What the Form Is For
First, an important clarification: in the Texas Comptroller’s official materials, Form 01-117 is the Texas Sales and Use Tax Return – Short Form, while Form 01-156 is the Texas Use Tax Return for people or businesses that do not hold a Texas sales and use tax permit. Since these forms are closely related, this summary explains the short form and also notes when Form 01-156 is the right form instead. Source Source
In everyday terms, the short form is the return a qualifying Texas business uses to tell the state how much it sold, how much of those sales were taxable, whether it made any taxable purchases for its own use, and how much sales or use tax it owes for that reporting period. The form includes lines for total Texas sales, taxable sales, taxable purchases, tax due, discount, prior payments, penalty and interest, and the final amount due. Source
Texas limits who can use the short form. According to the Comptroller, you may use it only if your business has a single Texas location, reports local tax only to the local jurisdictions where that business is located, does not prepay taxes, does not claim credits, does not report customs broker refunds, and is not a remote seller or marketplace provider. If those conditions do not all apply, Texas says to use the long form instead. Source Source
When You’d Use Texas Form 01-117 or 01-156
You use the short form for your normal Texas sales-and-use-tax filing when the Comptroller has assigned your business a filing frequency and you meet the short-form rules. Texas says returns are generally due on the 20th day of the month after the reporting period ends. If the 20th falls on a weekend or legal holiday, the due date moves to the next business day. Depending on your account, the filing period may be monthly, quarterly, or yearly. Source Source
Late or Amended Returns
If you made a mistake on a filed return, you can submit an amended return. The Comptroller says amended returns may be filed on paper or electronically through Webfile or EDI. For a paper amendment, you make a copy of the original return or use a blank form, write “Amended Return” at the top, correct the figures, and sign and date the return. If the amended return shows that you underpaid, you must send the extra tax plus any penalty and interest that apply. Source Source Source
If the amendment shows that you overpaid, the situation becomes a refund matter. The Comptroller’s Webfile help page also notes that amended returns creating a credit balance cannot be submitted through Webfile and must be sent on paper. Source Source
Key Rules or Details for 2010
Using the Correct Form
One of the biggest rules is simply using the right form. If you have a Texas sales tax permit and qualify for the short form, you use Form 01-117. If you have a permit but do not qualify, you use the long form. If you do not hold a Texas sales and use tax permit and you bought taxable items without Texas tax being collected, Texas says to report those purchases on Form 01-156, Texas Use Tax Return. Source Source Source
Taxable Purchases
Another key rule is that you may owe tax not only on sales to customers, but also on some purchases your own business makes. The short form’s instructions say taxable purchases include items bought, leased, or rented for your own use when sales or use tax was not paid. That can include purchases from in-state or out-of-state sellers, items taken from inventory for use, items given away, or items bought for an exempt purpose but actually used in a taxable way. Source
Tax Rates
The tax rate is also important. Texas imposes a 6.25 percent state sales and use tax, and local jurisdictions can add up to 2 percent, for a maximum combined rate of 8.25 percent. The short form tells the taxpayer to multiply the amount subject to tax by the combined rate. Form 01-156 says the use tax rate is the same as the sales tax rate and includes applicable local tax where the item is delivered or used in Texas. Source Source Source
Zero Returns Requirement
Texas also expects a return even when the numbers are zero. The short-form instructions say not to leave key items blank and to enter “0” when the amount is zero. They also say you must file a return even if you had no sales. Source
Step-by-Step (High Level)
Step 1: Confirm Filing Details
Start by checking that you are filing the correct form for the correct period. Make sure you still qualify for the short form, verify your filing period and due date, and confirm that your business information is current. If you do not hold a permit and are reporting untaxed purchases, that is when Form 01-156 may be the correct form instead. Source Source
Step 2: Gather Financial Data
Next, gather the numbers for the reporting period. The short form separates total Texas sales from taxable sales. Total Texas sales is the big-picture number for all Texas sales, leases, rentals, and related charges. Taxable sales is the portion that is actually subject to tax. Then identify any taxable purchases your business made for its own use where tax was not already paid. Source
Step 3: Calculate Tax
After that, do the return math in order. Add taxable sales and taxable purchases to get the total amount subject to tax. Multiply that by the combined tax rate to get the tax due. If you are filing and paying on time, compute the 0.5 percent timely filing discount. Then subtract prior payments, add any penalty and interest if you are late, and arrive at the total amount due. Source Source
Step 4: File the Return
Finally, sign, date, and file the return. Texas offers Webfile and other electronic filing options, and paper filing may still be available for some taxpayers, though higher-volume taxpayers may be required to file electronically. Source
Common Mistakes and How to Avoid Them
Using the Wrong Form
A common mistake is using the short form when your business no longer qualifies for it. For example, having multiple locations, claiming credits, dealing with customs broker refunds, or being a remote seller can mean you need the long form. Checking eligibility before you start can save time and reduce correction work later. Source Source
Missing Taxable Purchases
Another frequent mistake is forgetting taxable purchases. Some businesses focus only on taxable sales to customers and overlook items bought for their own use without tax paid. Reviewing purchases, inventory withdrawals, freebies, and exempt-purpose purchases that ended up being used in a taxable way can help avoid underreporting. Source
Late Filing Penalties
Late filing is another expensive error. Texas says a $50 late-filing penalty applies to each late report. If the tax is paid 1 to 30 days late, the penalty is generally 5 percent. If it is more than 30 days late, the penalty is generally 10 percent. Interest on past-due taxes begins on the 61st day after the due date. Filing on time, even for a zero report, is one of the simplest ways to avoid extra charges. Source Source Source
What Happens After You File
After you file, the Comptroller processes the return and payment and posts them to your account. If you later notice an error, you can amend the return. If the correction shows that you owe more tax, you send the added tax plus any penalty and interest that apply. Source Source
If the filing or amendment shows that you overpaid, you may need to pursue a refund claim. The Comptroller says refund claims generally must be filed within four years from the date the tax was due and payable. The office may ask for records such as invoices, proof of payment, ledgers, or schedules to support the claim. If approved, the refund is issued; if incomplete or denied, the Comptroller sends follow-up notice explaining what is needed or why the claim was not granted. Source
FAQs
Do I have to file even if I had no sales?
Yes. Texas says you must file a return for every reporting period even if you had no sales or no tax due. Source Source
Can a business with more than one Texas location use the short form?
No. The short form is only for businesses that meet all the eligibility requirements, including having a single Texas location. Source
Where do I report business purchases on which Texas tax was not paid?
If you are a permitted seller using the short form, those generally go on Item 3, Taxable Purchases. If you do not hold a Texas permit, Texas says to report them on Form 01-156. Source Source
What if I already paid tax to another state?
Texas says a purchaser using Form 01-156 may take a credit for sales or use tax paid to another state. Source
Can I amend a return online?
Usually yes, through Webfile or EDI. But if the amendment creates a credit balance, the Comptroller says it must be filed on paper. Source Source
What if I miss the filing deadline?
Texas may assess a late-filed report penalty, late-payment penalties, and interest on past-due tax. Source Source
