34 Tex. Admin. Code § 3.286 - Seller's and Purchaser's Responsibilities
(a) Definitions. The following words and
terms, when used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1)
Consignment sale--The sale, lease, or rental of tangible personal property by a
seller who, under an agreement with another person, is entrusted with
possession of tangible personal property with respect to which the other person
has title or another ownership interest, and is authorized to sell, lease, or
rent the tangible personal property without additional action by the person
having title to or another ownership interest in the tangible personal
property.
(2) Direct sales
organization--A person that typically sells taxable items directly to
purchasers through independent salespersons and not in or through a place of
business of the seller. The term "independent salespersons" includes, but is
not limited to, distributors, representatives, and consultants. Items are
typically sold person-to-person through in-home product demonstrations,
parties, catalogs, and one-on-one selling. The term includes, but is not
limited to, direct marketing and multilevel marketing organizations.
(3) Disaster- or emergency-related
work--Repairing, renovating, installing, building, rendering services, or
performing other business activities relating to the repair or replacement of
equipment and property, including buildings, offices, structures, lines, poles,
and pipes, that:
(A) is owned or used by or
for:
(i) a telecommunications provider or
cable operator;
(ii) communications
networks;
(iii) electric
generation;
(iv) electric
transmissions and distribution systems;
(v) natural gas and natural gas liquids
gathering, processing, and storage, transmission and distribution systems;
or
(vi) water pipelines and related
support facilities, equipment, and property that serve multiple persons;
and
(B) is damaged,
impaired, or destroyed by a declared state disaster or emergency.
(4) Engaged in business--Except as
provided in subparagraphs (L) and (M) of this paragraph, a seller is engaged in
business in this state if the seller:
(A)
maintains, occupies, or uses in this state, permanently or temporarily,
directly or indirectly, or through an agent by whatever name called, a kiosk,
office, distribution center, sales or sample room or place, warehouse or
storage place, or any other physical location where business is
conducted;
(B) has any
representative, agent, salesperson, canvasser, or solicitor who operates under
the authority of the seller to conduct business in this state, including
selling, delivering, or taking orders for taxable items;
(C) promotes a flea market, arts and crafts
show, trade day, festival, or other event in this state that involves sales of
taxable items;
(D) uses independent
salespersons, who may include, but are not limited to, distributors,
representatives, or consultants, in this state to make direct sales of taxable
items;
(E) derives receipts from
the sale, lease, or rental of tangible personal property that is located in
this state or owns or uses tangible personal property that is located in this
state, including a computer server or software to solicit orders for taxable
items, unless the seller uses the server or software as a purchaser of an
Internet hosting service;
(F)
allows a franchisee or licensee to operate under its trade name in this state
if the franchisee or licensee is required to collect sales or use tax in this
state;
(G) otherwise conducts
business in this state;
(H) is
formed, organized, or incorporated under the laws of this state and the
seller's internal affairs are governed by the laws of this state,
notwithstanding the fact that the seller may not be otherwise engaged in
business in this state pursuant to this section;
(I) engages in regular or systematic
solicitation of sales of taxable items in this state by the distribution of
catalogs, periodicals, advertising flyers, or other advertising, by means of
print, radio, or television media, or by mail, telegraphy, telephone, computer
data base, cable, optic, microwave, or other communication system for the
purpose of effecting sales of taxable items;
(J) solicits orders for taxable items by mail
or through other media including the Internet or other media that may be
developed in the future; or
(K)
holds a substantial ownership interest in, or is owned in whole or substantial
part by, another person who:
(i) maintains a
distribution center, warehouse, or similar location in this state and delivers
property sold by the seller to purchasers in this state;
(ii) maintains a location in this state from
which business is conducted, sells the same or substantially similar lines of
products as the seller, and sells such products under a business name that is
the same or substantially similar to the business name of the seller;
or
(iii) maintains a location in
this state from which business is conducted if the person with the location in
this state uses its facilities or employees:
(I) to advertise, promote, or facilitate
sales by the seller to purchasers; or
(II) to otherwise perform any activity on
behalf of the seller that is intended to establish or maintain a marketplace
for the seller in this state, including receiving or exchanging returned
merchandise.
(iv) For
purposes of this subparagraph only, "ownership" includes direct ownership,
common ownership, or indirect ownership through a parent entity, subsidiary, or
affiliate, and "substantial," with respect to ownership, constitutes an
interest, whether direct or indirect, of at least 50% of:
(I) the total combined voting power of all
classes of stock of a corporation;
(II) the beneficial ownership interest in the
voting stock of the corporation;
(III) the current beneficial interest in the
corpus or income of a trust;
(IV)
the total membership interest of a limited liability company;
(V) the beneficial ownership interest in the
membership interest of a limited liability company; or
(VI) the profits or capital interest of any
other entity, including, but not limited to, a partnership, joint venture, or
association.
(L) Effective June 16, 2015, a seller is not
engaged in business in this state if the seller is an out-of-state business
entity whose physical presence in this state is solely from the entity's
performance of disaster- or emergency-related work during a disaster response
period. An out-of-state business entity that remains in this state after a
disaster response period has ended is engaged in business in this state if the
entity conducts any of the activities described in subparagraphs (A) - (K) of
this paragraph.
(i) For purposes of this
subparagraph only, an "affiliate" is a member of a combined group as that term
is described by Tax Code, §
171.1014 (Combined
Reporting; Affiliated Group Engaged in Unitary Business).
