Texas Economic Nexus: Sales Tax Requirements for Out-of-State Businesses

Are you an out-of-state business selling products or services to customers in Texas? If so, you may be subject to the state’s economic nexus law and required to collect and remit sales tax.

Creating and complying with a sales tax strategy can be complicated, but it doesn’t have to be. TaxValet can help you determine if you need to collect sales tax in Texas, and if so, we’ll handle all the paperwork and filings for you. We’ll make sure you’re compliant so you can focus on running your business. Click here to learn more about our services.

What is Texas’ Economic Nexus Threshold?

Texas’s economic nexus law tells us that out-of-state businesses must collect and remit sales tax if they have more than $500,000 in gross sales in the prior 12 months. Businesses that cross Texas’s economic nexus thresholds must register for a sales tax permit on the 1st day of the fourth calendar month crossing the threshold.

This means that businesses based in other states selling to customers in Texas must be aware of if their business is crossing the nexus threshold and take appropriate action to get a sales permit. It’s important to note that every state has different laws, so if you are selling into multiple states, it is important to understand all the applicable economic nexus thresholds.

TaxValet Can Help With Your Texas Nexus Compliance

Are you confused about what all this means? You don’t need to be! Let Taxvalet’s team of experts handle your sales tax in Texas. Get started by scheduling a free consultation with us here.

When Did Texas’ Economic Nexus Law Go Into Effect?

Texas’ sales tax economic nexus law went into effect on October 1st, 2019, requiring all businesses to have a sales tax permit if they crossed the threshold. This means that if your business cross the threshold after October 1st, 2019 then your business needs to get a sales tax permit.

If you crossed the threshold before this date, then you would only need to get a sales tax permit starting when the law went into effect (October 1st, 2019). Please note that there are other considerations, such as physical presence, which need to be taken into account when deciding what your sales tax permit start date should be in Texas.

Before you register for a sales tax permit, you should really consider if this is something you want to do on your own. There are a million ways to mess this up and create more of a headache for yourself That’s why our team of experts is here to help. We’ll handle all the paperwork and filings for you so you can focus on running your business. Click here to learn more.

What Are Businesses Supposed to Do if They Meet Texas’ Economic Nexus Threshold?

Businesses that meet Texas’ economic nexus threshold are required to register for a sales tax permit and begin collecting and remitting sales tax on their taxable sales immediately. The process can be confusing and difficult to navigate, so many businesses rely on professional services such as TaxValet to help them get and stay compliant with sales tax in Texas.

What Could Happen if I Cross Texas’ Economic Nexus Threshold and Don’t Get a Sales Tax Permit?

If you unknowingly cross Texas’ economic nexus threshold and don’t get a sales tax permit, be aware that there are real consequences. If the state of Texas finds out that you’ve exceeded the threshold, it may audit your business. This could mean that you’d need to play catch-up and file all of your past sales tax returns and pay for sales tax directly out of your pocket. Worse still, if the audit reveals a pattern of noncompliance with Texas’ laws, you may even face fines or other penalties. Fortunately, professional services like TaxValet can help by calculate your liability and administering filings for multiple states. There’s no reason for noncompliance when help is available!

Getting Help with California’s Economic Nexus Requirements

If you are a business owner, it’s important to know if you meet Texas’ economic nexus threshold for sales tax purposes. The law can be confusing, but the consequences for not following it are serious. That’s why TaxValet offers free initial consultations to help businesses determine their obligations under the law. We can help you get compliant and avoid costly penalties. To learn more, schedule a free consultation with us today.