State Tax Ruling

Plain-English summary

A taxpayer asked the Comptroller's Tax Policy Division for permission to begin or continue filing Texas sales tax returns based on its own thirteen-period fiscal accounting calendar, rather than the standard twelve calendar months. The Comptroller responded that while the Texas Tax Code requires reports to be filed on a calendar basis, it is permissible to file based on a fiscal calendar instead.

That permission comes with rules to keep the fiscal periods lined up with Texas's normal monthly due dates and its computer system, which only accepts 12 monthly returns per calendar year:

• Returns are still due the 20th of the month, and that due date can only shift for weekends, holidays, and other nonworking days -- it cannot otherwise be extended.
• If a fiscal accounting period ends on the 1st through the 10th of a month, that data is reported on the return for the prior month (e.g., a period ending April 1-10 is reported on the March return, due April 20).
• If a fiscal accounting period ends on the 11th through the last day of a month, that data is reported on the return for that same month (e.g., a period ending June 11-30 is reported on the June return, due July 20).
• Because the state's system only takes 12 monthly returns a year but a 13-period fiscal calendar has 13 periods, two of the taxpayer's accounting periods must be combined onto one return. The Comptroller confirmed the taxpayer's proposed combination met this requirement.
• Taxpayers must not change the preprinted report period-ending dates printed on the returns -- doing so will cause the returns to fail to process. The due date is already shown on each return.

What this means for you

Businesses using a 13-period (4-4-5 style) fiscal calendar

If your company's accounting runs on a thirteen-period fiscal year instead of ordinary calendar months, Texas will let you file sales tax returns aligned to that fiscal calendar. You still file monthly-equivalent returns due on the 20th, and you need to map each fiscal period to the correct filing month using the 1st-10th vs. 11th-end-of-month rule described above.

Accountants and tax professionals

When a client operates on a 13-period fiscal calendar, plan for combining two of the fiscal periods onto a single Texas sales tax return each year, since the state's processing system caps out at 12 monthly returns. Confirm the specific combination with the Comptroller, and never alter the preprinted period-ending dates on the return forms -- an altered form will not process.

Anyone relying on this letter

This is an individual STAR letter responding to one taxpayer's specific proposed combination of fiscal periods, not a general rule. If you want the same accommodation, you may need to request it and propose your own period combination for the Comptroller's confirmation.

Common questions

Q: Does Texas require sales tax returns to be filed on a strict calendar-month basis?
A: The Texas Tax Code requires reports to be filed on a calendar basis, but the Comptroller confirmed it is permissible to instead file based on a taxpayer's fiscal calendar.

Q: When are the returns due?
A: The 20th day of the month, and that due date cannot be extended except for weekends, holidays, and other nonworking days.

Q: How do I know which return to report a 13-period fiscal period on?
A: If the period ends on the 1st through the 10th of a month, report it on the prior month's return. If it ends on the 11th through the last day of the month, report it on that month's own return.

Q: What happens with the 13th period, since Texas only accepts 12 returns a year?
A: Two of the taxpayer's accounting periods must be combined onto a single return, since the Comptroller's computer system will only accept 12 monthly returns in a calendar year.

Q: Can I change the dates printed on my sales tax return to match my fiscal periods?
A: No. The letter warns that changing the preprinted report period-ending dates will cause the returns not to process; the due date is already shown on each return.

Citations and references

Statutes and rules:

• Texas Tax Code (reports required to be filed on a calendar basis, as referenced in the letter)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9211L1209E01

Original ruling text

November 30, 1992

Dear ***:

I am responding to your letter requesting permission for *** to begin
or continue filing sales tax returns based on your thirteen period accounting
calendar.

The Texas Tax Code requires reports to be filed on a calendar basis; however,
it is permissible to file based on your fiscal calendar. The returns are due on
the 20th day of the month and that due date cannot be extended except by
weekends, holidays, and other such nonworking days. The filing procedure
required by Texas is outlined below:

-- For accounting periods ending the first through the 10th day of the month,
the due date will be the 20th of that month (i.e., if the accounting period
ends April 1 through April 10, the data is to be reported on the March return
due April 20).

-- For accounting periods ending on the 11th through the last day of the month,
the due date will be the 2Oth of the next month (i.e., if the accounting period
ends June 11 through June 30, the data is to be reported on the June return due
July 20).

Also, our computer will accept only 12 monthly returns in a calendar year, two
of your accounting periods must be combined on one return. The combination you
have suggested meets these requirements. Please do not change the preprinted
report period ending dates on the returns. If the dates are changed, the
returns will not process. The due date is shown on each return.

Sincerely,

Tax Policy Division