(ii) For purposes of this subparagraph only,
a "disaster response period" is:
(I) the
period that:
(-a-) begins on the 10th day
before the date of the earliest event establishing a declared state of disaster
or emergency by the issuance of an executive order or proclamation by the
governor or a declaration of the president of the United States; and
(-b-) ends on the earlier of the 120th day
after the start date or the 60th day after the ending date of the disaster or
emergency period established by the executive order or proclamation or
declaration, or on a later date as determined by an executive order or
proclamation by the governor; or
(II) the period that, with respect to an
out-of-state business entity:
(-a-) begins on
the date that the out-of-state business entity enters this state in good faith
under a mutual assistance agreement and in anticipation of a state of disaster
or emergency, regardless of whether a state of disaster or emergency is
actually declared; and
(-b-) ends
on the earlier of the date that the work is concluded or the seventh day after
the out-of-state business entity enters this
state.
(iii)
For purposes of this subparagraph only, a "mutual assistance agreement" is an
agreement to which one or more business entities are parties and under which a
public utility, municipally owned utility, or joint agency owning, operating,
or owning and operating critical infrastructure used for electric generation,
transmission, or distribution in this state may request that an out-of-state
business entity perform work in this state in anticipation of a state of
disaster or emergency.
(iv) For
purposes of this subparagraph only, an "out-of-state business entity" is a
foreign entity that:
(I) enters this state at
the request of, or is an affiliate of, an in-state business entity and performs
work in Texas under a mutual assistance agreement; or
(II) enters this state at the request of an
in-state business entity, under a mutual assistance agreement, or is an
affiliate of an in-state business entity and enters this state at the request
of an in-state business entity, the state of Texas, or a political subdivision
of this state to perform disaster- or emergency-related work in this state
during the disaster response period, and:
(-a-) except with respect to the performance
of disaster- or emergency-related work, has no physical presence in this state
and is not authorized to transact business in this state immediately before a
disaster response period; and
(-b-)
is not registered with the secretary of state to transact business in this
state, does not file a tax report with this state, or a political subdivision
of this state, and is not engaged in business with this state for the purpose
of taxation during the tax year immediately preceding the disaster response
period.
(M) A broadcaster, printer, outdoor
advertising firm, advertising distributor, or publisher that broadcasts,
publishes, displays, or distributes paid commercial advertising in this state
that is intended to be disseminated primarily to consumers located in this
state and is only secondarily disseminated to bordering jurisdictions,
including advertising appearing exclusively in a Texas edition or section of a
national publication, is considered for purposes of this subsection to be the
agent of the person placing the advertisement and is not considered to be
engaged in business in this state as a result of those acts.
(5) Internet hosting service--The
provision to an unrelated user of access over the Internet to computer services
using property that is owned or leased and managed by the service provider and
on which the unrelated user may store or process the user's own data or use
software that is owned, licensed, or leased by the unrelated user or service
provider. The term does not include telecommunications services as defined in
§
3.344 of this title (relating to
Telecommunications Services).
(6)
Itinerant vendor--A seller who does not operate a place of business in this
state and who travels to various locations in this state to solicit
sales.
(7) Kiosk--A small,
stand-alone area or structure that:
(A) is
used solely to display merchandise or to submit orders for taxable items from a
data entry device, or both;
(B) is
located entirely within a location that is a place of business of another
seller, such as a department store or shopping mall; and
(C) at which taxable items are not available
for immediate delivery to a purchaser.
(8) Marketplace--A physical or electronic
medium through which persons other than the owner or operator of the medium
make sales of taxable items. The term includes a store, internet website,
software application, or catalog.
(9) Marketplace provider--A person who owns
or operates a marketplace and directly or indirectly processes sales or
payments for marketplace sellers.
(10) Marketplace seller--A seller, other than
the marketplace provider, who makes a sale of a taxable item through a
marketplace.
(11) Permit holder--A
person to whom the comptroller has issued a sales and use tax permit. The term
includes permitted sellers as well as permitted purchasers, but does not
include a person who does not hold a Texas sales and use tax permit or whose
sales and use tax permit is suspended, pursuant to subsection (l) of this
section, or cancelled, pursuant to subsection (n) of this section, or a person
who has not received a sales and use tax permit due to an unsigned or
incomplete application.
(12) Place
of business of the seller--This term has the meaning given in §
3.334 of this title (relating to
Local Sales and Use Taxes).
(13)
Seller--Every retailer, wholesaler, distributor, manufacturer, marketplace
provider, or any other person who sells, leases, rents, or transfers ownership
of tangible personal property or performs taxable services for consideration.
Seller is further defined as follows:
(A) A
promoter of a flea market, trade day, or other event that involves the sales of
taxable items is a seller responsible for the collection and remittance of the
sales tax that dealers, salespersons, or individuals collect at such events,
unless those persons hold active sales and use tax permits that the comptroller
has issued.
(B) A direct sales
organization that is engaged in business in this state is a seller responsible
for the collection and remittance of the sales and use tax collected by the
organization's independent salespersons.
(C) Pawnbrokers, storage facility operators,
mechanics, artisans, or others who sell property to enforce a lien are sellers
responsible for the collection and remittance of sales and use tax on the sale
of such tangible personal property.
(D) A person engaged in business in this
state who sells, leases, or rents tangible personal property owned by another
person by means of a consignment sale is a seller responsible for the
collection and remittance of the sales tax on the consignment sale.
