Texas Tax Law Update (Sales Tax): Comptroller Issues Guidance to Remote Sellers

The Texas Comptroller issued guidance in the wake of the Supreme Court’s landmark decision in South Dakota v. Wayfair, broadly advising businesses of how his agency will implement the decision. The decision allows a state to force out-of-state sellers (called “remote sellers”) to collect and pay over sales taxes of instate residents who purchase goods and services from the out-of-state sellers.

At the outset, the Comptroller recognizes that the physical presence nexus standard remains Texas’ law of the land for the time being. The Comptroller’s office expects to amend Texas’ rules to establish new rules for remote sellers, imposing tax collection obligations when the remote seller exceeds minimum thresholds for revenues and/or number of sales in the state. The Comptroller’s office stated it anticipates that the new rules will be effective in early 2019.

In an attempt to allay fears and foster “a smooth transition and a successful partnership with remote sellers,” the Comptroller’s office reiterated its position that it will not apply any new rules retroactively to remote sellers that did not have a physical presence in Texas. In the same breath, the Comptroller said that his agency could impose tax responsibilities on remote sellers who solicit sales in Texas through catalogs and emails without any further legislative action.

In addition, the Comptroller indicated that his agency will decrease its initial estimate of the expected additional tax collections from Texas residents since many large remote sellers had already begun collecting Texas sales tax voluntarily.