1. Sales Tax 101: The Puzzle you Can’t Figure Out
Let’s find the answer

2. Remember…you are always working with other agencies
Comptroller of Public Accounts
Texas Secretary of State
Internal Revenue Service

3. Don’t pay ‘stupid tax’!!
Money paid by your organization simply because you “forgot” to fill out a form, send in a document or meet the deadline!!
This Photo by Unknown Author is licensed under CC BY

4. Franchise tax reports
Levied annually by the state comptroller on all taxable entities doing business in the state. Each business in Texas must file an Annual Franchise Tax Report by May 15th each year.
TX Corps, PCs, LLCs, PLLCs, and LLPs domestic and foreign: pay 1% of gross receipts over $1,000, (whose making that??)

6. Failure to file the franchise tax report by may 15th will result in…
Failure to file the franchise tax report by may 15th will result in….stupid tax!! $50.00 late fee

7. Or….let’s not fill it out at all???
AP 204 Application for Exemption-Tells the Comptroller’s office that you are a non-profit organization and are exempt from completing this form.
Must submit AP 204 and your IRS Determination Letter
Verify with the Comptroller that they have received the information

8. Sales tax

9. This is an eleven digit number (this is not your EIN)
Sales tax permit
You must obtain a Texas sales and use tax permit if you are engaged in business in Texas or you sell taxable services in Texas
This is an eleven digit number (this is not your EIN)
It will take approx. 2-4 weeks to receive your permit once the Comptroller has received your signed application

10. Some basic sales tax info:
You may not necessarily ‘owe’ sales tax, but you MUST file a sales tax report. This is simply a ZERO TAX DUE REPORT.
The Comptroller will automatically assign you as a ‘quarterly’ filer. However, request to be an ‘annual’ filer. This is done only once a year in January.
You have TWO tax free days!! When calculating this, you must notate this in your meeting minutes.

11. T-shirt fundraiser (purchased from vendor $10.00)
At cost for the parents and the kids at $10.00
$11.00
Increase price to take into consideration the tax that will need to be paid (8%)- $11.00
$15.00
Increase price as a ‘true fundraiser’ to include taxes and make money for organization. $15.00

14. Now you are ready to file your sales tax report
You can file manually: through the mail
You can set up a WebFile account and file on- line: this is much easier. However, there are a few things you will need to have ‘in hand’ to WebFile.
RT number
Financial information
Note (to file franchise tax by WebFile, you will need an ‘XT’ number)

15. RT number
You should receive a ‘reminder’ to file your sales tax in the mail. The RT number is in the upper left-hand corner

16. Webfile Pay your file/pay taxes File franchise tax report
Request tax clearance letter
Request duplicate Permit
Review previous payments
Update user ID

17. TAXABLE VS NON-TAXABLE ITEMS
This can be very confusing especially when it comes to food and catalog sales, so we will see if we can break it down!!

18. Taxable Agenda books Agricultural sales Artistic (CDs, tapes, videos)
Athletic-equipment and uniforms
Automotive
Band-equipment, supplies, patches, badges, uniforms
Books-workbooks, vocabulary, library
Brochure items
Calculators
Calendars
Candles

19. Taxable Car-painting, , pin striping Clothing-school, club, class
Computer-supplies, mouse pads
Cosmetology products sold to customers
Cups-glass, plastic, paper
Decals
Directories-student, faculty
Drafting-supplies
Family and Consumer Science-supplies
Fees-copies, printing, laminating
Flowers-roses, carnations, arrangements

20. Taxable Greeting cards Handicafts Horticulture items Hygiene supplies
ID cards-when they are sold to the entire student body
Locks-sales and rentals
Lumber
Magazines-subscriptions less than 6 months
Magazines when sold individually
Merchandise, tangible personal property
Musical supplies, recorders, reeds

21. Taxable Parts-career & tech Parts-upholstery PE-uniforms, supplies
Pennants
Pictures-school, group (if school is the seller)
Plants-holiday greenery and poinsettias
Printing fee-computer
Rental-equipment of any kind
Rentals-towels
Repairs to tangible personal property (i.e. computer, house remodeling)
Rings and other school jewelry

22. Taxable Rummage and garage sales Safety supplies
School publication –athletic programs, posters, brochures
School store-all items (except food)
Spirit items
Science-science kits, boards, supplies
Stadium seats
Stationery, note pads, etc. produce in the classroom or vocational class
Supplies-any sold to students
Transcripts
Uniforms-any type to include PE, dance team, drill team, cheer, athletic and club shirts

23. Woodworking crafts-entire sale to include parts and labor
Taxable
Vending-Pencils an other non edible supplies when the school services the machince
Wood
Woodworking crafts-entire sale to include parts and labor
Yard signs

24. NON-TAXABLE
Admission-athletics, dances, dance performances, drama and musical performances
Admission-summer camps, clinics, workshops
Admissions-banquet fees, prom homecoming
Admission-tournament fees, academic competition fees
Cosmetology services (products sold to customer are taxable)
Deposits (lockers, etc)
Discount Entertainment cards and books
Facility rentals for school groups

25. NON-TAXABLE
Food items sold during fundraisers, including at a PTA/PTO carnival
Labor-automotive, upholstery classes (parts are taxable)
Magazine subscriptions greater than six months
Parking permits
Services-car wash, cleaning
Student Club Memberships

26. Don’t get lost in The “gray area” of taxable and non -taxable
Catalogs or Internet sales:
A seller who uses catalogs or the Internet to sell goods is treated the same as any other seller of taxable items. If you purchase merchandise through a catalog or the Internet from a seller located in Texas, you owe Texas sales tax on the purchase. If you purchase merchandise through a catalog or the Internet from a seller located outside of Texas and use the taxable item in Texas, then you owe Texas use tax on the purchase. An out-of-state mail-order company or an Internet company may hold a Texas Sales and Use tax permit and collect Texas tax. If the out-of-state seller does not have a Texas permit or does not collect Texas use tax, the use tax is due and payable by the purchaser.
Don’t get lost in The “gray area” of taxable and non -taxable

27. Don’t get lost in The “gray area” of taxable and non -taxable
Candy is ALWAYS TAXABLE.  Let’s get an understanding of what is considered "candy".  Basically, if you went to HEB, Kroger or Randalls, you will be taxed on a Snicker bar.  However, you will not be taxed on popcorn in a bag.  BUT....if you purchased cracker jacks (that is the only thing I can think of in a small box) that is considered candy and you are taxed. 

28. Don’t get lost in The “gray area” of taxable and non -taxable
Nontaxable Food Products
Boxes of fresh fruit
Frozen cookie dough, pizza kits (pizza only--not tools)
Mixes to be prepared at home (e.g., soup, dessert, bread, dip, pancake)
Meat sticks, cheese spreads & balls
Bottled sauce, salsa, jelly, syrup

29. Don’t get lost in The “gray area” of taxable and non -taxable
All volunteer nonprofits may hold tax- free food sale if:
Not professionally catered
Not held in a restaurant or hotel
Not in competition with a retailer
Food prepared by group’s members
Alcoholic beverage sales are taxable

30. Christie V. Erickson Yellow Rose Tax & Financial Service, LLC
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