What Texas Form 01-117 (2022) Is For
Businesses that meet the requirements can report taxable sales and send collected sales and use tax to the Texas Comptroller of Public Accounts using Texas Form 01-117, the abbreviated Texas Sales and Use Tax Return. It applies to businesses that operate simply and have a single location, subject to a single local tax rate.
Taxable entities can compute state and local sales tax rates, report gross receipts from taxable goods and services, and fulfill Texas Tax Code filing requirements with this tax return. Completing this form accurately will help businesses comply with Texas tax laws and avoid additional fines.
Form 01-117 does not replace other business taxes, like the Texas Franchise Tax or Franchise Tax Report. Businesses may still need to file Form 05-102 or Form 05-167, depending on their total revenue, cost of goods sold, and franchise tax liability.
When You’d Use Texas Form 01-117
When a business operates from a single location within a single local taxing jurisdiction and has a valid Texas tax permit, it uses Texas Form 01-117. It is meant for vendors who don't report use tax on purchases from out-of-state vendors and collect sales tax at a single combined local rate.
Even if there are no taxable sales during a filing period, this form is still necessary. To maintain tax compliance and prevent automatic late-filing penalties, businesses must still submit sales tax returns, even if there is no activity.
When filing after the deadline or with modifications, extra care must be taken to ensure accuracy. If errors are discovered after submission, businesses must handle any ensuing tax liability, penalties, or interest and file a corrected tax return for the applicable filing period.
Key Rules or Details for 2022
The sales tax rate in Texas is 6.25 percent statewide, with local governments having the option to tack on a regional rate of up to 2 percent. The business location determines the combined sales tax rate, not the client's ZIP code or address.
The Texas Comptroller sets the filing deadlines, which could be quarterly, annual, or monthly. This indicates that each period has a different set of filing requirements. Unless adjusted due to holidays, tax deadlines are typically on the twentieth day of the month following the end of the reporting period.
Only companies that satisfy specific requirements can use the short form. Companies with multiple locations, those that have economic nexus obligations, facilitate marketplaces, or are required to report use tax must file the long-form Texas Sales and Use Tax Return.
Step-by-Step (High Level)
Step 1: Verify preprinted account details
Check the taxpayer number, filing period, and business location on the form, and correct any errors before entering any numbers.
Step 2: Determine taxable sales
To figure out taxable sales, add up the gross receipts from taxable goods and services, but don't include the sales tax that was collected. Before proceeding, ensure that the totals match the sales records.
Step 3: Calculate sales tax due
To figure out how much tax you owe for the filing period, use the right state and local sales tax rates on taxable sales.
Step 4: Apply discounts and add penalties if needed
Apply any applicable discounts and calculate any penalties or interest if the return is filed after the deadline. Ensure that the calculations supporting the final amount owed are accurate and consistent with one another.
Step 5: Sign, submit, and pay
Fill out the return, sign it, and file it using an approved method. Maintain documentation of filing and payment, and send money using an authorized method.
Common Mistakes and How to Avoid Them
- Skipping returns during no-activity periods: File a sales and use tax return every assigned period, even with zero sales, to avoid penalties that apply even when no tax is due.
- Using incorrect sales tax rates: Verify the combined state and local rate for the correct business location each filing period, as outdated rates or inaccurate location data can result in underpayment or overpayment.
- Using Form 01-117 when no longer eligible: Review eligibility each period and switch to the long-form return when changes occur, such as added locations, nexus expansion, or increased use tax obligations.
- Failing to update business location information: Confirm the permit details, physical location, and reporting jurisdictions are current so local tax is calculated under the correct tax district.
- Not tracking use tax that affects filing method: Monitor purchases from out-of-state or online sellers where tax was not collected, and report use tax properly to avoid audit exposure and filing corrections.
What Happens After You File
The Texas Comptroller of Public Accounts processes the tax return and deposits payments into the business account after it is submitted. Electronic filings typically post faster than paper filings, which speeds up the processing time and eliminates posting delays.
The Texas tax laws say that the Comptroller automatically adds penalties and interest if a return is filed late or a payment isn't complete. Businesses will receive letters informing them of the amount they owe and the payment deadline.
Keep filed tax reports and sales records for at least four years. Auditors may review these records to ensure that Texas sales and use tax rules are being followed.
FAQs
Who must file Texas Form 01-117?
Any business entity holding a Texas sales tax permit and operating from a single location with one local rate must file this form. Filing is required even during periods with no taxable sales.
Can Texas Form 01-117 be filed late?
Yes, but there are penalties and potential interest associated with late filing. To minimize their overall tax burden and avoid additional charges, businesses should file as soon as possible.
How do amended sales tax returns work?
An amended tax return corrects mistakes made on a previous return. The company needs to submit corrected numbers for the original filing period and pay any additional taxes that are owed.
How long should sales tax records be kept?
For a minimum of four years, sales records, tax reports, exemption certificates, and supporting documentation must be kept on file. These documents confirm adherence to Texas tax laws and assist audits.
Is Texas sales tax related to federal income tax?
Federal income tax and sales and use tax are distinct entities. It doesn't change how you file your taxes with the IRS, how much you get from Social Security, or the federal income tax brackets.