(E) An auctioneer who owns tangible personal
property or to whom tangible personal property has been consigned is a seller
responsible for the collection and remittance of the sales and use tax on
tangible personal property sold at auction. For more information, auctioneers
should refer to §
3.311 of this title (relating to
Auctioneers, Brokers, and Factors).
(14) Taxable item--Tangible personal property
and taxable services. Except as otherwise provided in Tax Code, Chapter 151,
the sale or use of a taxable item in electronic form instead of on physical
media does not alter the item's tax status.
(A) Tangible personal property means property
that can be seen, weighed, measured, felt, or touched or that is perceptible to
the senses in any other manner, including a computer program as defined in
§
3.308 of this title (relating to
Computers--Hardware, Computer Programs, Services, and Sales) and a telephone
prepaid calling card, as defined in §
3.344 of this title.
(B) Taxable services are those identified in
Tax Code, §
151.0101 (Taxable
Services).
(b)
Who must have a sales and use tax permit.
(1)
Sellers. Except as provided in paragraph (2) of this subsection, each seller
who is engaged in business in this state, including itinerant vendors, persons
who own or operate a kiosk, and sellers operating temporarily in this state,
must apply to the comptroller and obtain a sales and use tax permit for each
place of business of the seller operated in this state and a single permit for
its out-of-state places of business.
(2) Safe harbor for remote sellers.
(A) Remote seller defined. For purposes of
this paragraph, a remote seller is a seller engaged in business in this state
whose only activity in the state is described in subsection (a)(4)(I) or (J) of
this section.
(B) Safe harbor.
(i) Permitting and collection obligations.
The comptroller will not enforce the permit requirement of this subsection or
the collection obligation of subsection (d) of this section on a remote seller
whose total Texas revenue in the preceding twelve calendar months is less than
$500,000. If a remote seller's total Texas revenue exceeds that amount, the
remote seller shall obtain a permit and begin collecting as provided in
subparagraph (E) of this paragraph and shall continue to collect unless it
terminates its collection obligation under subparagraph (F) of this
paragraph.
(ii) Temporary storage
of inventory. A remote seller that is temporarily storing tangible personal
property in Texas to be used for fulfillment at a facility of a marketplace
provider that has certified that it will assume the rights and duties of a
seller with respect to the tangible personal property, as provided for in this
subsection, will not have to obtain a permit or have a collection obligation.
This subsection is not applicable to those remote sellers who are above the
safe harbor amount under clause (i) of this subparagraph.
(C) Total Texas revenue defined for purposes
of this paragraph.
(i) Total Texas revenue
means the gross revenue from the sale of tangible personal property and
services for storage, use, or other consumption in this state recognized under
the accounting method used by the seller, and includes separately stated
handling, transportation, installation, and other similar fees collected by the
seller in connection with the sale.
(ii) A remote seller shall include in total
Texas revenue, the aggregate sum of all sales made on all mediums, including
all marketplaces and the remote seller's own website. This clause takes effect
on April 1, 2020.
(iii) Total Texas
revenue includes taxable, nontaxable, and tax-exempt sales. A sale of an item
for delivery in this state is presumed to be a sale for storage, use, or other
consumption in this state. With respect to a service, "use" means the
derivation in this state of direct or indirect benefit from the
service.
(D)
Consolidation of total Texas revenue. The comptroller may consolidate the total
Texas revenue of sellers engaged in conduct that circumvents the safe harbor
amount in subparagraph (B) of this paragraph.
(E) When to obtain a permit and begin
collecting. No later than the first day of the fourth month after the month in
which a remote seller exceeds the safe harbor amount in subparagraph (B) of
this paragraph, the remote seller shall obtain a permit and begin collecting
use tax. For example, if during the period of July 1, 2018, through June 30,
2019, a remote seller's total Texas revenue exceeds the safe harbor amount in
subparagraph (B) of this paragraph, the remote seller shall obtain a permit by
October 1, 2019, and begin collecting use tax no later than October 1,
2019.
(F) Terminating collection
obligation. A remote seller that is required to be permitted may terminate its
collection obligation under this paragraph after twelve consecutive months in
which the remote seller's total Texas revenue for the preceding twelve calendar
months is below the safe harbor amount in subparagraph (B) of this paragraph.
In order to terminate its collection obligation, a remote seller must submit a
form prescribed by the comptroller. Thereafter, the remote seller shall resume
collection on the first day of the second month following any twelve calendar
months in which the remote seller's total Texas revenue exceeds the safe harbor
amount in subparagraph (B) of this paragraph. For example, if the total Texas
revenue of a remote seller that previously terminated its collection obligation
exceeds the safe harbor amount in subparagraph (B) of this paragraph during the
period of January 1, 2020, through December 31, 2020, the remote seller shall
resume collection on February 1, 2021.
(G) Records retention required. For purposes
of this paragraph, a remote seller that terminates its collection obligation
shall comply with the record retention requirement of §
3.281 of this title (relating to
Records Required; Information Required) and §
3.282 of this title (relating to
Auditing Taxpayer Records). The remote seller must maintain sufficient
documentation to verify the date on which the remote seller terminated its
collection obligation under subparagraph (F) of this paragraph or ceases to
engage in business in this state.
(H) Transition rule. Remote sellers will be
subject to the permit requirement of this subsection and the collection
obligation of subsection (d) of this section beginning on October 1, 2019. The
initial twelve calendar months for determining a remote seller's total Texas
revenue will be July 1, 2018, through June 30, 2019. If a remote seller's total
Texas revenue during that period exceeds the safe harbor amount in subparagraph
(B) of this paragraph, the seller shall obtain a permit by October 1, 2019, and
begin collecting use tax no later than October 1, 2019.
