What the Form Is For
Texas Form 01-117, officially titled the "Texas 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 a single Texas location or multiple locations reporting at the same combined tax rate. This form allows Texas permit holders to report and remit the 6.25 percent state sales tax, plus any applicable local sales taxes of up to 2 percent, collected from customers during the reporting period.
The form serves three primary purposes: reporting taxable sales made to customers, reporting taxable leases and rentals, and reporting taxable purchases on which you owe use tax but did not pay sales tax at the time of purchase. Use tax applies when you buy taxable items from out-of-state sellers who don't charge Texas tax, or when you purchase items in areas with lower local tax rates than where you'll use them.
Businesses use Form 01-117 when they operate under straightforward circumstances—specifically when all locations use the same local tax rate or when only one location exists. If your business has multiple locations with different local tax rates, you'll need to use the longer Form 01-114 instead, which includes supplemental schedules for each location.
When You’d Use It: Regular, Late, and Amended Returns
Filing Frequency and Deadlines
The Texas Comptroller assigns your filing frequency—monthly, quarterly, or yearly—based on your tax liability during the preceding state fiscal year (September 1 through August 31). You'll receive written notification of your assigned schedule after your sales tax permit is approved.
Monthly filers must submit Form 01-117 by the 20th day of the month following the reporting month. For example, if you're reporting April sales, your return is due May 20. Quarterly filers report on April 20 (for January-March), July 20 (for April-June), October 20 (for July-September), and January 20 (for October-December). Annual filers must submit their returns by January 20 for the previous calendar year. When a due date falls on a weekend or legal holiday, the next business day becomes the deadline.
Late Filing Rules and Penalties
If you miss your filing deadline, you'll need to file a late return immediately. Texas doesn't offer filing extensions except in declared disaster areas. Late returns trigger automatic penalties:
- $50 late filing penalty
- 5 percent penalty if you pay the tax 1–30 days late
- 10 percent penalty if you pay more than 30 days late
Interest begins accruing on unpaid taxes starting on the 61st day after the original due date.
Amended Returns
To file an amended return when you discover an error on a previously filed return:
- Make corrections on a copy of your original return or complete a new Form 01-117
- Write "Amended Return" prominently at the top
- Sign and date it
- Mail it to the Comptroller
If you underpaid, include additional tax plus penalties and interest. If you overpaid, follow refund claim requirements.
Key Rules to Know
Zero-Activity Filing
If you had zero taxable sales and zero tax due, you can:
- Use TeleFile (24/7 phone system), or
- File Form 01-117 with the appropriate box checked
Electronic Filing Requirements
Electronic filing is required if you paid $50,000+ in sales tax during the prior fiscal year. Options include:
- Webfile
- EDI
- TeleFile (if eligible)
Paper filing is not accepted above this threshold.
Payment Rules
- $500,000+ in tax: must use EDI or TEXNET
- TEXNET deadlines:
- Over $1M: initiate by 8 p.m. prior business day
- $1M or less: by 10 a.m. on due date
Filing Discounts
- 0.5% timely filing discount
- Additional 1.25% prepayment discount (total 1.75%)
Prepayment must be:
- At least 90% of current tax due, OR
- 100% of same period last year
Use Tax Obligations
Report use tax on:
- Out-of-state purchases
- International purchases
- Purchases with lower local tax rates
Step-by-Step (High Level)
Preparation
Gather:
- Sales records
- Receipts
- Invoices
- Purchase documentation
Separate into:
- Taxable sales
- Leases/rentals
- Taxable purchases (use tax)
Completing the Form
Item 1–3
- Item 1: Total taxable sales
- Item 2: Taxable leases/rentals
- Item 3: Taxable purchases (use tax)
Item 4–5
- Item 4: Total (sum of Items 1–3)
- Item 5: Apply tax rate (6.25% + local up to 2%)
Item 6–7
- Item 6: Subtract discounts and prepayments
- Item 7: Final amount due
Final Steps
- Round to nearest dollar
- Sign and date the form
- Include contact number
- Submit via mail or electronically
Common Mistakes and How to Avoid Them
Missing Use Tax
Businesses often fail to report use tax on:
- Online purchases
- Out-of-state vendors
Incorrect Local Tax Rate
Rates change frequently. Always verify using official tools.
