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EPISODE 1: Starting your first business in Texas | Legal Thoughts

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Coleman Jackson, P.C. | Transcript of Legal Thoughts
Published August 08, 2022

Starting your first business in Texas

Legal Thoughts is an audiocast presentation by Coleman Jackson, P.C., a law firm based in Dallas, Texas serving individuals, businesses, and agencies from around the world in taxation, litigation, and immigration legal matters.

This episode of Legal Thoughts is an audiocast where the Attorney, Coleman Jackson is being interviewed by Johana Powell, Tax Legal Assistant of Coleman Jackson, P.C. The topic of discussion is “Starting your first business in Texas”. You can listen to this podcast by clicking here:

If you enjoy this podcast, make sure to stay tuned for more episodes from the taxation, litigation, and immigration Law Firm of Coleman Jackson, P.C. Be sure to subscribe. Visit the taxation, litigation and immigration law firm of Coleman Jackson, P.C. online at www.cjacksonlaw.com.

TRANSCRIPT:
ATTORNEY: Coleman Jackson
LEGAL THOUGHTS
COLEMAN JACKSON, ATTORNEY & COUNSELOR AT LAW

ATTORNEY: Coleman Jackson

Welcome to Legal Thoughts

My name is Coleman Jackson and I am an attorney at Coleman Jackson, P.C., a taxation, litigation and immigration law firm based in Dallas, Texas.

In addition to myself, we have Alexis Brewer – Tax Legal Assistant, Leiliane Godeiro – Litigation Legal Assistant, Gladys Marcos – Immigration Legal Assistant, and Johana Powell – Tax Legal Assistant.

On today’s “Legal Thoughts” podcast, our Tax Legal Assistant, Alexis Brewer, will be interviewing me on the important topic of: “Starting your first business in Texas.”

This is a series of podcasts about how to start your first business in Texas, and this is the first episode.

INTERVIEWER: Johana Powell, Tax Legal Assistant

Hi everyone, my name is Johana Powell and I am a Tax Legal Assistant at the tax, litigation and immigration law firm of Coleman Jackson, Professional Corporation. Our law firm is located at 6060 North Central Expressway, Suite 620, right here in Dallas, Texas.

Good afternoon, Attorney; thank you for agreeing to sit with me as I interview you with respect to this interesting topic: “Starting your first business in Texas.”

Let’s jump right into this!

Question 1: Attorney would be business entrepreneurs have the resources to invest, want to invest and want to start their own businesses in Texas, but have lots and lots of questions about how to start a business in Texas.

What do you think about this Attorney?

Attorney Answer – Question 1:

Good afternoon, Johana.

Businesses in Texas can operate in several different entity structures, such as, Sole Proprietorship, General Partnership, Limited Partnership, Limited Liability Company, and Corporation.

The choice of entity selection involves a number of legal and operational concerns and should be made in consultation with a lawyer, accountant, and possibly an insurance agent and banker depending upon the type of activities that is intended to be conducted in the state of Texas.

INTERVIEWER: Johana Powell, Tax Legal Assistant

Question 2: Attorney what types of legal and operational concerns are you talking about?

Attorney Answer – Question 2:

Johana, that is an excellent continuation question because it allows me to expand on my answer and explain why counsel and professional advice is so important when starting a business in Texas.

  1. Organizers intending to start businesses in Texas must consider the following legal and operational factors;
  2. The federal, state and local business tax structure in the State of Texas (Texas does not have income taxes, but does have sales taxes, property taxes and franchise taxes);
  3. The ease of formation and the startup cost of starting a business in the State;
  4. The accounting and operational requirements for operating a business in the State (The Texas Tax Code requires all businesses operating in the state to keep contemporaneous books and records, to maintain them for 4 years and make them available for inspection and audit examination at the request of the Texas Comptroller of Public Accounts);
  5. The rules and regulations governing the term of operations and rules governing winding down operations within the State (The Texas Business Organization Code governs business structuring matters within the State);
  6. The personal liability concerns for operating a business in the State;
  7. The special requirements, such as, licensing requirements for operating certain types of businesses within the State; and
  8. The unique requirements that might apply to government contractors if the business intends to sale goods and services to the federal, state or local government or to government agencies.