(3) Marketplace providers and marketplace
sellers.
(A) Duties of marketplace providers.
A marketplace provider shall:
(i) certify in
writing to each marketplace seller that the marketplace provider assumes the
rights and duties of a seller with respect to sales made by the marketplace
seller through the marketplace (no specific language or format is required for
the certification);
(ii) collect
sales and use tax on Texas sales of taxable items made through the
marketplace;
(iii) report and remit
the sales and use taxes on all Texas sales made through a
marketplace;
(iv) provide to each
marketplace seller records of the marketplace sales made on behalf of the
marketplace seller; and
(B) Duties of
marketplace sellers. A marketplace seller shall:
(i) retain records for all marketplace sales
made on a marketplace as required in §
3.281 of this title and §
3.282 of this title;
(ii) furnish to the marketplace provider
information that is required to correctly collect and remit sales and use tax
(the information may include a certification of taxability that an item being
sold is a taxable item, is not a taxable item, or is exempt from taxation);
and
(iii) not be required to obtain
a permit if only selling through a marketplace provider that has certified that
it will assume the rights and duties of a seller, as provided in this
subsection.
(C) Good
faith requirements for marketplace sellers and marketplace providers.
(i) A marketplace seller who in good faith
accepts a marketplace provider's certification under subparagraph (A)(i) of
this paragraph shall exclude sales made through the marketplace from the
marketplace seller's sales tax report if the marketplace seller is otherwise
required to collect and remit tax.
(ii) Except as provided by subparagraph (E)
of this paragraph, a marketplace provider is not liable for failure to collect
and remit the correct amount of sales and use taxes if the marketplace provider
shows the failure resulted from the marketplace provider's good faith reliance
on incorrect or insufficient information provided by the marketplace
seller.
(D) A marketplace
seller is liable for any deficiency resulting from incorrect or incomplete
information provided by the marketplace seller to the marketplace
provider.
(E) Joint and several
liability. A marketplace provider and marketplace seller that are affiliates or
associates, as defined by Business Organizations Code, §
1.002,
are jointly and severally liable for a deficiency resulting from a sale made by
the marketplace seller through the marketplace.
(F) Marketplace provider waiver requests. A
marketplace provider may request a waiver of the requirements of subparagraph
(A) of this paragraph by sending a written request to the Texas Comptroller of
Public Accounts, Tax Policy Division that explains the basis for the waiver.
The comptroller will review the waiver request and issue a letter granting,
conditionally granting, or denying the waiver request. If the information
below, or any additional information requested by the comptroller, is not
provided, the comptroller will not issue a waiver. The requestor does not have
the right to a hearing. The request for the waiver must include:
(i) the name of the marketplace
provider;
(ii) an explanation of
the marketplace provider's business model, including information on the
services offered by the marketplace provider and the charges for those
services;
(iii) the basis for the
waiver request;
(iv) a statement
providing whether the waiver is permanent or temporary; and
(v) if temporary, the date the marketplace
provider expects the waiver to expire.
(G) Exceptions. The comptroller may except
marketplace providers in certain industries from some or all of the statutory
and regulatory requirements for marketplace providers based on the industries'
business models and practices. The comptroller will provide written
notification to the excepted marketplace providers.
(4) A seller that no longer intends to engage
in business and make sales of taxable items in the state shall submit a form
prescribed by the comptroller to terminate its permit and must obtain a new
permit before it commences sales of taxable items in the state thereafter. The
seller must maintain sufficient documentation to verify the date on which the
seller ceases to engage in business in this state.
(5) Direct sales organizations. Independent
salespersons of direct sales organizations are not required to hold sales and
use tax permits to sell taxable items for direct sales organizations. Direct
sales organizations engaged in business in this state are sellers responsible
for holding sales and use tax permits and for the collection and remittance of
sales and use tax on all sales of taxable items by their independent
salespersons. See subsection (d)(3) of this section for more information about
the collection and remittance of sales and use tax by direct sales
organizations.
(6) Non-permitted
purchasers. Persons who are not required to have a sales and use tax permit or
who do not have a direct payment permit are still responsible for paying to the
comptroller sales or use tax due on purchases of taxable items from sellers who
do not collect and remit tax. See subsection (g)(9) of this section for return
and payment information and §
3.346 of this title (relating to
Use Tax).
(7) Non-permitted
sellers. Failure to obtain a sales and use tax permit does not relieve a seller
required by this section or other applicable law to have a sales and use tax
permit from the obligation to properly collect and remit sales and use taxes.
Sellers whose sales and use tax permits are suspended, pursuant to subsection
(l) of this section, or cancelled, pursuant to subsection (n) of this section,
and sellers who have not received sales and use tax permits due to unsigned or
incomplete applications, are still responsible for properly collecting and
remitting sales and use taxes. See subsection (g) of this section for return
and payment information.
(c) Obtaining a sales and use tax permit.
(1) A seller must complete an application
that the comptroller furnishes and must return that application to the
comptroller, together with bond or other security that may be required by
§
3.327 of this title (relating to
Taxpayer's Bond or Other Security). A seller who files an electronic
application furnished by the comptroller is deemed to have signed the
application and is not required to print and mail a signed application to the
comptroller. A separate sales and use tax permit under the same taxpayer
account number is issued to the applicant for each place of business of the
seller. Sales and use tax permits are issued without charge.
