A Friendly Sales Tax Exemption Reminder

sales, tax, exemption

Happy Hump Day!

Take a moment from contemplating an escape to Costa Rica to read this reminder from our friendly Texas Comptroller.

Their office wants us to remember that exempt organizations doing business in Texas still have to collect and remit sales tax for items it sells. This makes sense, as everyone pushes pumpkin spice pastries and calendars in their last fundraising hurrahs.

Not sure whether you’re handling sales tax correctly?  Read on for a brief refresher and links for more information. 


But, But, But….What Do You Mean?

Unless you’re exempt, anyone doing business in Texas (who sells taxable services or sells/leases personal property) has to apply for a Sales and Use Tax Permit. At the time you apply for a permit, you find out when you have to send your taxes in. And how you report sales taxes will depend on the amount of taxes you paid in the previous year. What happens if you don’t file on time? You may have to deal with a monetary fine, along with a certain percentage due as a penalty.


Wait, there’s a Sales Tax Exemption?

Yep. Certain organizations can apply for an exemption, and don’t have to pay taxes on specific items. But there’s confusion around when the sales tax exemption applies.

The sales tax exemption applies when an exempt organization is purchasing, not when the organization is selling. And even when it’s purchasing, the purchase has to be something that helps the organization carry out its mission. So sorry, no break on those Christmas Crocs you were getting just because.


How Do I Collect Sales Tax?

Most organizations build the tax into the price. But remember, if you build sales tax into your price you have to include a statement that the price includes tax.


How Do I Calculate My Taxes Due?

The Comptroller’s article (linked below) walks through this. Most attorneys don’t do numbers, and the decimal points started to make me a bit anxious.


For more information on the following topics click on the link:

Exempt organizations sales and purchases: https://www.comptroller.texas.gov/taxes/publications/96-122.pdf

Guidelines to texas tax exemption: https://www.comptroller.texas.gov/taxes/publications/96-1045.php

Link to the page for exempt organizations: https://www.comptroller.texas.gov/taxes/exempt/

Link to the newsletter: https://www.comptroller.texas.gov/taxes/tax-policy-news/2016-october.php




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