INTERVIEWER: Johana Powell, Tax Legal Assistant

Attorney my next question is what happens if a business entrepreneur already has a business running but no paperwork filed with the State?

Attorney Answer – Question 3:

Johana that is a very complex question because it depends upon whether the business is structured outside of our state and is coming into Texas to do business or whether the business started in Texas but simply did not file any documents with the Secretary of State.  Let me first point out that out of state businesses doing business in Texas must register with the Secretary of State’s Office.  Let me also point out that the default form of business entity is a sole proprietorship when there is only one owner; and, when there are two or more owners; the default entity is a general partnership.  I will not address the various federal tax elections that might be available for businesses.  Let’s leave that discussion to another episode of “Starting Your First Business in Texas.”  Those starting or thinking about starting businesses in Texas should consult with legal counsel to avoid making legal mistakes when starting their first business enterprise in Texas.  Business structuring in Texas is a complicated legal issue which could expose those operating businesses within Texas without following the rules to serious civil and even criminal consequences.

INTERVIEWER: Johana Powell, Tax Legal Assistant

Oh I see; it sounds like you are saying that a lot of complex business and tax laws are at play when starting a business in Texas.  My next question is this one:

Question 4: What is the difference and the advantages between all the business structures that you mentioned previously?

Attorney Answer – Question 4:

The main differences in the business structures that I mentioned earlier in our discussions in this ‘episode one’ on the topic “Starting Your First Business In Texas” are the liability and the tax concerns. Regarding the liability concerns; in a sole proprietorship and a partnership which are structures that are not incorporated, the owners of these two entity types do not enjoy liability protection for the acts of the business entity.  What I mean by that is that the owners’ personal assets are exposed to the liabilities incurred in the business.  As for the liability concerns for owners of corporations and limited liability companies, the owners of those type business structures are limited.  What I mean by that is that the owners are not personally liable for the debts of the business entity, unless they personally guarantee those business debts.  However, a general partner in a Limited Liability Partnership is personally liable for the debts of the limited partnership whether they guarantee the business debts or not.  In the Limited Partnership only limited partners enjoy liability protection.
Now with respect to the tax differences between these various business entities we are discussing here today, generally it is more favorable to structure a business as a Limited Liability Company or corporation.

Let me point out that non-profit businesses must register as such in the State and with the U.S. Treasury and meet state and federal tax requirements to be recognized as non-profit entities in this State and for federal tax purposes; otherwise, a business cannot operate as a non-profit entity in the State of Texas.

Johana this is an extremely complex question as to what constitutes advantages or disadvantages between the choice of entity selection.  Determining what type of business structure best fits any particular entrepreneur’s goals and objectives requires a conversation with a lawyer.  Many businesses law, contract law and tax law questions need to be discussed when determining what entity fits best to achieve the goals of the new business owner.

INTERVIEWER: Johana Powell, Tax Legal Assistant

Question 5: When a business entrepreneur is ready to do the paperwork what is the first thing they have to do?

Attorney Answer – Question 5:

It depends upon what type of business they decide to form.  Remember a sole proprietorship and general partnership can for formed in Texas without filing any paperwork with the Secretary of State’s Office.  For now Johana, let’s just leave any discussion concerning operating a business in Texas under an assumed name for another episode in this series.

The organizer of any business entity in Texas must first check on name availability with the Secretary of State’s office (this is a must first step with all the business entity types that we have discussed today because you cannot infringe on the trade marks or rights of other businesses in Texas by using a name that creates confusion in the market place.)  For those types of business entities who must file organizational papers with the Secretary of State, for example, limited liability company, and corporation to name a couple; the organizer must file organizational documents compliant with the Texas Business Organization Code.  The business should request an Employer Identification Number from the U.S. Treasury if they intend to hire employees and register with the Texas Workforce Commission, and obtain a Texas Sales Tax Permit if the Texas Tax Code requires it. The Comptroller is notified whenever a business files organizational documents with the Secretary of State’s Office.  Franchise tax reports must be filed for all businesses who are required to file organizational documents.  Johana again we don’t want to make this podcast episode too long; we like to keep our podcast to about 20 minutes each; but we can discuss all of these individual topics in separate bite-size episodes so that our audience and understand these things.