(2) Each seller must apply for a sales and
use tax permit. An individual or sole proprietor must be at least 18 years of
age unless the comptroller allows an exception from the age requirement. The
sales and use tax permit cannot be transferred from one seller to another. The
sales and use tax permit is valid only for the seller to whom it was issued and
for the transaction of business only at the address that is shown on the sales
and use tax permit. If a seller operates two or more types of business at the
same location, then only one sales and use tax permit is required.
(3) The sales and use tax permit must be
conspicuously displayed at the place of business of the seller for which it is
issued. A permit holder that has traveling sales persons who operate from a
central office needs only one sales and use tax permit, which must be displayed
at that office.
(4) All sales and
use tax permits of the seller will have the same taxpayer account number;
however, each place of business of the seller will have a different outlet
number. The outlet numbers assigned may not necessarily correspond to the
number of business locations operated by the seller.
(d) Collecting sales and use tax due.
(1) Bracket system.
(A) Each seller must collect sales or use tax
on each separate retail sale in accordance with the statutory bracket system in
Tax Code, §
151.053 (Sales Tax
Brackets). The practice of rounding off the amount of sales or use tax that is
due on the sale of a taxable item is prohibited. Copies of the bracket system
should be displayed in each place of business of the seller so both the seller
and the purchaser may easily use them.
(B) The sales and use tax applies to each
total sale, not to each item of each sale. For example, if two items are
purchased at the same time and each item is sold for $.07, then the seller must
collect the tax on the total sum of $.14. Sales and use tax must be reported
and remitted to the comptroller as provided by Tax Code, §
151.410 (Method of Reporting
Sales Tax; General Rule). When sales and use tax is collected properly under
the bracket system, the seller is not required to remit any amount that is
collected in excess of the sales and use tax due. Conversely, when the sales
and use tax collected under the bracket system is less than the sales and use
tax due on the seller's total receipts, the seller is required to remit sales
and use tax on the total receipts even though the seller did not collect sales
and use tax from the purchasers.
(2) Sales and use tax due is debt of the
purchaser; document requirements.
(A) The
sales and use tax due is a debt of the purchaser to the seller until collected.
Unpaid sales or use tax is recoverable by the seller in the same manner as the
original sales price of the taxable item itself, if unpaid, would be
recoverable. The comptroller may proceed against either the seller or
purchaser, or against both, until all applicable tax, penalty, and interest due
has been paid.
(B) The amount of
sales and use tax due must be separately stated on the bill, contract, or
invoice to the purchaser or there must be a written statement to the purchaser
that the stated price includes sales or use tax. Contracts, bills, or invoices
that merely state that "all taxes" are included are not specific enough to
relieve either party to the transaction of its sales and use tax
responsibilities. The total amount that is shown on such documents is presumed
to be the taxable item's sales price, without sales and use tax included. The
seller or purchaser may overcome the presumption by using the seller's records
to show that sales or use tax was included in the sales price. Sellers located
outside of Texas must identify the tax as Texas sales or use tax on their bill,
contract, or invoice to the purchaser. If the out-of-state seller does not
identify the tax as Texas sales or use tax at the time of the transaction, the
seller is presumed not to have collected Texas sales or use tax. Either the
seller or the purchaser may overcome the presumption by submitting evidence
that clearly demonstrates that the Texas sales or use tax was remitted to the
comptroller.
(3) Direct
sales organizations. A direct sales organization is responsible for the
collection and remittance of the sales and use tax on all sales of taxable
items in this state by the independent salespersons who sell the organization's
product or service as explained in this paragraph. See subsection (b)(4) of
this section for information about sales and use tax permits required to be
held by direct sales organizations.
(A) If an
independent salesperson purchases a taxable item from a direct sales
organization after taking the purchaser's order, then the direct sales
organization must collect from the independent salesperson, and remit to the
comptroller, the sales and use tax on the actual sales price for which the
independent salesperson sold the taxable item to the purchaser.
(B) If an independent salesperson purchases a
taxable item from a direct sales organization before the purchaser's order is
taken, then the direct sales organization must collect from the independent
salesperson, and remit to the comptroller, the sales and use tax based on the
organization's suggested retail sales price of the taxable item.
(C) Taxable items that are sold to an
independent salesperson for the salesperson's use are taxed based on the actual
sales price for which the item was sold to the salesperson at the tax rate in
effect for the salesperson's location.
(D) Incentives, including rewards, gifts, and
prizes.
(i) Direct sales organizations owe
sales and use tax on the cost of all taxable items used as incentives that are
transferred to a recipient in this state, including purchasers, independent
salespersons, and persons who host a direct sales event.
(ii) Direct sales organizations must collect
sales or use tax on the total amount of consideration received in exchange for
taxable items, including items purchased with hostess points or similar forms
of compensation paid to a person for hosting a direct sales event and items
that are earned by the host based on the volume of purchases. The redemption of
reward points in exchange for taxable items is subject to sales tax under Tax
Code, §
151.005(2)
("Sale" or "Purchase"). See also §
3.283 of this title (relating to
Bartering Clubs and Exchanges).
