Key takeaways
- The timely filing discount is 0.5 percent of the tax due. The prepayment discount is a separate 1.25 percent for monthly and quarterly filers.
- Monthly and quarterly returns are due on the 20th after the period ends, and yearly returns for calendar 2026 are due January 20, 2027.
- Form 01-117 covers only zero taxable sales and zero tax due, so any period with taxable sales needs the regular return.
- Keep sales and use tax records for at least four years, and longer while an audit, appeal or refund claim is open.
Confirm the filing frequency first
The Comptroller assigns each sales tax account a filing frequency and tells the taxpayer by letter, after the permit application is approved. The letter states whether the account files monthly or quarterly.
Yearly filing is a separate status. A 2016 Comptroller fiscal note said taxpayers who collect less than $1,000 in state sales tax per year may file annually, with the Comptroller's authorization. That $1,000 figure is the only dollar test I could confirm from a Comptroller source, and it is dated. The current pages I read do not publish the test for assigning monthly or quarterly, so do not build one from last year's tax and file on it.
The status can change. The Comptroller's TeleFile page says a filer can move from monthly to quarterly, or from quarterly to yearly, if eligible, and that the Comptroller notifies the filer when it qualifies. Until a letter confirms a new status, keep filing on the schedule that is on the account.
Pick the right form for each period
The Comptroller's TeleFile page pairs Form 01-117, Texas Sales and Use Tax Return - Short Form, with zero taxable sales and zero tax due. It pairs Form 01-114, Texas Sales and Use Tax Return, with zero total sales, zero taxable sales and zero tax due.
If the period has any taxable sales, or any tax due, the short form does not apply. Use the regular return, which the Comptroller identifies as Form 01-114, and enter the taxable sales and tax for the period.
The file-and-pay page lists Webfile, EDI and TeleFile as filing options. TeleFile is available when taxable sales are zero, and the TeleFile page says taxable sales must be zero to use it. A period with sales, even a small amount, goes through Webfile or EDI.
Use the 2026 due dates
Monthly reports are due on the 20th of the month after the reporting month. Quarterly reports are due April 20 for January through March, July 20 for April through June, Oct. 20 for July through September and January 20 for October through December. Yearly reports for the previous calendar year are due January 20.
For a monthly account with October 2026 sales, the return is due on the 20th of November 2026. A monthly prepayment is due on or before the 15th of the month, so it lands before the return date. For a quarterly account, the July through September 2026 return is due on the 20th of October 2026, and the October through December 2026 return is due January 20, 2027.
The 2026 yearly return covers calendar 2026 sales and is due January 20, 2027, which is a Wednesday. If a due date falls on a Saturday, Sunday or legal holiday, the next working day is the due date.
Apply the 0.5 percent timely filing discount
The timely filing discount is 0.5 percent, not 1 percent. Texas Tax Code 151.423 lets a taxpayer deduct and withhold one-half of one percent of the taxes due on a timely return. Example: a monthly return showing $12,000 of tax due, filed and paid on time, lets the filer keep $60 (0.5 percent of $12,000), so the payment is the $12,000 less that $60.
The prepayment discount is a separate 1.25 percent for monthly and quarterly taxpayers. To take it, the taxpayer must prepay at least 90 percent of the current period's tax, or at least 100 percent of the amount paid for the same period last year, and file the prepayment report with the total tax due on time. The FAQ text I read does not state the base for the 1.25 percent, so check the prepayment report's own calculation before taking it.
Both discounts are lost when the return or payment is late. A late report also carries a $50 penalty for each report filed after the due date.
File through Webfile and watch the electronic thresholds
Webfile runs inside Comptroller eSystems. Sign in with the account, select the sales and use tax account and the reporting period, enter the figures from the return and submit. Save the submission confirmation in the client file. That confirmation, with the payment record, is the proof that the return was filed on time.
Electronic obligations are measured on the preceding state fiscal year, September 1 through August 31. The file-and-pay page lists $50,000 or more paid for sales and use tax as a threshold for electronic filing, and it says taxpayers may be required to file and pay electronically based on that amount. A client that paid $50,000 or more between September 1, 2025 and August 31, 2026 may be required to file electronically, so check the filing method on the account before the next return.
Taxpayers who paid $500,000 or more for any specific tax in the preceding state fiscal year must transmit payments through TEXNET. For a payment above $1,000,000 the initiation deadline is 8 p.m. Central on the banking business day before the due date. For a payment of $1,000,000 or less, the deadline is 10:00 a.m. Central on the due date.
File zero returns for periods with no sales
A period with no sales is still a period on the schedule. Form 01-117 is the form the Comptroller pairs with zero taxable sales and zero tax due, and TeleFile is available for those periods. Treat each assigned period as a filing obligation even when nothing is owed, and file the zero return by its due date.
The Comptroller's motor vehicle rental tax guide says returns must be filed for each monthly or quarterly period even if there is no tax due. I did not find that sentence on a sales tax page, so use it as the working rule for a sales account.
A closed store is the usual trap. The owner stops selling in August, the bookkeeper stops filing, and the September and October returns go out late with penalties. Keep filing zero returns on the schedule that is on the account until the Comptroller confirms the account status in writing.
Keep records for at least four years
The Comptroller's records FAQ says sales and use tax records must be kept for at least four years, unless the Comptroller gives written authorization for earlier destruction. Keep the return as filed, the Webfile confirmation, the payment record, the sales records that support taxable and exempt sales, and the exemption certificates for the sales that relied on them.
The minimum is longer when a matter is open. Keep the records for the period under audit until the audit is completed. If the business appeals the findings or files a refund claim, keep the records until the case is resolved. For a 2026 period, the four-year minimum runs to at least 2030, so the record stays in the file that long.
Send the client a plain request that names the records: "Please keep every 2026 sales invoice, point-of-sale report and exemption certificate, and do not delete them from the system until we confirm the retention period is over." A request that names the documents gets a better answer than a general instruction to keep records.
Fix the mistakes that cost money
Typing 1 percent as the timely filing discount. The timely discount is 0.5 percent under Texas Tax Code 151.423. Fix the return template so the discount line uses 0.5 percent and the prepayment discount is calculated only on the prepayment report.
Filing the short form with a small amount of sales. Form 01-117 covers zero taxable sales and zero tax due only. Fix: check the taxable sales line before choosing the form, and use the regular return whenever the period has any taxable sales.
Assuming the frequency from last year. Fix: check the most recent Comptroller letter and the account before the due date, and calendar the due dates from that frequency rather than from the prior year's return.