The 10 Basics Every Texas Business Should Know About Sales Tax
What is the Sales Tax Rate in Texas?
Sales tax is a blended State rate of 6.25% plus a local county, city or special rate.
What is Sales Tax in Texas?
Texas imposes a 6.25 percent state sales and use tax on all retail sales, leases and rentals of most goods, as well as taxable services. Local taxing jurisdictions (cities, counties, special purpose districts and transit authorities) can also impose up to 2 percent sales and use tax for a maximum combined rate of 8.25 percent.
Are All Goods and Services Taxable?
How Do I Know What’s Taxable and What’s Not?
This link can help you determine what is taxable and what isn’t in Texas by industry.
Who Pays Sales Tax?
Consumers pay sales tax. Merchants do not pay sales tax out of their own pockets. It’s commonly referred to as a pass through tax.
What Am I Responsible For?
You are required to collect sales tax, hold it secure and send it to the State on-time and in-full.
When Is My Sales Tax Payment Due in Texas?
In Texas your tax filing frequency is determined by your revenue. You may be an quarterly or monthly filer. Contact the state to determine your sales tax due date. Click here for Texas filing guidelines.
How Do I Know How Much Sales Tax to Charge?
Texas sales tax is a blended rate of State and local. Click here to find your sales tax rate. The final and definitive answer is always the sales tax rate posted on State Department of Revenue website. Rates posted on the web are often not up-to-date and incorrect. It’s always the merchant’s responsibility to charge the correct sales tax rate.
Who Gets the Sales Tax Money?
In Texas all sales tax gets paid directly to the State.
How Do I Manage Tax Exempt Sales?
Tax exempt organizations such as schools and religious organizations are often exempt from sales tax. They are required to give you copy of their “TAX EXEMPT CERTIFICATE” at the time of the sale and you are required to keep this certificate on file. Failing to do so may result in you paying the sales tax out of your own pocket if you have a sales tax audit.
What if I Forget to Pay or Spend the Money and Can’t Pay?
TEXAS has severe penalties for missing tax payments. You can find the penalties for late payments here. If you received a letter from the state for a late sales tax payment, you can call 800-252-5555 for assistance. If sales tax goes unpaid, states will seize the assets of the business or owner and auction them off to pay the debt. In extreme cases owners will be prosecuted and sent to jail. Even if the business closes, sales tax is a personal liability that will follow the owner until paid.
Texas Sales and Use TAX HELP: