses Form 01-117. When the economic nexus applies, marketplace facilitators and remote sellers may have to pay taxes. The Texas Comptroller's Office sets expectations through account notices and advice.
Even if there are no taxable sales, returns must still be filed on a monthly, quarterly, or annual basis. If you can't pay your taxes in full, you might have to sign a payment agreement. If you file your return after the deadline, you may be required to pay a late filing fee. If an amended filing is needed to fix mistakes or strengthen a refund claim, there may be refund hearings or re-determination hearings.
Key Rules or Details for 2020
In 2020, the state sales tax rate was 6.25 percent, and local sales tax could increase the combined tax rate, depending on the tax districts. Filers had to apply the correct tax rate based on sourcing rules and delivery location for taxable items and taxable services transactions. Accurate tax rates reduce disputes and improve audit results.
When sales tax is not collected on taxable purchases—including those made from out-of-state vendors and inventory withdrawals—use tax is imposed. To support accurate classification, some taxpayers also kept track of special events, such as the Energy STAR promotions and the Water-Efficient Products Sales Tax Holiday. When the Texas Comptroller of Public Accounts announces relief in the Texas Register, it may affect deadlines and late fees related to Hurricanes Hanna and Laura.
Step-by-Step (High Level)
Step 1: Enter account and period information
After entering the taxpayer number, reporting period, and contact information, ensure that you update any account information that has changed. Check the status of the filing and the due date.
Step 2: Report gross receipts
Report the period's gross receipts using numbers that do not include sales tax. Before computing taxes, reconcile totals with sales records.
Step 3: Determine taxable sales and apply the rate
Distinguish between taxable and non-taxable sales and provide evidence. To find the combined state and local rate, apply the appropriate tax district regulations.
Step 4: Report use-taxable purchases
Determine the amount of use tax due on a list of taxable purchases for which sales tax was not paid at the time of purchase. Before discounts, add the sales tax and the use tax to the total.
Step 5: Apply discounts and submit payment
Once any applicable discounts have been applied, please return the item and pay using an authorized method. If full payment is not possible, request a payment plan from the Texas Comptroller.
Common Mistakes and How to Avoid Them
- Skipping zero returns: File a return every reporting period, even with zero activity, to avoid late penalties and unnecessary compliance notices.
- Treating gross receipts as taxable sales: Separate taxable sales from exempt sales, document exemptions, and confirm taxable services rules under the Texas Tax Code before reporting totals.
- Omitting use tax on out-of-state purchases: Track taxable purchases made without Texas sales tax and reconcile purchase records each filing period so use tax is reported accurately.
- Using incorrect local tax rates: Verify combined rates by tax district for the reporting period before submitting the return to prevent underpayment, overpayment, and notices.
- Claiming refunds on the short form: Follow the Texas Comptroller's procedures for refund claims and use the appropriate filing method to ensure the claim is processed without unnecessary delays or risk of hearing.
What Happens After You File
After the Texas Comptroller's Office has processed the return, the results are posted to the account; electronic submissions usually post faster. If the return is either late or underpaid, the account may be subject to interest, late fees, and additional steps for payment agreements. If there is evidence of reasonable cause, requests to waive fines and interest may be approved.
Audits can look at businesses that have to pay taxes, the paperwork that goes along with taxable sales, and tax reporting. They might also look at returns. Reviews can also look into things like tax code positions, credit card processing fees, and how consistent past tax reports have been. It's easier to plan for taxes and settle disagreements when you keep good records.
FAQs
Who must file Texas Form 01-117?
The Texas Comptroller will assign this return to an account, and eligible single-location permit holders are required to file it. Businesses with more than one location usually have to file separate sales and use tax returns for each one. The account profile contains all the necessary information.
How is sales tax different from the Texas Franchise Tax?
While the Texas Franchise Tax only applies to specific business types based on their profit margins, sales tax applies to taxable goods and services. In addition to requiring separate filings, such as the Texas Franchise Tax Report, franchise tax may also necessitate the use of Forms 05-102, 05-167, or a No Tax Due Report.
What triggers use tax reporting?
When sales tax wasn't charged on a taxable item or service, use tax applies. Buying items from other states and removing them from inventory are two common examples. Clear records of purchases help with accurate reporting.
Can a taxpayer request a payment plan?
People who can't pay their bills in full can set up payment plans with the Texas Comptroller's Office. These plans can help make enforcement less stressful, but they usually don't stop interest from growing. Usually, the account portal shows the terms and eligibility.
Are federal forms related to this filing?
This return is not the same as federal income tax forms, such as Schedule A and Form 1040. However, consistent records can make it easier to report and follow the rules across systems. State and federal filings should not be mixed up.
