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Deposit of Sales Taxes Collected by State Agencies (APS 008)

FPP A.015

Background

Introduction

State agencies must collect all applicable sales taxes — state, city, transit authority, county, combined and Special Purpose District (SPD) — when making sales to the public. These taxes must be deposited into the state treasury within three business days of receipt as provided by Government Code, Section 404.094, or within seven business days of receipt as provided by Education Code, Section 51.008. The Table of Taxable Items included in this accounting policy statement (APS) provides examples of items commonly sold by state agencies.

State Agencies Must Comply With Tax Code

Attorney General Opinion JM-987 (Nov. 30, 1988) concluded that state agencies are required to follow sales tax provisions in the Tax Code. This includes obtaining and displaying a sales tax permit and filing a sales tax return.

Agencies Are Eligible for Tax Discounts

As state agencies must comply with the sales tax laws, agencies are therefore eligible for sales tax discounts. The discount is 1/2 of 1 percent of the total sales taxes collected and is applicable for timely payments or deposits.

Institutions of higher education that collect sales tax generated by educational activities, research or demonstrations authorized by Education Code, Section 51.002 and 51.008, may retain the sales tax discount under Tax Code, Section 151.423, in their local banks.

State agencies must have specific appropriation authority to spend the discount. Otherwise, agencies must deposit the discount into unappropriated General Revenue, Appropriation 99906.

Depositing Taxes

Taxes must be deposited as follows:

  • State sales tax is deposited into the General Revenue fund, Appropriated Fund 0001.
  • Local sales taxes (city, transit authority, county, combined and SPD) are deposited into the City, Metropolitan Transit Authority (MTA), County and SPD Sales Tax Trust, Appropriated Fund 0882, for allocation to the local taxing authorities. Special purpose district sales taxes are governed by Tax Code, Chapter 323; therefore, they are accounted for as county sales taxes. Before an agency can record local sales activity, the local taxing authority vendor number must be profiled in the agency’s Uniform Statewide Accounting System (USAS) Vendor Profile (34) screen.

Entering Deposit Transactions in USAS

Agencies must enter their deposit transactions in USAS. The USAS transaction records will serve as the agencies’ tax information. The Comptroller’s office will accumulate the sales tax data, as entered in USAS, and prepare monthly sales tax returns for all state agencies. A separate sales tax return form is not required to be filed by the individual agency.

Filing Tax Returns

Sales tax forms used by businesses to report sales tax collections are sent to the Comptroller’s Revenue Processing Division monthly, quarterly or annually. The collections reported are credited to the business’ taxpayer number or federal employer identification number.

This process can be used in lieu of the USAS entries described in this accounting policy statement. For more information, contact the Webfile help desk at (800) 442-3453.

Recap of Comptroller Requirements

The Comptroller’s Fiscal Management Division will designate the following for tax deposits:

  • Appropriated fund.
  • Generally accepted accounting principles (GAAP) fund.
  • GAAP fund type.
  • Appropriation number.
  • Comptroller object.
  • Program code.
  • T-code for recording in USAS the deposit of sales tax in the state treasury.

The Comptroller’s Revenue Accounting Division will prepare a monthly local sales tax return for all state agencies.

The Comptroller’s Enforcement Division will assist agencies in:

  • Determining permitting needs.
  • Obtaining sales tax permits.
  • Answering specific tax-related questions.

Recap of Agency Requirements

Agencies must obtain and display a sales tax permit. In addition, agencies must establish the necessary USAS profiles to correctly record in USAS the deposit of sales tax into the state treasury. When new taxing authorities require collections, agencies must contact the Comptroller’s office to establish a Taxing Authority Vendor Number in USAS. Follow these procedures in setting up USAS profiles:

  • Agencies establish the D23 profile fund (Fund 1000) that looks up Appropriated Fund 0001, GAAP Fund 0001 and GAAP Fund Type 01.
  • Agencies establish the D23 profile fund that looks up Appropriated Fund 0882, GAAP Fund 0001 and GAAP Fund Type 01.
  • Universities establish the D23 profile fund that looks up Appropriated Fund 0001, GAAP Fund 0001 and GAAP Fund Type 05.
  • Universities establish the D23 profile fund that looks up Appropriated Fund 0882, the GAAP Fund with their assigned ACFR File ID contained in the D24 GAAP Fund profile and GAAP Fund Type 05.
  • On the Program Code Profile (DØ4), use Program Code 3992 or an appropriately defined program code that looks up Program Code 3992 for both Fund 0001 and 0882.
  • On the Program Cost Account Profile (26), use Program Cost Account (PCA) 99906 for Fund 1000 and PCA 99907 for Fund 0882.