Taxing Internet Sales in Texas
With state budgets shrinking nationwide we cannot expect Internet sales to remain untaxed at a uniform level. In fact, it is estimated that Texas loses $600 million in tax revenue through online sales placed to retailers that do not have a physical presence in Texas. However, that is not to say that all Internet transactions in Texas are tax-free.
The Texas Comptroller looks to whether there is some “nexus” or relationship between the business and the state to determine whether an online sale is taxed. This means, for instance, that even though a retailer does not have any locations in Texas, if it allows service or returns at a partnering store in Texas, the transaction should probably be taxed. In the same way, many other states are now taxing online sales that may include some sort of a relationship with a local retailer.
As online sales continue to increase, you can be sure that governments will be looking for ways to collect revenue. In fact, debate closed this week in Washington on Marketplace Fairness Act, which is designed to create nationwide sales tax on Internet transactions.
If your business conducts online sales, consult the attorneys at the McCleskey law firm to ensure that you are using the proper procedures for collecting, reporting and paying state and county sales taxes. Penalties and interest for not collecting sales tax can rapidly increase to at least 14.25% if not paid within 30 days.