Tag Archives: Sales tax

Remote Sellers Must Register in Texas before October 1, 2019

By Coleman Jackson, Attorney, Certified Public Accountant
September 16, 2019

 

Remote Sellers Must Register in Texas before October 1, 2019

Texas imposes a 6.25 percent state sales tax and use tax on all retail sales, leases and rentals of most goods and some services that are either sold in Texas or used in Texas.  Cities, Counties and Transit Authorities can charge up to 2% sales tax on taxable goods and services.  This local sales tax varies from city to city, county to county and transit authority to transit authority throughout the state of Texas.   The maximum sales and use tax in Texas is 8.25 percent.

 

online retail sales

Remote sellers are required to begin sales and use tax collection on October 1, 2019 on their Texas sales.    The remote seller must collect the correct tax by using the Sales Tax Rate Locator.  For example if a remote seller sales a chest of imported cigars to a person residing in Dallas, Texas; they must collect 8.25 percent tax on the gross sale at the time of the sale.  If this same sale is made in another city of Texas the total collected tax could be lower.  It would not be higher because 8.25% is the maximum sales and use tax in Texas.  However, other types of tax obligations could be implicated in this hypothetical, such as, tobacco taxes and fees. Remote sellers doing business in Texas must register with the Texas Comptroller of Public Accounts before October 1, 2019 to fulfill their Texas tax responsibilities.  First, remote sellers must apply for a Sales Tax Permit pursuant to the Texas Tax Code.

 

remote seller

Once the remote seller is properly registered with the Texas Comptroller of Public Account and receive their sales tax permit, they will be advised by the Texas Comptroller as to whether they must report their taxable sales and use taxes on a monthly basis, quarterly basis or annual basis.  Monthly sales and use tax reports are due on the 20th day of each month following the reporting month.  Quarterly filers must file their sales and use tax reports on April 20th, July 20th October 20th and January 20th.  Annual filers must report taxable Texas sales and use taxes on January 20th for the previous year.

Out of State sellers or remote sellers are required to begin collecting sales and use tax from their Texas customers on October 1, 2019.  If the remote seller fails to register and report Texas Sales and Use Tax they will be subjected to the penalties, administrative actions, and judicial options available under the Texas Tax Code in enforcing the tax laws.  The TTC provides for civil and criminal sanctions against businesses doing business in Texas and not in compliance with their tax responsibilities.

 

Businesses out of Texas

Businesses, who run afoul of the Texas Tax Code and desire to comply with Texas tax laws, whether they are in Texas or someplace else in the world, could possibly qualify to voluntarily disclose under the Texas Voluntary Disclosure Agreement Process (VDA).  A company representative must initiate the process on behalf of an anonymous client who meets the threshold requirements by contacting the Business Activity Research Team (BART) in writing.  If the business has already been contacted by the Texas Comptroller regarding non-compliance with Texas Tax laws, the business cannot voluntarily disclose.  It should be noted that the VDA process is available for all types of taxes administered by the Texas Comptroller of Public Accounts.  Some of the types of taxes that the Texas Comptroller is responsible for administering under the Texas Tax Code are as follows:

  • Sales and Use Tax
  • Hotel Tax
  • Franchise Tax
  • Tobacco Taxes and Fees
  • Battery Sales Fees
  • Cement Production
  • Boat and Boat Motor Taxes
  • Insurance Taxes
  • Manufactured Housing
  • Controlled Substances

 

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432

ONLINE RETAILERS LOOK OUT FOR TEXAS LIMITED SALES, USE & EXCISE TAX

By:  Coleman Jackson, Attorney, Certified Public Accountant
July 27, 2018

Online retailers have good reason to look out for the Texas Limited Sales, Use & Excise Tax.  Have you ever heard of South Dakota versus Wayfair, Inc.?    South Dakota vs. Wayfair, Inc., 585 U.S. ____ (2018) is a case decided by the U.S. Supreme Court on June 21, 2018.  In that case the Court decided in favor of South Dakota and against Wayfair, Inc.  Wayfair establishes a nationwide rule that basically allows all 50 States to lawfully tax the sales of goods and services performed by online retailers the same as they tax brick and mortar retailers.    Each State is permitted to change its laws governing transactions to realize this new source of revenue.  It is hard to imagine that Texas would not extend its sales, use and excise taxes to reach online retailers selling into Texas from other States or Countries.  The U.S. Supreme Court has given the States a green light to tax online retailers selling goods and services into their States from remote locations.

Online retailers have good reason to look out for Texas to extend the reach of its sales, use & excise tax rules to online retailers selling goods and services to consumers and businesses located in Texas.  In the past as it relates to brick and mortal retailers, Texas law presumed that all retail sales or uses of tangible personal property are taxable transactions.  The burden rested squarely on the shoulders of the brick and mortar retailers to show that sales were somehow exempt from sales, use and excise taxes.  Brick and mortar retailers are required by law to collect the tax and turn it over to the State of Texas pursuant to set rules and regulations.  These rules and burdens are most surely to extend to online retailers in the not so distant future when the Texas Legislature has had a chance to visit the issue after the South Dakota vs. Wayfair, Inc. decision.

Online retailers ought to watch, wait and plan their business activities in anticipation because the days when online retailers selling to consumers in Texas are numbered.    The Texas Comptroller of Public Accounts is the Texas governmental agency responsible for enforcing the sales tax rules in Texas.  Online Retailers need to perform due diligence and comply with Texas Limited Sales, Use & Excise Tax Act through voluntary disclosure and appropriate registrations.  Watch because the tax authorities cometh when you expect not.  Watch our blogs for future updates on this very important topic and other tax, litigation and immigration concerns of interest to our readers.

This law blog is written by the Taxation | Litigation | Immigration Law Firm of Coleman Jackson, P.C. for educational purposes; it does not create an attorney-client relationship between this law firm and its reader.  You should consult with legal counsel in your geographical area with respect to any legal issues impacting you, your family or business.

Coleman Jackson, P.C. | Taxation, Litigation, Immigration Law Firm | English (214) 599-0431 | Spanish (214) 599-0432