Big Changes to Texas Sales Tax

TaxCloud corrals sales tax for you

Texas Comptroller proposes destination-based sales tax

Currently, sales tax in Texas is collected and sent to the city where the seller is based. The proposed new rule would allow sales tax to be collected where the purchase is made. Most other states have already adopted this change subsequent to the June 2018 Supreme Court ruling of South Dakota v. Wayfair whereby the South Dakota Legislature enacted a law requiring out-of-state sellers to collect and remit sales tax “as if the seller had a physical presence in the State.”

How will this affect TaxCloud merchants?

TaxCloud automatically takes care of the calculation, collection, and remittance of sales tax for its merchants. Remote sellers will need to calculate the sales tax rate for each local jurisdiction they sell into.

Going forward, Texans can expect to see a sales tax charge on their online purchases, which will bring in millions of additional revenue to the state.

Why is Texas making this change?

As explained in the article written by Tessa Weinberg and Luke Ranker for the Fort Worth Star-Telegram (February 17, 2020):

“The proposed changes follow a 2018 U.S. Supreme Court ruling in South Dakota v. Wayfair Inc., in which the court decided states may require remote sellers to collect sales and local taxes. Lawmakers passed bills this past session to align with the court’s ruling.”

Previously, remote sellers outside of Texas were not required to collect sales taxes on online purchases. Going forward, Texans can expect to see a sales tax charge on their online purchases, which will bring in millions of additional revenue to the state.”

They go on to explain how this change in sales tax collection will affect cities and towns in Texas.

Full article: Online sales tax proposal may affect money for Texas cities

Press Contact

TaxCloud:
Patrick Riley
Vice President, Business Development
+1 203-803-2048
priley@taxcloud.com