Can a Texas business file sales tax returns based on a 4-4-5 (or 5-4-4) retail fiscal accounting calendar instead of standard calendar months?

Subject

4 — 4 — 5/4 — 5 — 4/5 — 4 — 4 Fiscal Accounting System — And 5/4 Week Accounting Period

Plain-English summary

A taxpayer asked the Texas Comptroller for permission to begin or continue filing sales tax returns using a "5-4-4" retail fiscal accounting calendar — one of the family of 4-4-5, 5-4-4, and 4-5-4 accounting calendars that retailers commonly use to keep each reporting period a consistent number of weeks (unlike calendar months, which vary in length).

The Comptroller's answer: it's permissible. Although the Texas Tax Code technically requires reports to be filed on a calendar basis, the Comptroller allows filing based on a taxpayer's fiscal calendar instead. The catch is that returns are still due on the 20th of the month, and that due date only shifts for weekends, holidays, and other non-working days — it doesn't move just because the fiscal period ends on an odd date.

To make fiscal-period reporting line up with the standard monthly due dates, the letter lays out a simple mapping rule:

• If a fiscal accounting period ends on the 1st through the 10th of a calendar month, that period's data is reported on the prior month's return (due the 20th of the current month).
• If a fiscal accounting period ends on the 11th through the last day of a calendar month, that period's data is reported on the current month's return (due the 20th of the following month).

The letter also warns that the Comptroller's computer system only accepts 12 monthly returns per calendar year, and that taxpayers must not alter the preprinted report period ending dates on their return forms — doing so will cause the return to fail processing.

What this means for you

Retailers and other businesses on a 4-4-5-style fiscal calendar

If your business uses a 4-4-5, 5-4-4, 4-5-4, or similar retail fiscal accounting calendar for internal bookkeeping, you don't have to convert your sales figures to strict calendar months to file Texas sales tax returns. You can report based on your fiscal periods, but you still have to slot that data into the standard 12 preprinted monthly returns and hit the 20th-of-the-month due dates — you just use the "which 10-day window does my period-end fall in" rule above to decide which month's return each fiscal period belongs to.

Accountants and tax professionals

Don't alter the preprinted period-ending dates on the sales tax return forms to try to match a client's actual fiscal period-end — the letter is explicit that changed dates will cause the return not to process. Instead, map each fiscal period to the correct calendar-month return using the 1st-10th / 11th-end-of-month rule, and continue observing standard weekend/holiday due-date adjustments.

Common questions

Q: Does Texas require sales tax returns to be filed on a strict calendar-month basis?
A: The Tax Code's default is calendar-based reporting, but the Comptroller permits filing on a taxpayer's fiscal accounting calendar (such as a 4-4-5, 5-4-4, or 4-5-4 retail calendar) instead.

Q: How do I know which monthly return to report a fiscal period on?
A: If your fiscal period ends on the 1st–10th of a month, report it on the prior month's return (due the 20th of that month). If it ends on the 11th through the last day of the month, report it on that month's return (due the 20th of the following month).

Q: Can the sales tax due date move to match my fiscal period-end?
A: No. Returns are due the 20th of the month regardless of your fiscal calendar, and that date shifts only for weekends, holidays, or other non-working days.

Q: Can I change the report period dates preprinted on my return?
A: No. The Comptroller's system only accepts 12 monthly returns per year, and altering the preprinted period-ending dates will cause the return to fail processing.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9207L1185A11

Original ruling text

July 31, 1992

Dear **:

I am responding to your letter requesting permission for **, to begin
or continue filing sales tax returns based on your 5-4-4 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 non working 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 20th 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.
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.

You may also write to Tax Administration Division, Comptroller of Public
Accounts.

Sincerely,

Tax Administration Division