In response to the U.S. Supreme Court’s decision on South Dakota v. Wayfair, Texas-based businesses selling items or services into other states may be required to collect taxes for those states. Additionally, remote sellers who were previously not required to collect and remit sales and use tax may have to begin collecting Texas tax on their sales into Texas in late 2019. Generally, a remote seller is a seller that does not have a physical presence in a state, but who sells products or services for delivery into that state. 

The Comptroller’s office is currently updating sales and franchise tax rules to provide details about remote seller tax responsibilities. The Comptroller is not applying the Wayfair decision to additional taxes, and any new tax responsibilities will be prospective.

Safe harbor

Texas has also established a safe harbor for remote sellers whose Texas revenues are below $500,000 from sales of personal property and services in the preceding 12 months. Remote sellers with Texas revenue below the safe harbor amount will not have to register and collect tax. Remote sellers whose Texas revenue exceeds the safe harbor amount are required to register and begin collecting tax.  

Although Texas Wayfair amendments became effective on January 1, 2019, enforcement won’t begin until October 1, 2019, giving remote seller’s more time to prepare for these changes. The initial 12 calendar months for calculating a remote seller?s Texas revenues will be July 1, 2018, through June 30, 2019. 

If you are unsure of where your business has nexus, and what your sales tax obligations may be, contact your TaxOps advisor for a nexus review.

Read more: Texas Tax Policy News

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Judy Vorndran can be reached at or 720.227.0093. Follow Judy on LinkedIn.

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