Let me clarify that there are different requirements for each structure of business and our listener’s should subscribe to our Legal Thoughts Podcast if they are interested in this topic or anything dealing with international, federal and state taxation, contracts, litigation or immigration legal matters.  Legal  Thoughts Podcast is published bi-weekly on Apple Podcast, Google Podcast, Spotify or where ever you listen to your podcasts.

INTERVIEWER: Johana Powell, Tax Legal Assistant. Wrap-Up

Attorney, thank you for siting with me today to explain how to prepare in the journey of owning your first business.

TAKEAWAY: It seems like the overall idea here is that selecting the best entity structure to conduct a business in Texas is complex and has many tax, operational and legal issues that entrepreneurs starting a business in Texas should consider and discuss with their legal counsel prior to investing a dollar.  It is kind of like plan your trip before you start driving; otherwise, you might be delayed getting to your destination and possibly not arriving there at all.

I am glad this topic “Starting a Business in Texas” is going to be a series of podcast where we will discuss other aspects to starting a Texas businesses.  That is super Attorney!

  • Our listeners who want to hear more podcast like this one should subscribe to our Legal Thoughts Podcast on Apple Podcast, Google Podcast, Spotify or where ever you listen to your podcast. Everybody take care!  And come back in about two weeks, for more taxation, contracts, litigation and immigration Legal Thoughts from Coleman Jackson, P.C., located right here in Dallas, Texas at 6060 North Central Expressway, Suite 620, Dallas, Texas 75206.
  • English callers: 214-599-0431 | Spanish callers:  214-599-0432 |Portuguese callers: 214-272-3100

Attorney Closing Remarks

This is the end of today’s Legal Thoughts!

Thank you all for giving us the opportunity to inform you about: “Starting your first business in Texas.”  Remember this is the first episode of Starting Your First Business in Texas.

If you want to see or hear more taxation, contract litigation and immigration LEGAL THOUGHTS from Coleman Jackson, P.C.  Subscribe to our Legal Thoughts Podcast on Apple Podcast, Google Podcast, Spotify or wherever you listen to your podcast.

Stay tuned!  We are here in Dallas, Texas and want to inform, educate and encourage our communities on topics dealing with taxation, litigation and immigration.  Until next time, take care.

Podcast – Liability of Remote Sellers to Collect, Remit and Report Texas Sales Taxes After Wayfair? | LEGAL THOUGHTS

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Published June 29, 2020

Podcast - Liability of Remote Sellers to Collect, Remit and Report Texas Sales Taxes After Wayfair? | LEGAL THOUGHTS

Legal Thoughts is a podcast presentation by Coleman Jackson, P.C., a law firm based in Dallas, Texas serving individuals, businesses, and agencies from around the world in taxation, litigation, and immigration legal matters.

This particular episode of Legal Thoughts is a podcast where the Attorney, Coleman Jackson is being interviewed by Mayra Torres, the Public Relations Associate of Coleman Jackson, P.C.   The topic of discussion is “Liability of Remote Sellers to Collect, Remit and Report Texas Sales Taxes After Wayfair?” You can listen to this podcast by clicking here:

You can also listen to this episode and subscribe to Coleman Jackson, P.C.’s Legal Thoughts podcast on Apple Podcast, Google Podcast, Spotify, Cashbox or wherever you may listen to your podcast.