Improper Discount Claims
- Timely discount only applies if received by due date
- Prepayment discount requires strict compliance
Misreporting Inventory
Do NOT include resale inventory in taxable purchases.
Late Filing Consequences
Penalties stack quickly:
- $50 minimum
- Additional percentage penalties
- Interest after 60 days
What Happens After You File
Processing and Confirmation
- Electronic filing: instant confirmation
- Paper filing: 2–3 weeks processing
Review and Audits
The Comptroller may:
- Review for discrepancies
- Request documentation
- Initiate audits (up to 4-year lookback)
If You Underpay
You may receive:
- Billing notice
- Penalties and interest
- Collection actions (liens, asset seizure, etc.)
If You Overpay
Options include:
- Credit toward future taxes
- Refund request
FAQs
Can I file Form 01-117 if I have multiple business locations?
You can use Form 01-117 only if all your locations report at the same combined tax rate. If different locations have different local tax rates, you must use Form 01-114 (the long form) with location supplements to report each location separately. Most businesses with multiple locations across different Texas cities or counties will need the long form because local rates vary significantly throughout the state.
What's the difference between sales tax and use tax, and why do I report both on the same form?
Sales tax is collected from your customers when you sell taxable items, while use tax is what you owe as a purchaser when you buy taxable items for your business use and the seller doesn't charge you Texas tax. Both taxes are reported on Form 01-117 because the tax rates and purposes are identical—use tax prevents businesses from avoiding sales tax by purchasing from out-of-state vendors. Together, they ensure all taxable consumption in Texas is taxed regardless of where the purchase occurred.
If I have no sales during a reporting period, do I still need to file Form 01-117?
Yes, you must file a return for every assigned reporting period, even if you had no taxable activity. If you have zero taxable sales and zero tax due, you can use the TeleFile system or mail Form 01-117 with the "no sales" box marked. Failing to file anything at all results in a $50 late filing penalty and may trigger estimated billing from the Comptroller based on your previous reporting history.
Can I get an extension if I can't file my return by the due date?
Texas does not grant extensions for filing sales and use tax returns except in areas where a disaster has been officially declared. Unlike federal income tax, there's no automatic extension process. If you miss the deadline, file as soon as possible and consider requesting a penalty waiver if you have reasonable cause for the delay, such as serious illness, natural disaster, or death in your immediate family. The Comptroller evaluates waiver requests on a case-by-case basis.
How do I know if I qualify for the prepayment discount, and is it worth the effort?
Monthly and quarterly filers qualify for the 1.25 percent prepayment discount by submitting a prepayment by the 15th of the month (monthly filers) or the second month of the quarter (quarterly filers). Your prepayment must equal at least 90 percent of the current period's final tax amount, or 100 percent of what you paid in the same period last year. For businesses with stable, predictable sales, this discount can add up significantly over time—a business paying $10,000 monthly would save $1,750 annually by taking both the timely filing and prepayment discounts.
What should I do if I discover an error after I've already filed my return?
File an amended return as soon as you discover the error. Make corrections on a copy of your original Form 01-117 or complete a new form, write "Amended Return" clearly at the top, and mail it to the Comptroller with any additional payment due or documentation supporting a refund claim. For underpayments, include the additional tax, penalty, and interest to minimize further charges. The sooner you file an amended return, the less interest and penalties accumulate.
Will the Comptroller audit my returns, and how can I prepare?
The Comptroller's office conducts routine audits of sales tax accounts, typically covering periods within the four-year statute of limitations. Not all businesses are audited, but maintaining thorough records protects you if selected. Keep all sales invoices, purchase receipts, exemption certificates, resale certificates, bank statements, and accounting records for at least four years. If you receive audit notice, respond promptly, organize your records, and consider whether you need professional assistance depending on the audit's complexity.
