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Texas Sales Tax Fraud

Retailers in Texas are required to collect sales and use taxes on the "tangible personal property or taxable services." Failure to pay those taxes after collecting them can result in severe penalties and Texas business people should know about sales and use tax laws so they avoid committing tax crimes.

Sales Tax Fraud Investigations

In 2007, the Texas legislature passed House Bill 11, which made it easier for the state comptroller investigate suspected sales tax fraud. Wholesalers and distributors of ale, beer, wine, cigars, cigarettes and other tobacco products must report their monthly sales to retailers to the Comptroller electronically. The Comptroller can then compare the purchases of these products that retailers have made with the sales retailers made to consumers, which retailers must report to the Comptroller by law. Since all the data is collected electronically, the Comptroller can spot discrepancies more easily than in the past.

When the Comptroller spots an inconsistency in the sales to the retailer and reported sales by the retailer, the office conducts an audit. If the audit reveals evidence of a criminal intent to evade paying taxes, the Comptroller reports the case to the Criminal Investigations Division, which files criminal charges in these matters.

Penalties for Sales Tax Fraud

If a person is convicted of crimes related to failing to pay sales tax, he or she faces severe penalties. Intentionally or knowingly failing to pay sales taxes to the government that the retailer collected from customer sales is a felony if the amount exceeds $10,000. Depending on the amount of unpaid sales tax, the offense could be up to a second degree felony, which carries a prison sentence of two to 20 years and a criminal fine of up to $10,000.

Additionally, a person convicted of failure to pay sales tax owes 5 percent of the total unpaid tax as a penalty. A person incurs an additional 5 percent penalty if the tax is more than 30 days overdue.

Intentionally or knowingly falsifying sales tax records, or failing to keep sales tax records, is a third degree felony. The penalty for a third degree felony is a two to 10 year prison sentence and a fine of up to $10,000.

Consult an Attorney

Texas authorities take sales tax fraud very seriously and will not hesitate to prosecute those charged with the offense to the fullest extent possible. If you are facing sales tax fraud, consult an experienced tax crime defense attorney who can help defend your rights.