Unsure where you owe sales or use tax or dealing with legacy compliance pain?
Check Your ExposureTexas use tax applies when taxable goods or services are purchased without paying Texas sales tax and are then used, stored, or consumed in Texas. Use tax exists to ensure tax is paid when sales tax was not properly collected at the point of sale. Most businesses underestimate Texas use tax exposure because it is not visible in normal sales reporting.
Texas use tax exposure often exists even when sales tax was never charged. Estimating exposure before filing or responding to an audit helps avoid penalties.
Use tax is complementary to sales tax. When sales tax is not charged by the seller, the buyer becomes responsible for reporting and paying the tax directly to the state. Texas use tax applies at the same rate as sales tax and follows the same jurisdiction rules. If an item would have been taxable if purchased in Texas, use tax generally applies when that item is used in Texas.
Texas use tax most often arises in the following situations:
These liabilities often go unreported for years.
Remote sellers may not charge Texas sales tax in certain situations. When this happens, the obligation shifts to the purchaser. Businesses operating in Texas must track these purchases and self assess use tax when required. Failure to do so commonly results in audit assessments with penalties and interest.
Use tax exposure frequently appears during asset purchases.
Examples include:
Auditors often review fixed asset schedules to identify unpaid use tax.
Software and digital tools are a common source of confusion. Depending on structure and delivery, software may be taxable in Texas. When vendors do not charge tax, the responsibility shifts to the buyer. Businesses rarely reconcile software spend against use tax obligations, creating long term exposure.
Texas actively enforces use tax through audits and data matching programs.
Audits typically review:
Because use tax is self reported, underpayment is treated as non compliance rather than a simple error.
Sales tax is collected by the seller at the time of sale. Use tax is reported and paid by the buyer after the fact.
Both taxes use the same rates and jurisdictions. The difference is who is responsible for collection and reporting.
Understanding this distinction is critical to managing risk.
Businesses often make these errors:
These mistakes compound and surface during audits.
TaxMap analyzes use tax at the transaction and jurisdiction level.
TaxMap:
This allows businesses to see exposure before filing or before audits.
Use tax exposure is rarely obvious. It grows quietly across vendors, assets, and systems. The first step to managing Texas use tax is understanding where tax was not collected and where liability exists. TaxMap helps businesses identify and resolve use tax exposure with clarity.