Out-of-state retailers who have annual sales of $500,000 or more in sales to Texas residents will soon be required to collect and remit Texas sales tax.
Requirements for Certain Out-of-State Retailers
For out-of-state retailers, the new collection requirement applies if a retailer exceeds the safe harbor amount during the preceding 12 calendar months. The safe harbor amount is $500,000 or more in sales into Texas. Retailers exceeding the safe harbor amount are required to get a Texas sales tax permit and beginning collecting. Collection must begin by the first day of the fourth month after the seller meets the threshold.
For example, a remote seller’s sales into Texas exceeds $500,000 during the period July 1, 2018, through June 30, 2019. By October 1, 2019, the remote seller must:
- obtain a permit; and
- begin collecting tax.
The initial 12 calendar months for calculating a remote seller’s Texas revenues will be July 1, 2018, through June 30, 2019. Retailers with Texas sales below the safe harbor amount do not have to register and collect.
34 TAC §3.286, Texas Comptroller of Public Accounts, effective January 1, 2019