taxes

Texas Tax Responsibilities and Resources for Sellers After Wayfair

In response to the U.S. Supreme Court’s decision on South Dakota v. Wayfair, Texas-based businesses selling items or services into other states may be required to collect taxes for those states. Additionally, remote sellers who were previously not required to collect and remit sales and use tax may have to begin collecting Texas tax on their sales into Texas in late 2019. Generally, a “remote seller” is a seller that does not have a physical presence in a state, but who sells products or services for delivery into that state.

The Comptroller’s office is currently updating sales and franchise tax rules to provide details about remote seller tax responsibilities. We are not applying the Wayfair decision to additional taxes at this time, and any new tax responsibilities will be prospective.

Tax Requirements

Texas-Based Sellers Engaged in Business

There is no change to a Texas-based seller’s responsibilities who has been engaged in business in Texas. Sellers engaged in business in Texas and selling taxable items are responsible for collecting the appropriate tax and remitting it to the Comptroller’s office.

Beginning Oct. 1, 2018, some states require remote sellers to collect taxes if they have more than $100,000 in gross sales or 200 individual transactions into that state, but you must contact the state taxing agency or authority directly for exact tax responsibilities.

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

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

If you do not have a Texas sales tax permit, you can apply for a free Texas sales tax permit:

Remote Sellers

Although the Wayfair decision is effective immediately, the Comptroller understands that the new standards represent a significant change for some remote sellers that may need time to adjust. Our goal is to ease this transition by providing these sellers ample notice of rules and deadlines for the collection and remittance of Texas taxes. We will not apply the new law retroactively to remote sellers that have no physical presence in Texas. The Comptroller will clarify the conditions that create tax obligations for remote sellers who were previously not required to collect and remit sales and use tax and may have to collect Texas taxes on their sales in late 2019. Texas-based sellers are not considered remote sellers for Texas sales and use tax. The franchise tax responsibilities will begin for returns due on or after Jan. 1, 2020.

Remote sellers may voluntarily apply for a free sales tax permit:

For more information about reporting requirements, due dates and other sales tax-related topics, visit our Sales and Use Tax webpage.

Texas Purchasers

Taxable purchases from remote sellers were always subject to Texas sales and use tax. If the seller has a sales tax permit, they must collect sales tax. If the seller does not have a permit or the seller fails to charge sales tax, the purchaser pays the use tax directly to the Comptroller’s office on either a use tax return (PDF), (if they do not have a Texas Sales and Use Tax Permit) or a sales tax return (if they do have a permit.).

Requirements for Recordkeeping

All sellers must maintain and retain required records for at least four years.

Frequently Asked Questions

What did the U.S. Supreme Court’s decision in the South Dakota v. Wayfair case say?

The Court overruled two previous decisions that held that a state can only require sellers of goods and services to collect tax when they have a physical presence in the state. The decision means that states can now impose tax collection responsibilities on sellers who have an economic presence. For example, a state may decide that remote sellers have to collect and remit sales and use tax once they make total sales into the state of $100,000 during the previous calendar year.

What does the decision mean for Texas purchasers?

If you purchase taxable items from remote sellers that have not previously collected sales tax, many of these sellers will begin collecting the applicable sales tax on your purchases delivered into Texas. If any purchases are not taxed appropriately, you must still report the applicable use tax directly to the Comptroller’s office on these purchases.

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).

Help with calculating, collecting, preparing returns and remitting the sales tax is available from various private service providers and tax practitioners.

What about a small seller exception from this collection responsibility?

We are reviewing agency rules that need changing. We intend to adopt new rules under our current legal authority in early 2019, but this may change depending on issues that arise during the rulemaking process.

What about other tax responsibilities for remote sellers?

For franchise tax, the Comptroller’s office is in the process of amending rules to incorporate the decision in Wayfair for franchise tax returns due on or after Jan. 1, 2020.

Other taxes administered by the Comptroller, such as hotel occupancy tax, will be addressed at a future date, and the tax responsibility will be prospective.

Additional Resources