• Call us now: Texas: (214) 315-6392   California: (408) 942-1450

Facts to Know About Sales Tax Fraud and Penalties in Texas

Facts to Know About Sales Tax Fraud and Penalties in Texas

Facts to Know About Sales Tax Fraud and Penalties in Texas

Tax crime snips you. In Texas, Retailers must use taxes on personal property or taxable services when they collect sales from it. People must know the sales and use tax laws in Texas to avoid committing tax crimes. Inability to pay the taxes in the wake of collecting sales can cause serious penalties.

The “statute of limitations” in Texas is 4 years from the due date of the tax. So, taxpayers must keep all records for a minimum of 4 years. If fraud was detected, the Office of the Texas Comptroller of Public Accounts can audit for periods of more than 4 years.

Sales Tax Fraud Investigations

In 2007, the Texas Legislature passed House Bill 11, which made it simpler to investigate sales tax fraud for the Texas Comptroller of Public Accounts. According to Law, wholesalers and merchants of cigarettes, beer, cigars, wine, and other tobacco items must report their month-to-month deals to retailers and afterward retailers to the Comptroller electronically.

The Comptroller can compare purchases of the products that retailers have made with Wholesalers and distributors. Since all the data is collected electronically, which make it easier than in the past to detect discrepancies by the Comptroller.

At the point when the Comptroller distinguishes an irregularity in the sales to the retailer and the sales revealed by the retailer, the Texas Comptroller of Public Accounts performs out an audit. Sales tax audits in Texas can be produced from potential clients acquired by directing audits of different citizens or taxpayers, in view of reports required by Texas HB 11, paper articles and bankruptcies.

If the audit reveals evidence of a criminal intent to evade payment of taxes, the Texas Comptroller of Public Accounts reports the case to the Criminal Investigations Division, which files criminal charges in these substances.

Penalties for sales tax fraud

On the off chance that an individual faces severe penalty if he found guilty of crimes related to not paying sales taxes. The state of Texas charges fines and interest for reports and late sales tax payments. The Penalties for sales tax fraud are the following:

     1. Each report submitted after the expiration date will receive a $50 fine.
     2. Texas will charge the payer 5% penalty, in the event that the tax due is paid late in the range of 1 and 30 days.
     3. Texas will charge the payer 10% penalty, in the event that the tax due is paid late more than 30 days.

Unpaid taxes are also charged interest to the following 60 days after the due date. The interest rate changes annually and is the special rate plus 1%. Texas state has claimed that the seller owes $1,000 in Texas sales taxes plus a $50 fine for each filing period in which no sales tax was filed.

Second Degree Crime

If the sum of amount exceeds $10,000 and he intentionally or knowingly not settled or pay the sales taxes regulatory expenses to the government that the retailer charged on selling items to the client is a crime.
Depending upon the portion of unpaid sales tax amount, the crime is considered as a second-degree serious crime. Which cause imprisonment of 2 to 20 years and improvise penalty of up to $10,000.

Third Degree Crime

If a person intentionally or knowingly represents false sales tax records or fail to keep sales tax records then it will consider as the third-degree serious crime. The fine for the third-degree crime is 2 to 10 years of imprisonment and a fine of up to $ 10,000.
If you do not agree with a penalties or decision made by the Comptroller, you have the right to appeal a reconsideration in less than thirty days after the issuance of the penalty letter.

Consult a CPA

Texas experts pay attention to deal with sales tax frauds and won't hesitate to charge culprits however much as could reasonably be expected. In the event, that you are facing sales tax audit, counsel an accomplished Accounting Firm or CPA who can enable you to protect your rights.