State Sales Tax Nexus and General Overview

Need to Understand a State's Sales Tax Situation? Here it is...

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Texas (TX)

TX Sales Tax - Name of Tax and General Application:

Texas imposes a tax on sales of tangible personal property and taxable services in the state. This tax is known as a "sales tax". In addition a tax is imposed on use, storage or consumption of tangible personal property or taxable services purchased from a retailer in the state. This tax is known as a "use tax" and only applies where sales tax has not been paid.

TX Nexus - General Requirements:

The word "nexus" means a link or connection. If you are determined to have nexus to a U.S. state then you are subject to that state's sales and use tax rules and must collect and remit sales tax to the state. This is known as a "filing obligation."

Each state has a different definition of nexus. However, if the answer to any of the following questions is yes, it is likely that a company has nexus as legally defined in most U.S. States.

Does the company own property in the state? Does the company have employees living in the state? Does the company regularly send employees in the state to perform services? Does the company have an agent acting on behalf of the company in the state?

Texas imposes nexus on an out-of-state vendor that regularly or systematically solicits sales using catalogs, magazines, flyers, or other advertising, whether by print, radio, TV, mail, telephone, computer database, cable, or other communication system. Also, software licensed to users in Texas and participation in trade shows as a retailer to solicit orders both result in nexus.

TX Local Tax - Do Localities Impose Tax?

Yes, Texas imposes local sales tax.

TX Resale Certificate Renewal Agreements:

Sales for resale are specifically exempt from tax in Texas.

TX Resale Certificate Renewal Periods

There is no stated expiration period for exemption certificates.

TX Statute of Limitations

Four years from the date the tax was due. If tax is understated by 25% or more, there is no limitations period.