34 Tex. Admin. Code § 3.328 - Optional Reporting Methods for Grocers and Other Vendors
(a) Retail grocer defined. Persons who sell
food at retail to be consumed off the premises where such food is sold, and who
sell household supplies and nondurable household goods, but whose receipts from
the sale of any other tangible personal property do not exceed 5.0% of their
total receipts, are referred to in this section as retail grocers. Beer and
wine are not food products or food, and therefore are tangible personal
property. If the receipts from the sale of beer and/or wine exceed 5.0% of the
total receipts, a grocer is disqualified from using the 15% reporting method
(Method C).
(b) Reporting methods.
(1) First method (B).
(A) Eligibility is restricted to the
following classes of retailers:
(i) any
retail grocer;
(ii) any vendor who
maintains a separate grocery department with separate records which may be
audited by the state, as applies to the grocery department only;
(iii) any vendor whose taxable receipts from
the sale of taxable items are less than 10% of his total receipts.
(B) Procedure:
(i) Add all invoices for merchandise
purchased during the past calendar or fiscal year to obtain a total of those
purchases.
(ii) Add all invoices
for exempt merchandise purchased during the past calendar or fiscal year to
obtain a total of those purchases.
(iii) To the total of exempt merchandise
purchased in clause (ii) of this subparagraph, add the amount of taxable items
purchased during the past calendar or fiscal year for which foodstamps were
accepted from the purchaser in lieu of other consideration.
(iv) Divide the total amount of exempt
merchandise purchased (clause (ii) and (iii) of this subparagraph) by the
amount of total purchases (clause (i) of this subparagraph) to obtain a
percentage relationship.
(v)
Multiply the total receipts from all sales during the reporting period by the
percentage thus obtained in clause (iv) of this subparagraph.
(vi) Deduct the figure obtained by this
multiplication as described in clause (v) of this subparagraph from the total
receipts for the reporting period. The remaining amount will be taxable
receipts from the sale of taxable items. Any purchases upon which the use tax
is due must be added to this amount.
(C) This method of calculating taxable
receipts from the sale of taxable items is available for reporting purposes
only, and is subject to audits as the comptroller may require. If an audit
indicates the actual tax liability differs from the tax reported and paid, then
the comptroller will assess additional tax or grant a refund. No penalties or
interest will be assessed on additional taxes disclosed to be due by audit
unless the audit discloses fraud or willful evasion of the tax.
(D) A retail grocer electing to use this
method of reporting must maintain records which will substantiate purchases of
exempt and taxable items as well as records which will substantiate total gross
sales.
(2) Second method
(C).
(A) Eligibility.
(i) Restricted to retail grocers, as defined
in subsection (a) of this section, whose gross receipts do not exceed $100,000
per calendar year.
(ii) A person
may use this method for one or more outlets which qualify, as set out in
paragraph (1) of this subsection, only if all outlets under the same ownership
qualify and combined gross receipts do not exceed $100,000.
(B) Procedure.
(i) Any retail grocer whose total receipts do
not exceed $100,00 per calendar year may elect to report and pay the tax
imposed by this chapter on the basis that taxable receipts from the sale of
taxable items are equal to 15% of his total receipts.
(ii) If a grocer qualifies and elects to use
this method, any audits performed on his account will be limited to this
method. No additional taxes shall be assessed or refunds or credits allowed
because of any showing that the amount of tax paid to the state under this
method of reporting differs from the amount that would have been paid under any
other reporting method. This method cannot be substituted for another method
previously elected, and it is prospective only in nature.
(iii) Grocers electing to use this method of
reporting are required to continue in the manner prescribed for a period of
three years following such election providing the total receipts of such
grocers continue to be $100,000 or less. At such time as the gross receipts of
any grocer exceed $100,000, such grocer shall, upon the next succeeding
calendar month, be ineligible to use this optional method, and he must promptly
inform the comptroller of this fact and cease to use that basis immediately.
Any retail grocer who fails to inform the comptroller of his ineligibility
loses the immunity for audit assessment otherwise provided and consequently is
liable for all back taxes, penalty, and interest prescribed by this section and
in accordance with the Tax Code, §
151.415.
(3) Third method (E).
Any retailer, including those mentioned in this section, who establishes an
accounting system in which the tax collected pursuant to the Limited Sales Tax
Act is commingled with the receipts from the sale of taxable items may
determine the taxable receipts in the following manner.
(A) He must subtract from his total receipts
the receipts from any sales which are specifically exempt from or otherwise
excluded from the tax imposed by this Act. The remainder consists of the
receipts from the sale of taxable items plus the tax collected pursuant to the
provisions of the Act.
(B) If the
retailer is subject to state tax only, the remainder must be divided by the
state tax rate, expressed as a percentage. If the retailer is subject to both
state and city tax, the remainder shall be divided by the combined state and
city tax rate, expressed as a percentage.
(i)
If the retailer is subject to state, city, and Metropolitan Transit Authority
taxes (MTA), the remainder must be divided by the combined state, city, and MTA
tax rate, expressed as a percentage.
(ii) If the retailer is within a metropolitan
transit authority but not subject to city tax, the remainder must be divided by
the combined state and MTA tax rate, expressed as a percentage.
(iii) If the retailer is subject to state,
city, and county sales taxes, the remainder must be divided by the combined
state, city, and county tax rates, expressed as a percentage.
(iv) If the retailer is subject to state and
county taxes but not subject to city tax, the remainder shall be divided by the
combined state and county tax rates, expressed as a percentage. If the retailer
is subject to state, city, MTA, and county taxes, the remainder must be divided
by the combined total of all taxes expressed as a percentage.
(C) The answer resulting is the
taxable gross receipts of the retailer for reporting purposes as prescribed by
the Tax Code, §
151.410, of the Limited
Sales Tax Act.
(D) The sole purpose
of this third method is to permit the widest possible latitude in the internal
accounting system of retailers and to avoid requiring certain retailers to
remit to the state a tax computed upon a base which already includes the tax
imposed by this Act. Nothing in this section may be construed to relieve the
retailer of the obligation and duty of collecting the tax in the specific
manner prescribed by the Tax Code, §
151.053, and the bracket
system provided therein. Neither may anything in this third method be construed
to relieve the taxpayer of the obligation of paying tax, penalty, and interest
upon delinquent taxes.
(c) Purchase invoice records must be
maintained for at least four years to verify a grocer's sales tax returns
regardless of the method chosen for reporting purposes.
Notes
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