INSIDE INFORMATION
South Dakota vs. Wayfair
86 th Texas Legislature
BY VANESSA HOLT On Oct. 1, two new sets of rules regarding sales tax collection in Texas took effect as a result of a 2018 U.S. Supreme Court decision, South Dakota vs. Wayfair. They require businesses selling items or services to purchasers in other states to collect taxes for those states, according to the Texas Comptroller of Public Accounts. The decision set the stage for buyers to now pay local sales tax for purchases frommajor online marketplaces regardless of where those business are located. These collections will benefit local entities which collect sales tax such as local municipalities. A pair of new Texas laws codified the requirements this year. The 86th Texas Legislature this year adopted House Bill 1525, which creates the new tax responsibilities for marketplace providers and marketplace sellers, and HB 2153, which provides a single local tax rate for remote sellers who now must charge Texas sales tax to buyers in this state. New Internet sales tax rules take effect in Texas
The U.S. Supreme Court decision handed down June 21, 2018 ruled: A state can impose sales tax collection on vendors without a physical presence in the state.
House Bill 1525:
The bill requires a large marketplace seller, such as eBay to collect sales tax on all sales made through the site.
House Bill 2153:
Beginning Oct. 1, 2019:
The law provides the option of a single local tax rate for remote sellers to charge Texas customers.
Sales tax collection is enforced on certain sellers* whose only activities in Texas are remote solicitation of sales. *Collection is not required for remote sellers with Texas revenue of less than $500,000 in the previous 12 calendar months.
Beginning Oct. 1, 2019:
Through Dec. 31, the single local tax rate for remote sellers is 1.75%, according to the comptroller’s office. In future years, the comptroller will compute a single local tax rate at the beginning of each calendar year. Sellers must notify the comptroller’s office account maintenance division by email or mail if they intend to use the single local tax rate instead of calculating and paying based
WHAT IS A REMOTE SELLER?
According to the comptroller’s office, a remote seller is a seller whose only activ- ities in this state are the remote solicita- tion of sales through means such as:
catalogs or flyers
radio or television
on the actual total local tax rate at: Comptroller of Public Accounts P.O. Box 149354, Austin, TX 78714 sales.applications@cpa.texas.gov
telephone
the internet
SALES TAX
Where does sales tax go?
2%
In The Woodlands, Shenandoah and Oak Ridge North, sales tax collection is the maximum amount permitted in Texas, 8.25%. In addition to the state sales tax rate of 6.25%, the following rates are charged to local buyers:
The Woodlands
Shenandoah
oak ridge north
LOCAL
1%
1.5%
2%
LOCAL RATE
LOCAL RATE
LOCAL RATE
STATE 6.25%
TheWoodlands Economic Development
Shenandoah Municipal Development
1%
0.5%
ZONE RATE
DISTRICT RATE
Sales tax collections
The Woodlands *
“THE GROWTH OF ONLINE SALES TAX HAS BEEN PHENOMENAL OVER THE PAST FIVE YEARS. ...
$23.01 MILLION
-1.59%
$22.6 4 MILLION
Sales tax collections are down in 2019 among taxing entities in south Montgomery County. Officials in The Woodlands Township have said the new rules under the Supreme Court decision in 2018 may allow for increased sales tax collections in late 2019 and 2020, but the first set of data from the new rules will not be available until early in the year.
Shenandoah
THAT’S IMPORTANT BECAUSEWE USED SALES TAX PROCEEDS
$5.43 MILLION
-8.36%
$4.98 MILLION
TOOFFSET OUR PROPERTY TAX REQUIREMENTS.”
SOURCE:TEXAS COMPTROLLEROFPUBLIC ACCOUNTS/COMMUNITY IMPACTNEWSPAPER *THEWOODLANDS TOWNSHIP ISASPECIAL- PURPOSEDISTRICTFOR TAXINGPURPOSES.
oak ridge north
—MONIQUE SHARP, THE WOODLANDS ASSISTANT GENERAL MANAGER FOR FINANCE AND ADMINISTRATION
$2. 25 MILLION
-0.97%
Key:
January - October 2018
January - October 2019
$2. 23 MILLION
47
The Woodlands edition • November 2019
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