This is the section of the Texas sales and use tax return that is used to report taxable purchases. When a vendor does not charge sales tax on a purchase that is taxable under Texas law, the taxpayer should accrue and remit use tax on the sales and use tax return.
The value of the taxable purchase is included in the taxable purchases section of the return. It is imperative that a clear audit trail is maintained to show all purchases included in the number reported to the Texas Comptroller of Public Accounts. Do not include taxable purchases with taxable sales. These sections are broken out for a reason.
For example, if paintings are purchased via the internet and shipped from a New York vendor into Texas via common carrier and the New York vendor does not have nexus in Texas, the purchaser should report the value of the taxable paintings, including freight charges, in the taxable purchases section of the Texas sales and use tax return and remit the use tax due. The same idea applies to all taxable purchases that are not taxed by the vendor even if the vendor is in Texas and should charge sales tax.
NOTE: The example includes the detail that the paintings are shipped via common carrier because if the New York vendor does not have a presence in Texas, nexus and registration with the Texas Comptroller of Public Accounts is not required. Presence can be established by the entry of delivery trucks, personnel, locations, independent contractors, etc. depending on the rules governing the jurisdiction.
Use tax should be remitted when the vendor is located in Texas, sells taxable items or services and fails to charge the appropriate sales tax. When this occurs it is the responsibility of the purchaser to remit use tax via the taxable purchases section of the Texas sales in use tax return.
REMEMBER: In Texas, sales tax is the debt of the purchaser even though the Comptroller may assess the tax against the purchaser or the seller.