Texas Taxes Tax Publications

Trade Shows and the Texas Sales and Use Tax
May 2003

Trade show exhibitors need a Texas sales tax permit if they sell taxable products at the show, take orders that are later accepted out of state, or use the show to promote sales.

State and Local Sales and Use Taxes
Texas has a 6 1/4 percent state sales or use tax. Cities, counties, transit authorities, and other special purpose districts may adopt local sales and use taxes. These local taxes range from 1/8 percent to 2 percent and are collected with the state sales or use tax.

For help in determining which local tax to collect, see our Local Sales and Use Tax Web site at, http://www.window.state.tx.us/taxinfo/local/rateinfo.html. Sales tax applications, publications and forms may be obtained on our Web site www.window.state.tx.us/taxinfo/sales. Sales tax forms and publications can be found under the "Quick Link" heading for sales tax.

Tax Permits
Every retailer in Texas needs a sales tax permit. An exhibitor without a Texas location needs a use tax permit. There is no fee for either permit. The application is online at http://www.window.state.tx.us/taxinfo/taxforms/01-forms.html, or call us at 1-800-252-5555 and request a "289" packet.

Sales Tax Bond
Some new permit holders must provide a bond to ensure payment of tax. The requirement can be met by a surety bond, cash, a letter of assignment, or a letter of credit from a bank, savings and loan, or credit union. The bond is returned to the permit holder after two years if all taxes are paid promptly.

Sales Tax Returns
Tax returns are filed monthly, quarterly, or yearly depending on the amount of state sales and use tax collected. Reports and payments are due by the 20th day of the month following the report period. For example, the report for the first quarter (January, February, March) is due April 20.

Filing the report and paying the tax promptly entitles the taxpayer to a timely filing discount equal to 1/2 percent of the tax collected as compensation for their time and effort. Taxpayers must submit reports even if no tax is due. Our Web site at www.window.state.tx.us has information on how to file returns online or over the phone.

Tax Collection/Resale Certificates
When reselling merchandise, an exhibitor must collect sales or use tax or get a resale certificate from a customer purchasing the property to resell it. An exhibitor who does not get a completed resale certificate will be liable for the tax.

Franchise Tax Exemption
A non-Texas corporation is exempted from the Texas franchise tax if its only activity in the state is soliciting orders at trade shows. To take advantage of this exemption, however, the corporation must make no more than five visits to Texas during its accounting year upon which the tax is based, and each visit must be for not more than 120 consecutive hours. For more information, see Texas Tax Code Sec.171.084 and Franchise Tax Rule 3.541.

A corporation is eligible for this exemption even if it has a certificate of authority from the Texas Secretary of State to do business in Texas. To get the exemption, such corporations must notify the Comptroller's office in writing of its activities by the franchise tax report due date. The corporation also must notify the Comptroller when it no longer qualifies for the exemption.

Need More Assistance?
Email us at tax.help@cpa.state.tx.us.	Call us toll free.	Visit one of our local field offices.

96-276
(05/2003)