In the 2018 South Dakota v. Wayfair decision, the U.S. Supreme 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. As a result of South Dakota v. Wayfair, states can now impose tax collection responsibilities on sellers who have an economic presence without any physical presence.
Remote sellers are out-of-state sellers whose only activity in Texas is the remote solicitation of sales. Remote sellers have Texas tax collection and reporting obligations if they have economic nexus in this state. If you have a physical presence in this state (i.e., business location, salespersons, representatives, etc.), you are not a remote seller.
Remote sellers needing to terminate the remote seller status or tax responsibility may use the Remote Seller's Intent to Terminate Use Tax Responsibilities/Remote Seller Status web form.
Remote solicitation of sales includes activities such as soliciting sales through
The law provides a safe harbor: Remote sellers with total Texas revenue of less than $500,000 in the preceding twelve calendar months are not required to obtain a tax permit or collect, report and remit state and local use tax. Your total Texas revenue is based on gross revenue from taxable and nontaxable 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, if you exceed the $500,000 safe harbor amount, you are required to obtain a permit and begin collecting and remitting state and local use tax on sales to customers in Texas beginning no later than the first day of the fourth month after the month that a remote seller exceeds the $500,000 safe harbor amount. For example, if during the period of July 1, 2021, through June 30, 2022, a remote seller's total Texas revenue exceeds the safe harbor, the remote seller shall obtain a permit by October 1, 2022, and begin collecting use tax. You must keep records of your sales into Texas.
A remote seller who only sells through a marketplace provider that certifies they are collecting and reporting sales and use tax on the remote seller’s behalf is not required to hold a Texas tax permit. However, all sellers must keep required records of all marketplace sales for at least four years.
As a seller, you may apply for a tax permit
If you are a remote seller located outside the United States, you can register to collect and remit Texas tax by emailing the application (PDF) to email@example.com, or faxing it to 512-936-0010.
Local use tax is due at the location in Texas where the order is shipped or delivered when the order is not received or fulfilled from a Texas place of business. You can use our Sales Tax Rate Locator to search for tax rates by address.
The single local use tax rate is an alternative local tax rate that remote sellers can use instead of collecting and remitting the total local tax in effect at the destination address. The current single local use tax rate is 1.75 percent, and the rate is published in the Texas Register by Jan. 1 of each year.
Remote sellers can choose to collect the alternate single local use tax rate. Businesses located in Texas are not remote sellers and cannot use the single local use tax rate for sales. Additionally, the single local use tax rate is not available to any marketplace provider collecting taxes on behalf of marketplace sellers.
If you are a remote seller that chooses to collect the single local use tax, you must notify the Comptroller’s office in writing of your election using Form 01-799, Remote Seller's Intent to Elect or Revoke Use of Single Local Use Tax Rate (PDF) by email or mail. The effective date must be on the beginning date of a reporting period.
For example, if a remote seller chooses to collect the single local use tax rate in February, the single local use tax rate will be effective in March (return due April 20).
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, 2022, the revocation will be effective January 1, 2023. If the Comptroller receives a revocation on November 1, 2022, the revocation will be effective January 1, 2024.
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
A foreign (i.e., out-of-state) taxable entity with annual gross receipts of $500,000 or more from business in Texas has economic nexus even if the entity has no physical presence in this state. This economic nexus provision applies to reports due on or after January 1, 2020.
Each taxable entity with nexus must file a Franchise Tax Report (No Tax Due, EZ Computation or Long Form), and an Information Report (Public Information Report or Ownership Information Report) and pay any franchise tax due.
Prior to Jan. 1, 2019, a foreign taxable entity’s nexus begins on the date the taxable entity has physical presence in Texas. On or after Jan. 1, 2019, a taxable entity’s nexus begins on the earliest of