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Dear Rex,
If a working artist in the state of Texas sells some of his pieces, but it isn’t a significant portion of his income, should he still collect sales tax on the pieces sold? And how does he go about filing said taxes with the county and/or state? (Or is there a ballpark threshold income above which it would be wise for said artist to file such paperwork?)
-Taxes in Texas

Dear Taxes,

Pony up, buddy; if you’re selling more than two pieces of your art in a 12 month period—and congrats if you are—you have a legal obligation to collect sales taxes and send them to the State.  Unlike the Margin Tax (which is applicable only to corporations, limited liability companies, and the like), there is no minimum threshold for Sales Tax so you owe tax starting with the first dollar in sales.

The first step is to apply for a sales tax permit with the Comptroller of Public Accounts.   You can do this on-line here.  Before you visit, you’ll need:

• Sole owners need a social security number.
• Partnerships need the social security number or federal employer’s identification number for each partner.
• Texas corporations must have their file number from the Texas Secretary of State.
• All corporations need the social security number for each officer or director.

After your application is approved, it’ll take 2-3 weeks to receive your permit in the mail.

Once received, you’ll need to file and pay your taxes on a schedule determined by your sales volume.  In other words, you’ll file either monthly, quarterly, or annually, as outlined in the instruction sheet that will accompany your permit.  Filing and paying is pretty easy, too, and can also be done on-line.  If you have zero sales in a tax period, remember that you still need to file a return.  There are penalties if you fail to file a return, even when no sales tax is due!

The tax rate you’ll charge is based on the location of your studio, shop, or office, and is composed of city, county, and state taxes.  In larger cities like Houston and Austin, this combined rate adds up to 8.25%.  The State provides information with your permit to help determine the rate.  The good news is you pay the entire tax bill to the state, who then handles divvying the money between the different jurisdictions.

By the way, the Controller’s office is staffed with very helpful people who do a good job of answering your questions either on-line or in person at their state-wide office locations.

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