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Texas Amendments Remote Seller Rules After Wayfair

As part of Wayfair implementation, the Texas Comptroller recently releases amendments to the state Rule concerning remote seller’s responsibilities, which will be effective Jan. 1, 2019. The amendments establish a safe harbor for remote sellers whose Texas revenues are below $500,000 from sales of goods and services in the preceding 12 calendar months. Remote sellers with Texas revenue below the safe harbor amount will not have to register and collect tax. Remote sellers whose Texas revenue exceeds the safe harbor amount shall register and begin collecting tax.

To allow time for remote sellers to prepare for their collection and reporting obligations, the amendments postpone the permitting and tax collection requirements for remote sellers until Oct. 1, 2019. The initial 12 calendar months for calculating a remote seller’s Texas revenues will be July 1, 2018, through June 30, 2019.

The Texas’s $500,000 sales threshold and no transaction threshold, which is greater than $100,000 sales threshold in South Dakota, appears to help simplify compliance for remote retailers. With an effective date of Oct. 1, 2019, Texas provides businesses with additional time to plan accordingly. Further, under a draft bill that may be introduced during the 2019 legislative session, proposes a single combined local rate for remote seller tax collection, easing the burden on remote sellers from having to collect individual local sales and use taxes at many different rates.

Just like South Dakota’s economic nexus law, Texas’ law will prohibit retroactive enforcement.