TRANSCRIPT:

ATTORNEY:  Coleman Jackson
Legal Thoughts
COLEMAN JACKSON, ATTORNEY & COUNSELOR AT LAW

ATTORNEY:  Coleman Jackson

Welcome to Tax Thoughts

  • My name is Coleman Jackson and I am an attorney at Coleman Jackson, P.C., a taxation, litigation and immigration law firm based in Dallas, Texas.
  • Our topic for today is: “Liability of Remote Sellers to Collect, Remit and Report Texas Sales Taxes After Wayfair?”
  • Other members of Coleman Jackson, P.C. are Yulissa Molina, Tax Legal Assistant, Reyna Munoz, Immigration Legal Assistant and Mayra Torres, Public Relations Associate.
  • On this “Legal Thoughts” podcast our public relations associate, Mayra Torres will be asking the questions and our Immigration Legal Assistant, Reyna Munoz will be reading answers that I previously wrote in response to the questions on this important tax topic: “Liability of Remote Sellers to Collect, Remit and Report Texas Sales Taxes After Wayfair?”

Interviewer:  Mayra Torres, Public Relations Associate

Question 1:

Hello, Good morning Coleman. My name is Mayra Torres, for everyone who hasn’t met me yet, I am the Public Relations Associate at Coleman Jackson, P.C. Umm… todays first question is regarding Wayfair. What Businesses Located Outside of Texas are Required to Collect and Remit Sales Taxes to the State of Texas after Wayfair. Who is “Wayfair”?

Attorney Answers Question 1:

Wayfair refers to a united states supreme court decision decided by the court on June 21, 2018 in a case that is called south Dakota vs Wayfair, Inc. The case involved a sales tax dispute between south Dakota and Wayfair, Inc.

Interviewer:  Mayra Torres, Public Relations Associate

Question 2:

Well what was the dispute about?

Attorney Answers Question 2:

Wayfair, Inc. Was not located in south Dakota and had no physical presence within The state.

Wayfair, Inc. Sold goods from its remote location to customers who lived in South Dakota. The question in this case was: “when can an out-of-state seller be required to Collect and remit sales tax to a state where they have no physical presence.”

Interviewer:  Mayra Torres, Public Relations Associate

Question 3:

So, why was that even in doubt that South Dakota could make Wayfair an out-of-state Seller collect taxes on purchases of goods and services by south Dakota Residents?

Attorney Answers Question 3:

  • That is an excellent question. I am going to explain the concerns with respect to States imposing legal duties on out of state residents as it relates to sales Taxation: the issue here is the free flow of interstate commerce!
    1. The constitution of the united states gives congress the power to regulate Commerce in article 1, section 8, clause 3.
    2. The concern of the framers of the constitution was division within the United states where states are fighting among themselves imposing economic Burdens on the free flow of commerce.
    3. The commerce clause limits the states regulation of commerce
  • The U.S. Supreme Court will allow a State tax on Commerce so long as it meets all of these conditions:
    1. The tax applies to an activity with a substantial nexus with the taxing State;
    2. The tax is fairly apportioned;
    3. The tax does not discriminate against interstate commerce; and
    4. The tax is fairly related to the services the State provides.
  • Condition Number 1 is the only one in question in the Wayfair Case: the tax applies to an activity with a substantial nexus with the taxing State:
  • In those states that have a sales tax statute, before Wayfair, sellers had to have a physical presence within a state in order for that state to impose a liability on a merchant to collect sales taxes on purchases of goods and services. That is known as the Quill physical presence test from the U.S. Supreme Court decision in 1992 called Quill Corporation vs. North Dakota.
  • After Wayfair, which involves South Dakota, out-of-state sellers can be held responsible for collection and payment of sales taxes to a state by selling a product or service to customers within the state. The Court said that physical presence in a State can be established merely by selling goods and services to customers in the State. No employees or offices or other physical presence is required in order to establish substantial nexus in the taxing state. So now mere shipping goods and services into a state may bring remote sellers within the scope of out-of-state sales tax statutes. The Supreme Court in Wayfair said that imposing this sales tax collection, remittance and reporting requirement in some circumstances did not violate the Commerce Clause of the United States Constitution, Article 1, Clause 3.

Interviewer:  Mayra Torres, Public Relations Associate

Question 4:

Okay…. What Texas… Who is a remote seller selling goods and services to people who live in Texas? Are they liable to collect, remit, report, and keep records of Texas taxable sales?

