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Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts

taxes

Remote Sellers and Marketplace Frequently Asked Questions

Do the new laws for marketplace providers or for the single local use tax rate impose a new tax on internet sales?

No, the new laws passed during the 86th Legislative Session do not impose new taxes. These new laws only address tax collection responsibilities.

Can I be a remote seller, marketplace seller, and marketplace provider at the same time?

Yes. Depending on your activities, you may be a remote seller, a marketplace seller, a marketplace provider, or any combination of the three. There are different tax responsibilities for each type of seller.

Who is required to keep and maintain records?

All sellers must keep required records for at least four years.

Are there software services available to help sellers collect and remit sales tax?

Our office offers free electronic reporting using Webfile or Electronic Data Interchange (EDI), but we do not have software that integrates with a seller’s system to help with collecting and remitting. Help with calculating, collecting, preparing returns and remitting the sales tax is available from various private service providers and tax practitioners.

Contact us for questions about the taxability of goods and services, rates and related issues.

Remote Sellers

What is the safe harbor provision for remote sellers?

If a remote seller has total Texas revenue of less than $500,000 in the 12 months, they are not required to obtain a permit and collect use tax. The dollar amount is based on gross revenue from sales of tangible personal property and services into Texas. The amount includes separately stated handling, transportation, installation, and other similar fees you collect. It also includes sales for resale and sales to exempt entities.

As a remote seller, do I have to collect local tax?

Yes. Unless you qualify under the safe harbor provision, you are required to collect local use tax based on the local tax applicable to the location to which you are shipping. You can choose to collect the single local use tax rate instead of having to determine the rate based on destination. You must notify our office if you choose to collect the single local use tax rate by completing and sending Form 01-799, Remote Seller's Intent to Elect or Revoke Use of Single Local Use Tax Rate (PDF) by email to sales.applications@cpa.texas.gov or mail. The mailing address is:

Comptroller of Public Accounts
P.O. Box 149354
Austin, TX 78714-9354
As a remote seller, was I responsible for collecting Texas tax prior to Oct. 1, 2019?

No. You were responsible for collecting tax only if you were engaged in business in Texas prior to Oct. 1, 2019, such as by maintaining an office or property in the state or having representatives in the state who take orders or make sales or deliveries.

As a remote seller, when can I terminate my Texas use tax responsibilities?

In order to terminate Texas use tax responsibilities as a remote seller

  • you must have 12 consecutive months in which total revenue from sales of all tangible personal property and services in Texas for the preceding 12 calendar months was less than $500,000; or
  • you must not be engaged in business in Texas.

To terminate your use tax responsibilities, please complete Form 01-798, Remote Seller's Intent to Terminate Use Tax Responsibilities (PDF) and submit it to the Comptroller’s office. A remote seller cannot have a physical presence or representative in the state. A remote seller that terminates its use tax responsibilities must resume collection on the first day of the second month following any 12 months in which total Texas revenue exceeds $500,000.

For information about ending your franchise tax responsibility, please see our Reinstating and Terminating a Business webpage.

I’m a remote seller, and I sell through a marketplace provider. How will I know whether the marketplace provider will collect sales and use tax or whether I need to collect sales and use tax?

A marketplace provider is required to certify to you that it will collect sales and use tax. You should receive a certification from the marketplace provider. If the marketplace provider does not issue any type of certification, then you should collect sales and use tax until you receive a certification.

I’m a remote seller with inventory temporarily stored in a marketplace provider’s Texas warehouse. If this is my only physical presence in Texas, do I need to apply for a tax permit?

A remote seller who is below the $500,000 safe harbor threshold and has tangible personal property temporarily stored in Texas at a marketplace provider’s facility does not have to obtain a permit or have a collection obligation if the marketplace has certified it will assume the duties of a seller.

As a remote seller, if you are above the $500,000 safe harbor threshold and have tangible personal property temporarily stored in Texas at a marketplace provider’s facility then you must obtain a tax permit and collect tax on your sales.

You have franchise tax responsibility as a remote seller if your taxable entity has temporarily stored inventory in a marketplace provider’s facility in Texas.

I’m a remote seller and I sell my products on my website and on a marketplace. Do I include the revenue from sales on the marketplace in calculating my safe harbor amount?

Yes. As of April 1, 2020, you must include all sales for safe harbor calculation, including marketplace sales, even if the marketplace provider is collecting and remitting the sales tax. Prior to April 1, 2020, marketplace sales were not included when determining a remote seller’s total Texas revenue.

For example, during a 12-month period a remote seller makes $300,000 in total sales into Texas through its website and $300,000 in sales through multiple marketplace providers that certify they are collecting and remitting the tax. Based on these sales, the remote seller is not covered by the safe harbor provision and is required to collect and remit tax for Texas sales made through their website. The marketplace providers are responsible for collecting and remitting tax on sales made through the marketplace.

Prior to April 1, 2020, the remote seller was covered by the safe harbor provision with $300,000 of sales through its website and was not required to collect and remit tax for Texas. After April 1, 2020, the remote seller has a combined $600,000 of Texas revenue, is over the safe harbor threshold, and is required to apply for a permit from the Comptroller’s office and collect and remit tax for Texas.

