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Sales Tax Refunds
The purchaser of a taxable item or service who held a sales tax permit at the time they paid sales tax in error can:
- ask the seller for a refund of the tax paid in error, or
- amend the sales tax return for the period in which the tax was paid in error, or
- take a credit on a future sales tax return for the tax paid in error, or
- request a refund from the Comptroller’s office.
A permitted purchaser who did not hold a sales tax permit at the time the tax was paid in error can ask the seller for a refund of tax paid in error. The seller can either grant the refund or give the purchaser an assignment of right to refund, which allows the purchaser to file the refund claim directly with the Comptroller’s office.
Taking a Credit on a Future Return or Amending a Return
You must file Form 01-114, Texas Sales and Use Tax Return (PDF, 130KB), to take a credit on a return, even if you normally file the short form. Check “yes” on Item j, and then reduce the amount of taxable sales on Line 2 by the purchase price of the items on which tax was paid in error, not including the tax. You must also report the total amount of credit taken and the earliest date of the tax paid in error on Form 01-148, Credits and Customs Broker Schedule (PDF, 59KB).
Example: You owe $100,000 in sales tax on your next return, but you are due a $20,000 refund because you overpaid tax on a previous return. You can report the $20,000 credit on the Credit and Customer Broker Schedule, and report tax due of $80,000 on the long form return. Be sure to keep good records to show why and how the reduction was made.
A permitted purchaser cannot claim a credit for a local taxing jurisdiction unless it has been previously reported on prior tax returns. Instead, a refund claim must be filed with the Comptroller’s office.
You can also amend an original return you filed. Follow the instructions on the form used to file the original return. You cannot electronically file an amended return that reduces the tax due after the due date for the period being amended.
It is not necessary to file amended returns for separate periods in separate envelopes. For efficient processing, the Comptroller’s office will review all the amended returns filed at the same time.
While waiting for a response about the approval or denial of your credit, do not stop filing sales tax reports and paying the tax due. If you fail to report and pay sales tax liabilities on time, you will be assessed penalties and interest on the unreported or unpaid amounts.