Attorney Answers Question 4:

  1. A remote seller is defined in Texas Tax Code Rule 3.286(a)(4)(l) and (J) as any seller whose only activities in Texas are the remote solicitation of sales, which includes activities such as solicitation by catalogs, flyers, radio, television, telephone or internet.
  2. Sellers outside of Texas who sell goods and services to Texas residents are required to collect, remit and report Texas sales and use tax effective October 1, 2019 if they made total sales of $500,000 into Texas for a prior 12-month period. If the appropriate sales tax is not properly collected the Use tax must be submitted to the Texas Comptroller of Public Accounts.
  3. And yes, remote sellers must keep proper books and records of all Texas taxable sales transactions and have them available for inspection and examination in compliance with 34 Texas Tax Code Section 3.281. The TAC specifically identifies the types of records that all sellers of taxable goods and services must maintain for 4 years.
  4. Texas Comptroller Auditors are permitted to estimate taxable sales in the event a seller fails to maintain and present the required records for inspection at the request of the Texas Comptroller.

Interviewer:  Mayra Torres, Public Relations Associate

Question 5:

What are the Texas Sales and Use Tax Rate?

Attorney Answers Question 5:

  1. The current sales tax rate is 6.25 percent State rate and each local taxing authority can charge up to 2.0 percent. The maximum allowable sales tax rate in Texas is 8.25 percent.
  2. As for remote sellers, Texas permits them to charge a flat rate of 1.75 percent instead of the local rate which changes from county to county, city to city and school district to school district throughout the State. Remote sellers make this election by filing form 01-799, Remote Seller’s Intent to Elect or Revoke Use of Single Local Use Tax Rate with the Comptroller’s Office. If the remote seller does not make this election, they must compute, collect and remit the local tax based on the local tax applicable to the location to which they shipped the goods or performed the service.

Interviewer:  Mayra Torres, Public Relations Associate

Question 6:

So, who administers the Limited Sales, Use and Excise Tax laws in Texas?

Attorney Answers Question 6:

The Texas Comptroller of Public Accounts.

Interviewer:  Mayra Torres, Public Relations Associate

Question 7:

Are all remote sellers required to do this now?

Attorney Answers Question 7:

  • No; these requirements do not apply to all remote sellers.
  • A remote seller whose total Texas revenue from sales into Texas in the preceding 12 calendar months are less than $500,000 is not required to obtain a sales tax permit and they are not required to collect and remit any sales tax to Texas. The sales are computed on gross revenue not net revenue.
  • As of April 1, 2020, remote sellers must combine sales made through all mediums with delivery into Texas to determine whether they must collect, remit and report Texas Sales.

Interviewer:  Mayra Torres, Public Relations Associate

Question 8:

Wow, it seems like a somewhat complex issue.

Attorney Answers Question 8:

  • Yes, we have just a brief outline here of the issues and sales tax laws applicable to remote sellers since the Wayfair decision of the U.S. Supreme Court.
  • Listeners should stay tune and follow our podcast and read our blogs as we might revisit this topic in the future.

Attorney’s Concluding Remarks:

This is end of “legal thoughts” for now!

  • Thanks for giving us the opportunity to inform you about how the Texas Tax Code requires remote sellers to collect, remit and report sales taxes on sales made to Texas residents to the Texas Comptroller. If you want to see or hear more taxation, litigation and immigration LEGAL THOUGHTS from Coleman Jackson, P.C. Stay tune! We are here in Dallas, Texas and want to inform, educate, and encourage our communities on topics dealing with taxation, litigation and immigration. Until next time, take care.

Some Things About Contracts While Sheltering from the Unknown Virus like Covid-19

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By:  Coleman Jackson, Attorney & Counselor
April 29, 2020

Some Things About Contracts While Sheltering from the Unknown Virus like Covid-19

What is a Contract?  A contract is an enforceable promise under the law.  That means that if you agree to do something for consideration and the other party either performs or changes their position in any material way, the law will compel you to do what you promised to do or demand that you pay the performing party compensation of some kind.  Usually the compensation is going to tailor the party’s expectations at the time they agreed to do such-and-such.  In a nutshell, that is what the term contract means.

 

What about when Covid-19 says go home, stay there and I will let you know when you can come out again?

