Texas Sales Tax Nonpayment Risk Checklist
Introduction
Sales tax nonpayment in Texas occurs when a business or seller fails to remit the tax it has collected to the Texas Comptroller of Public Accounts. This tax applies to most retail sales of tangible goods and certain services within the state, and nonpayment can trigger penalties, interest charges, and enforcement actions that compound over time.
What This Issue Means
Sales tax nonpayment means the amount collected from customers—or the amount that should have been collected—was not remitted to the state within the required timeframe. This can occur because returns were not filed, returns were filed, but payment was not sent, or neither returns nor payments were submitted.
Why the State Issued This or Requires This
Texas law requires all sellers of taxable goods and services to collect sales tax from customers and remit it to the Comptroller. The state identifies nonpayment through several administrative processes: filed returns without payment, returns that show tax owed but no corresponding payment, audit discoveries, and voluntary disclosures from taxpayers.
What Happens If This Is Ignored
Unpaid sales tax debt triggers the addition of penalties and interest. The state sends follow-up notices requesting payment. If nonpayment continues, the Comptroller’s office pursues collection actions, which can include requiring security bonds, filing tax liens, freezing and seizing non-exempt assets, suspending permits and licenses, filing criminal charges, and placing holds on outstanding state warrants.
What This Does NOT Mean
Nonpayment of sales tax does not automatically mean criminal charges have been filed or that your business license has been revoked. Receiving a notice about unpaid sales tax is an administrative communication, not a final enforcement action.
Understanding Texas Sales Tax Nonpayment Penalties
Texas applies multiple penalties when sales tax is not filed or paid on time. A flat fifty-dollar late filing penalty is charged for each report submitted after the deadline, even when no tax is due.
Tax payments made within one to 30 days after the due date are subject to a 5% penalty.
Once payment is more than 30 days late, the penalty increases to 10%. If the balance remains unpaid after the date listed on the Notice of Tax/Fee Due, an additional 10% penalty is added, bringing the total penalty to 20%.
Interest does not begin immediately. Instead, it starts accruing on the sixty-first day after the original report due date. The interest rate is variable and is set by the state at the beginning of each calendar year.
Steps to Take After Receiving Notice of Sales Tax
Nonpayment
Step 1: Gather your paperwork
Collect every notice you received from the Texas Comptroller of Public Accounts. Pull supporting records too, including filed returns, payment confirmations, bank statements, and any correspondence. Write down the tax periods listed on each notice so you do not miss anything.
Step 2: Read the notice closely and identify what the state claims you owe
Look for the tax period (or periods) in question, the unpaid sales tax amount, and any penalties
and interest shown. Also note the original due date for each return, since penalties and interest are based on that deadline.
Step 3: Check your filing and payment history in the Comptroller’s online
portal
If you have a sales tax permit, log in to your account and review which returns were filed, which returns were not filed, and what payments were posted. Match the portal history to the tax periods listed in the notice.
Step 4: Confirm the notice matches your business information
Verify that the business name, account number, and tax identification number on the notice match your permit and records. This helps you catch mix-ups, misapplied payments, or notices tied to the wrong account.
Step 5: Recalculate the total balance using your records
Start with the original sales tax due for each period. Add the fifty-dollar late filing penalty for every report that was filed late. Add any listed percentage-based penalties, then add the interest amount shown on the notice. If your numbers do not match the notice, write down exactly where the difference appears.
Step 6: Contact the Texas Comptroller to confirm the balance and next
steps
Call the Comptroller’s office to verify the amount due and discuss available payment options.
When the notice appears incorrect, explain your findings and ask for the required documentation for review. For situations that may qualify for penalty relief, request clarification on the eligibility standards and the proper way to submit a request.
Step 7: Keep detailed notes of every communication
Record the date and time of each call or message. Write down the name, department, and any reference number provided. Summarize what was discussed, including any deadlines or instructions you were given.
- State enforcement notices and responses
- Sales tax audits, assessments, and collections
- Payroll & trust fund tax enforcement issues
- Penalty and interest reduction options
- Payment plans and state tax relief eligibility
- Representation before state tax agencies
Step 8: Clarify your payment options before you commit
Ask whether full payment is required immediately or if a payment plan is available. If a plan is offered, confirm the required down payment, monthly payment amount, due dates, and whether interest will continue to accrue while payments are being made.
Texas Comptroller Penalty Waiver Options
Penalty waiver requests are reviewed under a reasonable diligence standard set out in Texas
Administrative Code Rule 3.5. When evaluating a request, the Revenue Accounting Division considers whether all required returns have been filed and whether all taxes owed to the state are current.
Prior penalty waivers for any tax type are also considered in the overall review. To qualify, you must show that corrective steps have been taken to prevent the issue from recurring in future filings.
One waiver request may cover penalties or interest assessed on one annual return, two quarterly returns, or six monthly returns. Waiver approval is not available when the liability results in a bank account freeze, the seizure of business assets, or a referral to a third-party collection agency.
Payment Plans and Ongoing Collection Actions
Even if you enter into a payment plan, your account remains subject to specific collection actions. The state will still send billing notices, file a tax lien, and place holds on state warrants.
Frequently Asked Questions
Can the state garnish wages for unpaid sales tax?
No, Texas law prohibits wage garnishment for state tax debt. The Comptroller can freeze bank accounts, file liens, and seize non-exempt assets, but cannot garnish wages.
Can a business that owes sales tax renew its license?
Texas Tax Code Section 151.203 authorizes the suspension or revocation of permits. The
Comptroller sends a Notice of Hearing with twenty days' written notice. You can avoid the hearing by filing and paying past due amounts and posting the required security bond.
If my business closed, am I still responsible for unpaid sales tax?
Yes, the business owner remains responsible for unpaid sales tax regardless of whether the business is still operating.
Closing
Sales tax nonpayment is a financial debt to the state that accrues penalties and interest if left unpaid. Taking action now—whether by paying in full, setting up a plan, or requesting penalty relief—is more effective than waiting for enforcement actions to escalate.
Facing State Tax Enforcement Action?
If you’ve received a notice related to sales tax or payroll tax enforcement, and aren’t sure how to respond, our team can help you understand your options and next steps.
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