(4) Payment of certain sales and use taxes by
a seller. A seller may directly or indirectly advertise, hold out, or state to
a purchaser or to the public that the seller will pay the sales and use tax for
the customer if:
(A) the seller indicates in
the advertisement, holding out, or statement that the seller is paying the tax
for the purchaser;
(B) the seller
does not indicate or imply in the advertisement, holding out, or statement that
the sale is exempt or excluded from taxation; and
(C) any purchaser's receipt or other
statement given to the purchaser identifying the sales price paid or to be paid
by the purchaser separately states the amount of the tax and indicates that the
tax will be paid by the seller.
(5) Printers. A printer is a seller of
printed materials and is required to collect sales and use tax on sales of
those materials in this state. A printer who is engaged in business in this
state, however, is not required to collect the sales and use tax if:
(A) the printed materials are produced by a
web offset or rotogravure printing process;
(B) the printer delivers those materials to a
fulfillment house or to the United States Postal Service for distribution to
third parties who are located both inside and outside of this state;
and
(C) the purchaser issues a
properly completed exemption certificate that contains the statement that the
printed materials are for multistate use and the purchaser agrees to pay to
this state all the sales and use taxes that are or may become due to the state
on the taxable items that are purchased under the exemption certificate. See
subsection (g)(4) of this section for additional reporting
requirements.
(6)
Fundraisers by exempt entities. Regardless of the contractual terms between a
for-profit entity and a non-profit exempt entity relating to the sale of
taxable items, other than amusement services, as part of any fundraiser, the
for-profit entity will be considered the seller of the items under Tax Code,
§
151.024 (Persons Who May be
Regarded as Retailers), must be a permit holder, and is responsible for the
proper collection and remittance of any sales or use tax due. The exempt entity
and its representatives will be considered as representatives of the for-profit
entity. The for-profit entity may advertise in a sales catalog or state on each
invoice that sales and use tax is included, as provided under paragraph (2) of
this subsection, or may require that the sales and use tax be calculated and
collected by its representatives based on the sales price of each taxable item.
Fundraisers conducted by exempt entities in this manner do not qualify as a
tax-free sale day. For more information on exempt entities and tax-free sales
days, see §
3.322 of this title (relating to
Exempt Organizations). For more information on amusement services, see §
3.298 of this title (relating to
Amusement Services).
(7) Local
sales and use tax. A seller who is required to be permitted in this state is
required to properly collect and remit local sales and use tax even if no sales
and use tax permit is required at the location where taxable items are sold.
For more information on the proper collection of local taxes, see §
3.334 of this
title.
(e) Sales and use
tax returns and remitting tax due.
(1) Forms
prescribed by the comptroller. Sales and use tax returns must be filed on forms
that the comptroller prescribes. The fact that a person does not receive or
obtain the correct forms from the comptroller does not relieve a person of the
responsibility to file a sales and use tax return and to remit the required
sales and use tax.
(2) Signatures.
Sales and use tax returns must be signed by the person who is required to file
the sales and use tax return or by the person's duly authorized agent, but need
not be verified by oath.
(3) Permit
holders.
(A) Each permit holder is required
to file a sales and use tax return for each reporting period, even if the
permit holder has no sales or use tax to report for the reporting
period.
(B) Each permit holder must
remit sales and use tax on all receipts from sales or purchases of nonexempt
taxable items, less any applicable discounts as provided by subsection (h) of
this section.
(C) Each permit
holder shall file a single sales and use tax return together with the tax
payment for all businesses that operate under the same taxpayer number. The
sales and use tax return for each reporting period must reflect the total
sales, taxable sales, and taxable purchases for each outlet.
(D) Consolidated reporting by affiliated
entities is not allowed. Each legal entity engaged in business in this state is
responsible for filing a separate sales and use tax return.
(4) Electronic returns and
remittances. Certain persons must file returns and transfer payments
electronically as provided by Tax Code, §
111.0625 (Electronic
Transfer of Certain Payments) and §111.0626 (Electronic Filing of Certain
Reports). For more information, see §
3.9 of this title (relating to
Electronic Filing of Returns and Reports; Electronic Transfer of Certain
Payments by Certain Taxpayers).
(f) Due dates.
(1) General rule. Sales and use tax returns
and remittances are due no later than the 20th day of the month following each
reporting period end date unless otherwise provided by this section. Sales and
use tax returns and remittances that are due on Saturdays, Sundays, or legal
holidays may be submitted on the next business day.
(A) Sales and use tax returns submitted by
mail must be postmarked on or before the due date to be considered
timely.
(B) Sales and use tax
returns filed electronically must be completed and submitted by 11:59 p.m.,
central time, on the due date to be considered timely.
(2) Due dates for payments made using an
electronic funds transfer method approved by the comptroller are provided at
§
3.9(c) of this
title.
(3) Extensions for persons
located in an area designated in a state of disaster or state of emergency
declaration. The comptroller may grant an extension of not more than 90 days to
make or file a sales and use tax return or pay sales and use tax that is due by
a person located in an area designated in an executive order or proclamation
issued by the governor declaring a state of disaster or state of emergency, or
an area that the president of the United States declares a major disaster or
emergency, if the comptroller finds the person to be a victim of the disaster
or emergency. The person owing the sales and use tax may file a written request
for an extension at any time before the expiration of 90 days after the
original due date. If an extension is granted, interest on the unpaid tax does
not begin to accrue until the day after the day on which the extension expires,
and penalties are assessed and determined as though the last day of the
extension were the original due date.
(g) Reporting periods.
(1) Quarterly filers. Permit holders who have
less than $1,500 in state sales and use tax per quarter to report may file
sales and use tax returns quarterly. The quarterly reporting periods end on
March 31, June 30, September 30, and December 31.
