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Sales Tax Refunds
Requesting a Refund of Tax Collected from a Customer in Error
If you are a seller who collected tax in error, the Comptroller cannot refund tax, penalty or interest until you have:
- either refunded to the purchaser the tax collected in error, or
- provided a credit to the purchaser for the tax collected in error (with the purchaser's written consent; use Form 01-136, Credit Memo Acceptance (PDF, 30KB)), and
- obtained a resale or exemption certificate from the purchaser, if the purchaser is asking for the refund because an exemption or sale for resale applies.
A seller who is due a tax refund can:
- take a credit in the amount of the refund or credit on a future sales tax return,
- amend the return to take a credit in the amount of the refund or a credit for the period in which the sales tax was paid, or
- request a refund from the Comptroller.
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. Reduce taxable sales by the price paid for the goods or services, 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 a Credit and Custom 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.
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, keep 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.
Taxable Items Returned to the Seller
If a purchaser returns a taxable item to a permitted seller, the seller can claim a credit or request a refund of tax, equal to the amount refunded to the purchaser, when the purchaser receives a full or partial refund of the price of the item returned to the seller.
Sellers Can Assign Their Right to Refund to a Purchaser
A permitted seller can assign a right to refund to the purchaser, from whom the tax was collected in error, allowing the purchaser to file a refund claim directly with the Comptroller’s office.
Assignees of and Successors to Permitted Sellers
A permitted seller can assign a right to refund to a third party such as a creditor, settlement trustee, or successor entity. The Comptroller’s office will treat the refund claim as if it had been submitted by the original seller. The assignee must comply with the same requirements as the seller when filing any refund claim, including the requirement to refund or credit tax paid in error to any purchasers.