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Texas tax collectors eye post-Wayfair world

On Behalf of | Feb 28, 2019 | Uncategorized |

For years, businesses that sold items via the internet didn’t need to collect sales tax from the states where the items were sold.

That changed in June when the U.S. Supreme Court decided in “South Dakota v. Wayfair” that many internet retailers had to collect state sales tax.

The decision

Before the Wayfair decision, states could only require state taxes from businesses with a physical presence in the state. Obviously, that is not the case for most businesses based on the internet.

After the decision, businesses that have more than $100,000 in gross sales or 200 individual transactions in each state must collect and remit taxes to those states.

Since that means a different tax and separate remittances from each business for each state, tax officials and comptrollers across the country have shown sympathy to the strain the new requirement puts on businesses.

Texas rules

The most populated states – California, New York, Florida and Texas – are moving cautiously.

Texas businesses are already paying state taxes on sales to Texas customers.

The Texas Comptroller’s office has issued prospective sales and franchise tax rules to provide details about remote seller tax responsibilities. The tax will not be collected until late-2019 and any new tax responsibilities will not be retroactive, the office says. A franchise tax won’t be collected until Jan. 1, 2020.

Oklahoma and Rhode Island were collecting some of the taxes prior to the Wayfair decision while Hawaii, Maine and Vermont started collecting sales taxes last summer. Alabama, Illinois, Indiana, Kentucky, Maryland, Michigan, Minnesota, North Dakota, Washington and Wisconsin started collecting taxes on Oct. 1 while New Jersey, North Carolina, South Carolina and South Dakota started on Nov. 1. Colorado, Connecticut, Georgia, Iowa, Massachusetts, Tennessee and Wyoming join the others with laws in effect.

If you own a business that sells items on the internet, it’s best that you check with a qualified, experienced attorney to make sure you are compliant with the changing tax laws.

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