(2) Yearly filers. Permit holders who have
less than $1,000 in state sales and use tax to report during a calendar year
may file yearly sales and use tax returns upon authorization from the
comptroller.
(A) Authorization to file sales
and use tax returns on a yearly basis is conditioned upon the correct and
timely filing of prior returns.
(B)
Authorization to file sales and use tax returns on a yearly basis will be
denied if a permit holder's liability exceeded $1,000 in the prior calendar
year.
(C) A permit holder who files
on a yearly basis without authorization is liable for applicable penalty and
interest on any previously unreported quarter.
(D) Authority to file on a yearly basis is
automatically revoked if a permit holder's state sales and use tax liability is
greater than $1,000 during a calendar year. The permit holder must file a sales
and use tax return for that month or quarter, depending on the amount, in which
the sales and use tax payment or liability is greater than $1,000. On that
return, the permit holder must report all sales and use taxes that are
collected and all accrued liability for the year, and must file monthly or
quarterly, as appropriate, thereafter for as long as the yearly sales and use
tax liability is greater than $1,000.
(E) Once each year, the comptroller reviews
all accounts to confirm yearly filing status and to authorize permit holders
who meet the filing requirements to file yearly sales and use tax
returns.
(F) Yearly filers must
report on a calendar year basis. The sales and use tax return and payment are
due on or before January 20 of the next calendar year.
(3) Monthly filers. Permit holders who have
$1,500 or more in state sales and use tax per quarter to report must file
monthly sales and use tax returns except for permit holders who prepay the
sales and use tax as provided in subsection (h) of this section.
(4) Printers. A printer who is not required
to collect sales and use tax on the sale of printed materials because the
transaction meets the requirements of subsection (d)(4) of this section must
file a quarterly special use tax report, Form 01-157, Texas Special Use Tax
Report for Printers, its electronic equivalent, or any form promulgated by the
comptroller that succeeds such form, with the comptroller on or before the last
day of the month following the quarter. The report must contain the name and
address of each purchaser with the sales price and date of each sale. The
printer is still required to file sales and use tax returns to report and remit
sales and use taxes that the printer collected from purchasers on transactions
that do not meet the requirements of subsection (d)(4) of this
section.
(5) Local sales and use
tax. Each permit holder who is required to collect, report, and remit a city,
county, special purpose district, or metropolitan transit authority/city
transit department sales and use tax must report the amount subject to local
sales and use tax on the state sales and use tax return described in subsection
(e) of this section.
(6) State
agencies. Sales and use taxes must be deposited with the comptroller within the
time period specified by law for deposit of state funds. State agencies may
file sales and use tax returns through electronic reporting methods provided by
the comptroller, which allocates total sales and use tax deposits by state and
local taxing authority. State agencies that deposit sales and use taxes
according to Accounting Policy Statement Number 8 are not required to file a
separate sales and use tax return, but must manually allocate total sales and
use tax deposits by state and local taxing authority and deposit those amounts
in accordance with the policy. Paragraphs (1) - (3) of this subsection do not
apply to agencies following Accounting Policy Statement Number 8, as a fully
completed deposit request voucher is deemed to be the sales and use tax return
filed by these agencies.
(7)
Refunds on exports. Sellers who refund sales tax on exports based on customs
broker certifications should refer to §
3.360 of this title (relating to
Customs Brokers).
(8) Direct
payment permit holders. Yearly and quarterly filing requirements, as discussed
in this subsection, and prepayment discounts and discounts for timely filing,
as discussed in subsection (h) of this section, do not apply to holders of
direct payment permits. See §
3.288 of this title (relating to
Direct Payment Procedures and Qualifications).
(9) Non-permitted purchasers. A person who
does not hold a sales and use tax permit or a direct payment permit must pay
sales or use tax that is due on purchases of taxable items when the sales or
use tax is not collected by the seller. The sales or use tax is to be remitted
on comptroller Form 01-156, Texas Use Tax Return, its electronic equivalent, or
any form promulgated by the comptroller that succeeds such form.
(A) A non-permitted purchaser who owes less
than $1000 in sales and use tax on all purchases made during a calendar year on
which sales and use tax was not collected by the seller must file the return on
or before the 20th of January following the year in which the purchases were
made.
(B) A non-permitted purchaser
who owes $1000 or more in sales and use tax on all purchases made during a
calendar year on which sales and use tax was not collected by the seller must
file a return and remit sales and use taxes due on or before the 20th of the
month following the month when the $1000 threshold is reached and thereafter
file monthly returns and make sales and use tax payments on all purchases on
which sales and use tax is due.
(h) Discounts; prepayments; penalties and
interest relating to filing sales and use tax returns.
(1) Discounts. Unless otherwise provided by
this section, each permit holder may claim a discount for timely filing a sales
and use tax return and paying the taxes due as reimbursement for the expense of
collecting and remitting the sales and use tax. The discount is equal to 0.5%
of the amount of sales and use tax due and may be claimed on the return for
each reporting period and is computed on the amount timely reported and paid
with that return.
(2) Prepayments.
Prepayments may be made by permit holders who file monthly or quarterly sales
and use tax returns. The amount of the prepayment must be a reasonable estimate
of the state and local sales and use tax liability for the entire reporting
period. "Reasonable estimate" means at least 90% of the total amount due or an
amount equal to the actual net tax liability due and paid for the same
reporting period of the immediately preceding year.