What about when Covid-19 says go home, stay there and I will let you know when you can come out again?  Contracts are based on expectations; or put another way, a contract is a bargained for outcome.  Sometimes parties insert a clause into their contracts that is called a ‘force majeure’ cause.  Don’t get lost in the foreign language… force majeure is French.  First thing you really need to know is that force majeure clauses in contracts are enforceable in Texas.  Texas will make the parties to contracts perform in accordance to what the force majeure clause says.  That is simply in keeping with the fundamental contract law in Texas; which is, consenting parties can pretty much agree to do or not do any lawful thing in the State of Texas.  So be careful about what you agree to do or not do in Texas.  What about enforcement of force majeure clauses in Texas:  first they are enforceable contract provisions; your contract must contain language that a court can construe as a force majeure event excusing your performance of your obligations under the contract.  Parties to contracts in Texas can define or describe situations, occurrences, or events that constitute a force majeure event and typically they are defined as some event or series of events that make it impossible to perform under the contract or impractical to perform under the contract.  But a mere difficulty in performance would not likely be reason for a party to fail to perform under the contract.  Parties to contracts in Texas must make all reasonable efforts to perform responsibly under their contracts.  What constitutes reasonable efforts depends upon the nature of the contract because the scope of a force majeure clause in a contract depends upon the benefit of the bargain the parties negotiated within the four corners of their contract.  Courts in Texas do not like to take the liberty of contract away from responsible contracting parties afforded to them by the Texas and United States Constitution.  So, it follows that if the parties did not bargain for force majeure, it is highly unlikely that Texas Courts will recognize an event or series of events out of its own clothe that would excuse or release parties of contracts without the possibility of paying damages.  In a nutshell, force majeure is a lawful bargained for excuse to not perform under the contract.

 

breach of contract

An unexcused failure to perform pursuant to the agreed upon bargain is called a breach of contract when a party’s failure to deliver what’s promised is material to the expectations of the parties from the start.  In a nutshell, breach of contract damages could be a reasonable option or perhaps even the only option for a party if it becomes impossible or impractical to perform obligations of contracts entered into before the Covid-19 Pandemic sent the global economy to the dog pound.

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

 

Federal Tax Developments Related to Covid-19

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By: Coleman Jackson, Attorney & Certified Public Accountant
March 30, 2020

As you can imagine, things are changing and developing fast and furious during this Covid-19 Pandemic. Developments in taxes are no exception! Our law firm desires to keep our clients and others informed with regards to certain tax developments that might impact their businesses. In keeping with that desire, note some of the most significant recent federal tax developments:

  1. Tax Day now July 15, 2020: The U.S. Treasury and Internal Revenue Service automatically extended from April 15, 2020 to July 15, 2020 the federal income tax filing due date. The IRS gives affected taxpayers until the last day of the Extension Period to file tax returns or make tax payments, including estimated tax payments, that have either an original or extended due date falling within the Period. The IRS will waive any interest and late filing and payment penalties related to these late tax returns.
  2. Small and midsize employers can begin taking advantage of two refundable payroll tax credits designed to immediately and fully reimburse them, dollar of dollar, for the cost of providing Coronavirus-related leave to their employees.
  3. The CARES Act of 2020 enacted in response to Covid-19 provides employers with an employee retention credit in the amount of 50% of their wages impacted by closure due to Covid-19. Further the Act which became law on March 27, 2020 extends the due date for paying employer payroll taxes. Taxpayers must carefully review the law and properly compute the amount of payroll taxes that can be deferred; because it is not 100% deferral of all payroll taxes. Note: The Small Business Administration has announced that they are taking applications for disaster relief from small businesses with respect to loans up to two million dollars for monies borrowed to make payroll and pay rent during this Covid-19 Crisis. The application process and details regarding what businesses qualify and the procedures for applying can be found on the Small Business Administration website. The SBA has announced that they have relaxed some of their processing and documentation requirements to expedite the processing of these emergency loans to small businesses impacted by Covid-19. It appears that these SBA emergency loans could be converted to grants under certain condition(s). The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected Covid-19 taxpayers who need them to apply for benefits or to file amended tax returns claiming casualty losses. Watch our blogs as more changes may be forth coming in the area of employer relief due to Covid-19 closures. But for now, this appears to be the game plan regarding employers.
  4. “Existing Installment Agreements –For taxpayers under an existing Installment Agreement, payments due between April 1 and July 15, 2020 are suspended. Taxpayers who are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Deposit Installment Agreement, may suspend payments during this period if they prefer. Furthermore, the IRS will not default any Installment Agreements during this period. By law, interest will continue to accrue on any unpaid balances.” Source: IR-2020-59, March 25, 2020.
  5. The CARES Act eliminates the 10% early withdrawal penalty for Covid-19 related distributions from retirement accounts and make other rule changes regarding retirement account contributions.
  6. The Act relaxes certain corporate and individual charitable contributions rules and provides for an above the line deduction up to $300 for charitable contributions.
  7. Texas has been declared a Presidential Disaster Area related to Covid-19, so more specific rules and provisions could be developed by the IRS related to individuals and businesses with business operations in Texas or impacted by this particular Presidential Disaster Area Declaration.

