The Texas Comptroller intends to do the same, but promised to proceed “carefully, deliberately, and with ample input from the public, the Legislature, and the business community.” The fact that this enormous state has 1,500+ local sales tax jurisdictions is one good reason to do so: As the Texas Comptroller has noted, “The Court also reiterated that ‘States may not impose undue burdens on interstate commerce.’” All states, including Texas, now have the authority to require out-of-state sellers to collect and remit sales tax.Ĭlose to 30 states have imposed new sales tax collection obligations on remote sellers since Wayfair, basing a sales tax collection obligation on economic activity in the state (economic nexus) rather than physical presence. The court ruled that a tax collection obligation (nexus) can be established through a business’s “economic and virtual contacts” with a state. However, on June 21, 2018, the Supreme Court of the United States overruled the physical presence requirement in its decision in South Dakota v. This would greatly facilitate sales and use tax compliance for out-of-state sellers doing business in Texas.Īccording to Texas law, nonresident persons engaged in business in the state can be required to collect and remit sales and use tax only “ to the extent authorized by federal law.” Until quite recently, federal law prohibited states from taxing sales by businesses with no physical presence in a state. Recently, the Texas Comptroller of Public Affairs proposed replacing the 1,500+ local sales and use tax rates with a single, flat rate for remote sellers. There are more than 1,500 local sales and use tax jurisdictions in Texas, and each has its own sales and use tax rate. No additional information regarding local taxing jurisdictions was provided. Update : The Texas Comptroller has announced it will enforce economic nexus starting October 1, 2019. For the period Octothrough December 31, 2019, the single combined rate will be 8 percent (6.25 percent state rate plus the single local rate of 1.75 percent) Update : Governor Abbott has signed HB 2153, which allows remote sellers to elect to collect the "single local use tax rate" determined by the Texas Comptroller rather than more than 1,500 different local use tax rates.
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