(A) A permit holder who makes a timely
prepayment based upon a reasonable estimate of sales and use tax liability may
retain an additional discount of 1.25% of the amount due.
(B) The monthly prepayment is due on or
before the 15th day of the month for which the prepayment is made.
(C) The quarterly prepayment is due on or
before the 15th day of the second month of the quarter for which the sales and
use tax is due.
(D) A permit holder
who makes a timely prepayment must file a sales and use tax return showing the
actual liability and remit any amount due in excess of the prepayment on or
before the 20th day of the month that follows the quarter or month for which a
prepayment was made. If there is an additional amount due, the permit holder
may retain the 0.5% reimbursement on the additional amount due, provided that
both the sales and use tax return and the additional amount due are timely
filed. If the prepayment exceeded the actual liability, the permit holder will
be mailed an overpayment notice or refund warrant.
(E) Remittances that are less than a
reasonable estimate, as described by this paragraph, are not regarded as
prepayments and the 1.25% discount will not be allowed. If the permit holder
owes more than $1,500 in a calendar quarter, the permit holder is regarded as a
monthly filer. All monthly sales and use tax returns that are not filed because
of the invalid prepayment are subject to late filing penalty and
interest.
(3) Penalties
and interest.
(A) If a person does not file a
sales and use tax return together with payment on or before the due date, the
person forfeits all discounts and incurs a mandatory 5.0% penalty. After the
first 30 days delinquency, an additional mandatory penalty of 5.0% is assessed
against the person, and after the first 60 days delinquency, interest begins to
accrue at the prime rate, as published in the Wall Street Journal on the first
business day of each calendar year, plus 1.0%. For taxes that are due on or
before December 31, 1999, interest is assessed at the rate of 12%
annually.
(B) A person who fails to
timely file a sales and use tax return when due shall pay an additional penalty
of $50. The penalty is due regardless of whether the person subsequently files
the sales and use tax return or whether no taxes are due for the reporting
period.
(C) A seller who
advertises, holds out, or states that the seller will pay the sales and use tax
as provided by subsection (d)(4) of this section and makes a sale of a taxable
item:
(i) is presumed to have received or
collected the amount of the sales and use taxes on the sale or storage, use, or
consumption in this state of the taxable item;
(ii) must hold the amount described by clause
(i) of this subparagraph in trust for the benefit of the state; and
(iii) is liable to the state for the amount
described by clause (i) of this subparagraph plus any accrued penalties and
interest on the amount.
(i) Reports of alcoholic beverage sales to
retailers. Each brewer, manufacturer, wholesaler, winery, distributor, or
package store local distributor shall electronically file a report of alcoholic
beverage sales to retailers, as that term is defined in §
3.9(e)(2) of
this title, as provided in that section.
(j) Records required for comptroller
inspection. See §
3.281 of this title and §
3.282 of this title.
(k) Resale and exemption certificates. See
§
3.285 of this title (relating to
Resale Certificate; Sales for Resale) and §
3.287 of this title (relating to
Exemption Certificates).
(l)
Suspension of sales and use tax permit.
(1)
If a permit holder fails to comply with any provision of Tax Code, Title 2, or
with the rules issued by the comptroller under those statutes, the comptroller
may suspend the permit holder's sales and use tax permit or permits.
(2) Before a permit holder's sales and use
tax permit is suspended, the permit holder is entitled to a hearing before the
comptroller to show cause why the permit should not be suspended. The
comptroller shall give the permit holder at least 20 days notice. The notice
will include a statement of the matters asserted and procedures to be followed.
A show cause notice for suspension of a sales and use tax permit shall serve as
notice that the comptroller may suspend any other sales and use tax permits
held by the entity.
(3) After a
sales and use tax permit has been suspended, a new permit will not be issued to
the same person until the person has posted sufficient security and satisfied
the comptroller that the person will comply with both the provisions of the law
and the comptroller's rules and regulations.
(m) Refusal to issue sales and use tax
permit. The comptroller is required by Tax Code, §
111.0046 (Permit or
License), to refuse to issue any sales and use tax permit to a person who:
(1) is not permitted or licensed as required
by law for a different tax or activity administered by the comptroller;
or
(2) is currently delinquent in
the payment of any tax or fee collected by the comptroller.
(n) Cancellation of sales and use
tax permits with no reported business activity.
(1) Permit cancellation due to abandonment.
Any holder of a sales and use tax permit who reported no business activity in
the previous calendar year is deemed to have abandoned the sales and use tax
permit, and the comptroller may cancel the sales and use tax permit. "No
business activity" means zero total sales, zero taxable sales, and zero taxable
purchases.
(2) Re-application. If a
sales and use tax permit is cancelled, the person may reapply and obtain a new
sales and use tax permit upon request, provided the issuance is not prohibited
by subsection (m) of this section, or by Tax Code, §
111.0046.
(o) Liability related to
acquisition of a business or assets of a business. Tax Code, §
111.020 (Tax Collection on
Termination of Business) and §111.024 (Liability in Fraudulent Transfers),
provides that the comptroller may impose a tax liability on a person who
acquires a business or the assets of a business. See §
3.7 of this title (relating to
Successor Liability: Liability Incurred by Purchase of a Business).
(p) Criminal penalties. Tax Code, Chapter
151, imposes criminal penalties for certain prohibited activities or for
failure to comply with certain provisions under the law. See §
3.305 of this title (relating to
Criminal Offenses and Penalties).
Notes
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