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

Remote Sellers Must Register in Texas before October 1, 2019

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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

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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

VENDORS DOING BUSINESS WITH TEXAS AND HIRING UNDOCUMENTED WORKERS – BEWARE YOU MIGHT HAVE TO PAYBACK ALL PUBLIC SUBSIDIES PLUS INTEREST

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By: Coleman Jackson, Attorney
August 27, 2015

VENDORS DOING BUSINESS WITH TEXAS AND HIRING UNDOCUMENTED WORKERS MIGHT HAVE TO PAYBACK ALL PUBLIC SUBSIDIES PLUS INTEREST

Texas Government Code §2264.051 stipulates that vendors doing business with any public agency, state or local taxing jurisdiction, or economic development corporation in Texas must certify in writing that the business, or a branch, division, or department of the business, does not and will not knowingly employ an undocumented worker.

The certification statement must also stipulate that if, after receiving a public subsidy, the business or a branch, division, or department of the business, is convicted of a violation under the Immigration and Nationality Laws of the United States, 8 U.S.C.A.  §1324a(f), the business will repay the amount of the public subsidy with interest, at the rate and according to the other terms provided by an agreement under Texas Government Code § 2264.053, not later than the 120th day after the date the public agency, state or local taxing jurisdiction, or economic development corporation notifies the business of the violation.  INA, 8 U.S.C.A. §1324a essentially deals with persons or entities that violate the U.S. immigration laws by hiring, or recruiting or referring for a fee for employment in the United States an undocumented person.  A person or entity charged with violations of 8 U.S. C.A. §1324a may establish that it has compiled in good faith with the requirements with respect to the hiring, recruiting, or referral for employment of an alien (illegal alien is the term used in the INA to refer to an undocumented person or a person who came to the U.S.A. without inspection or overstayed their visa) in the United States.  Anyway, If a person or entity charged with a violation under 8 U.S.C.A. §1324a, establishes an affirmative defense, a conviction could possibly be avoided, and the person or entity doing business with a Texas public agency, state or local taxing jurisdiction, or economic development corporation could probably avoid the penalty of repaying Texas all public subsidies received with interest under Tex. Gov’t Code §§2264.051-2264.101.

A public agency, local taxing jurisdiction, or economic development corporation, or the attorney general on behalf of the state or the state agency, may bring a civil action to recover any amount owed to the public agency, state or local taxing jurisdiction, or economic development corporation against any person or entity convicted of 8 U.S.C.A.  §1324a violations pursuant to Texas Government Code Section 2264.101.

Specifics regarding your company, workers, or government contracts should be discussed with legal counsel of your choice.  This overview is supplied for educational purposes, is only an overview, and do not create an attorney-client relationship with the Immigration & Tax Law Firm of:

COLEMAN JACKSON, PC
6060 North Central Expressway
Suite 443
Dallas, Texas 75206
Phone:  (214) 599-0431 English
Phone:  (214) 599-0432 Spanish
Website:  www.cjacksonlaw.com