Guides a Texas business through its full sales-and-use-tax compliance cycle: nexus and permit verification, taxability classification, Form 01-114 (or 01-117 short form) preparation with local Schedule A (01-115), and timely WebFile submission with the 0.5% vendor discount claimed.
Determine whether the business has physical or economic nexus in Texas. Physical nexus arises from an office, warehouse, employee, or inventory in Texas. Economic nexus is triggered at $500,000 in taxable sales into Texas in the preceding 12 calendar months (exempt sales do not count toward this threshold). If nexus exists and no Texas Sales and Use Tax Permit is on file, registration through the Comptroller's eSystems portal must precede any filing.
Classify each revenue stream under Texas Tax Code Chapter 151. Texas taxes tangible personal property (TPP) and only specifically enumerated services — not all services. Key flags: SaaS and data processing services are taxable but only 80% of the charge is subject to tax (20% exemption under Sec. 151.351); custom software is taxable in Texas unlike most states; residential real-property services are NOT taxable but nonresidential equivalents are. Collect valid resale or exemption certificates (Form 01-339) for any exempt sales.
Compile gross sales, taxable sales, exempt sales, and use tax owed for the filing period. Apply the correct combined rate: state rate is 6.25%; local (city + county + transit + special district) may add up to 2.00%, capping the combined rate at 8.25%. For intrastate sales, use origin-based sourcing (seller's Texas location rate); for remote sellers, use destination-based sourcing (buyer's ship-to address). Prepare Form 01-114 (standard) or 01-117 (short form), plus Schedule A (Form 01-115) for local tax detail if multiple local jurisdictions are involved.
Submit the return and remit tax through the Texas Comptroller's WebFile portal by the applicable due date. Claim the 0.5% timely-filing vendor discount (capped at $1,750/month) on the return. Confirm the payment clears and retain all supporting records — sales journals, exemption certificates, and filed returns — for a minimum of four years per Comptroller Rule 3.286. Flag any use-tax obligations (Form 01-148) for untaxed out-of-state purchases consumed in Texas.
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