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Tough decision for some small business owners in Texas: Pay sales tax or pay employees?

HOUSTON – In Texas, sales tax collected by businesses is due to the state every month on the 20th. This month, some business owners must choose between paying that tax and paying their employees.

Houston Jewelry has been in the area for generations, surviving hurricanes, recessions and other crisis. In disasters like Hurricane Harvey, the state has delayed sales tax payments for business owners like them as part of a disaster declaration.

But not during the coronavirus pandemic.

“We’re actually quite surprised that the comptroller, that this was not anticipated in the disaster declaration,” Houston Jewelry owner Rex Solomon said.

“That creates a giant cash flow crunch, especially for small family businesses, coupled with the fact the 20th is payroll day for most,” he added.

Business at Houston Jewelry and many, if not most, small businesses has largely disappeared.

Solomon will forgo his pay on Friday in order to pay the state more than $10,000 in sales tax and the employees.

“This is a complex and rapidly evolving situation," Texas Comptroller Glenn Hegar said in a statement. “Many of our fellow Texans are facing devastating economic conditions as bars, restaurants, retail outlets and other businesses make difficult staffing decisions.”

“The economic impacts are currently the most visible, but a more pressing concern is simmering behind the economic concerns,” the statement said. “A looming health emergency may strain our abilities to provide adequate care and emergency services to our fellow Texans. We must pull together to ensure we can meet the needs we will inevitably face. As part of that pulling together, I ask businesses to remit the taxes they collected from Texans by the established due date.”

Hegar said his office will reexamine that decision next month “as the agency evaluates rapidly changing conditions."


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