What Texas Form 01-117 (2025) Is For
State and local sales and use tax obligations for a particular filing period are reported using Texas Form 01-117, the abbreviated Texas Sales and Use Tax Return. It is meant for businesses with straightforward tax compliance needs.
The form lists taxable sales, taxable purchases subject to use tax, and any local sales tax that may be applicable. The Texas Comptroller gets the official tax return, which is how Texas sales and use tax is reported and paid.
Form 01-117 ensures that sales tax is reported accurately and distributed correctly among Texas tax jurisdictions. It displays both the state sales tax rate and the applicable amounts for local sales and use taxes.
When You’d Use Texas Form 01-117
Form 01-117 is for businesses that have a Texas sales tax permit but don't need to report complicated credits or sales from more than one location. Small companies, sellers who work from home, and sellers on online marketplaces who only have to follow basic sales tax rules often file it.
The comptroller decides when to file, which could be every three months, every year, or every month. There is a specific due date for each filing period that is based on the month or quarter that is currently happening.
Even if there are no taxable sales, you still have to file the return. An amended filing occurs when mistakes are discovered, and a late filing occurs when the return is submitted after the deadline.
Key Rules or Details for 2025
In Texas, the state sales tax is 6.25%. Depending on where the business is located and where the goods are being delivered, there may also be a local sales tax. The total sales tax rate for one set of tax jurisdictions in Texas cannot be more than 8.25 percent.
The sales tax rates vary by city, county, transit authority, and special purpose district, and changes may impact each filing period. Businesses must accurately assign sales tax to the appropriate areas and use the Texas Local Sales Tax Directory to verify rates in order to comply with sales tax laws.
When nexus requirements are satisfied under Texas sales tax laws, remote sellers and marketplace facilitators are covered by economic nexus. State nexus obligations that result in tax filing and continuous tax compliance can also be created by physical nexus, click-through nexus, and affiliate nexus.
Step-by-Step (High Level)
Step 1: Gather records for the filing period
Get copies of sales records, purchase receipts, and exemption certificates. Accurate records facilitate accurate reporting and the application of rates.
Step 2: Verify registration details and filing period
Confirm permit and registration details and verify the correct filing period and schedule before entering any amounts.
Step 3: Calculate taxable sales
Find out how much taxable sales there are after taking out documented exempt transactions. Use the correct Texas state and local rates based on the business's location.
Step 4: Calculate use tax on taxable purchases
Determine the amount of use tax due using the relevant local rate rules for taxable purchases for which Texas sales tax was not collected.
Step 5: Sign and submit the return
Check the totals, sign the return, and submit it using the approved method. Keep proof of filing and other records for future use.
Common Mistakes and How to Avoid Them
- Using the wrong local tax rate: Verify the combined rate by tax jurisdiction for each filing period, since local rates vary and can change over time.
- Missing use tax on remote-seller purchases: Track taxable purchases made without Texas sales tax and report use tax for the period to avoid liabilities surfacing later in an audit.
- Misusing exemption certificates: Confirm the exemption applies, ensure certificates are complete and valid, and retain them with supporting records to reduce assessment risk.
- Missing the report due date: Calendar owing dates and file on time even when no tax is due, since late penalties can apply to zero-tax returns.
- Using the wrong form or filing method: Confirm the correct Texas sales and use tax form and submission process for the business setup before filing to avoid rejections and enforcement actions.
What Happens After You File
The Texas Comptroller manages the Texas sales and use tax filing after the return is filed, depositing any money for the current filing period into the taxpayer's account. Paying your taxes on time ensures that the correct amount of local sales and use tax is collected and that the appropriate amount of sales tax is remitted to the respective tax jurisdictions.
The Comptroller may send a notice for additional tax filing, penalties, or interest if they find mistakes, missing use tax, or rate issues related to Texas sales tax rates. You may be more likely to be audited if you don't adhere to sales tax regulations, particularly if you sell remotely and are governed by marketplace facilitator and economic nexus laws.
FAQs
Who must file Texas Form 01-117?
Businesses that hold a Texas sales tax permit and have simple reporting needs are required to file the return. This includes remote sellers and marketplace facilitators meeting nexus requirements.
What if there are no sales during the filing period?
A return must still be filed showing zero taxable sales. Failure to file results in penalties regardless of tax owed.
How is use tax reported?
Use tax is reported on taxable purchases when sellers did not collect tax. The applicable local sales tax rate is used based on where the item is used.
How does economic nexus affect filing?
The economic nexus applies when sales exceed the state's thresholds. Remote sellers meeting these thresholds are required to report Texas sales and use tax.
Are delivery charges taxable?
Delivery charges, shipping, and freight charges may be taxable when tied to taxable items. Each transaction must be reviewed individually.
