Since the Wayfair case became the law of the land, remote sellers have been as jumpy as a sinner in church about whether they must register to collect a jurisdiction’s sales or use tax. While each jurisdiction has different requirements, there are important updates. One update is the requirement that remote sellers who meet a Texas sales threshold must register to collect Texas sales and use tax.
Effective January 1, 2019, remote sellers with $500,000 or more of revenue from Texas customers in the preceding 12 months are required to register to collect Texas sales tax. Those requirements have been postponed until October 1, 2019. You must review your revenue from Texas customers to determine if registration to collect Texas sales and use tax is required. The initial 12 calendar months for calculating a remote seller’s Texas revenue is July 1, 2018 through June 30, 2019. If you meet the $500,000 threshold, you must register to collect Texas sales tax.
You can register online for a Texas Sales and Use Tax permit at the Texas Comptroller of Public Accounts website. Allow 2-3 weeks to receive your permit. Once you are registered, you must be proactive in determining the taxability of the items that you sell, the tax rate you should charge your customer, the taxability of freight and shipping charges, etc. While it may seem overwhelming, remember there are various resources available to help you.
Be aware and be informed about your responsibilities. Sales tax is usually not a high priority topic on business owners’ check lists. But it is important. If you get it wrong, it can put you out of business. The onus is on you to get to understand your business and the applicable sales and use tax laws before an auditor comes knocking at your door.
NOTE: The law regarding remote sellers is going to be enforced starting October 1, 2019. If your company had nexus in Texas, prior to the imposition of registration requirements on remote sellers, nothing has changed. If you have a physical presence in the state (and you sell taxable items or services), you were/are required to register to collect Texas sales and use tax.