I’m a remote seller who is above the safe harbor threshold. I sell products on my website and through a marketplace provider. What do I report on my sales tax return?

Marketplace sales are excluded from line one (Total Texas Sales) on the sales and use tax return if the marketplace has certified they will collect and remit tax on your behalf. You must collect and remit Texas tax on sales made outside the marketplace.

For example, in a reporting period you have $30,000 of sales through a marketplace provider, and $20,000 of sales into Texas through your website. Based on these sales, you will report $20,000 in lines one (Total Texas Sales) and two (Taxable Sales) of your return.

I’m a remote seller, and I only sell my products through a marketplace provider. Do I need to obtain a permit and collect tax?

No. You do not need a permit if you have received and accepted in good faith a certification that the marketplace provider will collect sales and use tax. However, you must retain required records of all marketplace sales for at least four years.

Single Local Use Tax Rate

What is the single local use tax rate?

The single local use tax rate is an alternative local tax rate that can be used by remote sellers only. The single local use tax rate is not available to marketplace providers. The current single local use tax rate is 1.75 percent. We will compute the single local use tax rate prior to the beginning of each calendar year and publish it in the Texas Register.

A remote seller may elect to use the single local use tax rate in place of the actual local use tax rate for a specific location. If so, the remote seller must notify our office in writing of its election using Form 01-799, Remote Seller’s Intent to Elect or Revoke Use of Single Local Use Tax Rate (PDF) and submitting by email to sales.applications@cpa.texas.gov or by mail to the Account Maintenance Division:

Comptroller of Public Accounts
P.O. Box 149354
Austin, TX 78714-9354
If I’m a remote seller who elects to use the single local use tax rate, may I opt out of the election at any time?

If you wish to stop collecting the single local use tax rate, you must notify the Comptroller’s office using Form 01-799, Remote Seller's Intent to Elect or Revoke Use of Single Local Use Tax Rate (PDF) by email or mail. If you notify the Comptroller’s office of your revocation before Oct. 1, you must continue to use the single local use tax rate until the end of the calendar year. If you notify the Comptroller’s office on or after Oct. 1, you must continue to collect the single local use tax rate until the end of the following year.

For example, if the Comptroller receives a revocation on April 1, 2020, the revocation will be effective January 1, 2021. If the Comptroller receives a revocation on November 1, 2020, the revocation will be effective January 1, 2022.

You can submit Form 01-799, Remote Seller's Intent to Elect or Revoke Use of Single Local Use Tax Rate (PDF) to our office

I purchased an item from a remote seller who used the single local use tax rate. If the single local use tax rate is higher than the local tax rate at my location, can I apply for a refund of tax?

Yes. You may apply for a refund on an annual basis of the difference between the single local use tax rate paid and the local tax rate you would have paid at your location. Please use Form 00-957-Texas Claim for Refund (PDF) to submit your claim.

Texas Sellers

If I live in Texas and sell only through a marketplace that has certified it will collect and remit Texas sales tax on my behalf, do I need a sales tax permit?

Yes. As a Texas seller, you have physical presence in Texas and must have an active sales and use tax permit.

You can purchase inventory tax free to resell through a marketplace by giving your vendor a resale certificate (PDF).

Will I be charged sales tax on items I purchase for resale through a marketplace?

You can issue a resale certificate (PDF) to any vendor when purchasing for resale. If the vendor does not honor the certificate and you are charged sales tax on items you purchase for resale, you can take a credit on your next sales tax return or request a refund from our office.

What do I report on my sales tax return if I have marketplace sales?

Marketplace sales are excluded from line one (Total Texas Sales) on your sales tax return if the marketplace has certified they will collect and remit tax on your behalf. This means that if your only sales in a reporting period were those which a marketplace certified they collected the sales tax on, then you will report “0” in lines one (Total Texas Sales) and two (Taxable Sales).

If you have sales outside the marketplace, you should collect, report and remit tax as usual.

What are my requirements in other states?

For more information about Texas businesses’ collection responsibilities for other states, see these websites:

Disclaimer: Each website listed is responsible for its own information. The Texas Comptroller of Public Accounts is not responsible for maintaining the information provided on these websites.

Marketplace Sellers

How can a marketplace provider certify that it will collect and remit tax for third-party sellers? Is a special form required?

No special form or language is required by marketplace providers to notify marketplace sellers that the provider is collecting and remitting tax for Texas. The notification can be part of the terms of use or any other agreement between the marketplace provider and seller and does not need to be a separate document that the provider issues to all sellers.

If selling on a marketplace, who is subject to an audit – a marketplace provider, or marketplace seller … or both?

The marketplace provider is subject to audit for all transactions on the marketplace. The marketplace seller may also be audited and subject to liability for any deficiencies resulting from incorrect or insufficient information provided by the marketplace seller.

I sell through a marketplace provider. What do I report on my sales tax return?

Marketplace sales are excluded from line one (Total Texas Sales) on the sales and use tax return if the marketplace has certified they will collect and remit tax on your behalf. You must collect and remit Texas tax on sales made outside the marketplace.

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