Texas Authorizes State Comptroller to Establish Uniform Local Tax Rate for Remote Sellers

Texas has enacted legislation that authorizes the state comptroller to establish a single uniform tax rate for remote sellers to collect and remit local sales and use taxes. The legislation takes effect on October 1, 2019, the same date that the state’s economic nexus legislation will begin to be enforced. Remote sellers can opt into the uniform local tax rate established by the Comptroller instead of collecting and remitting taxes at the different rates imposed by the localities in which they make sales. A remote seller who elects to use the single local use tax rate must notify the comptroller of the election before using that rate. The election applies to all sales of taxable items made by the remote seller unless the remote seller revokes the election by notifying the comptroller. The rate will be determined annually based on the estimated average rate of local sales and use taxes imposed during the preceding state fiscal year by dividing the total amount of net local sales and use taxes remitted by the total amount of net state sales and use taxes remitted and rounding to the nearest quarter percent.  The rate to be effective October 1 to December 31, 2019 will be 1.75%.

If a purchaser pays a higher rate to a remote seller using the flat rate than what would have been due without the flat rate, the purchaser is entitled to file for a refund of the difference. However, purchasers who store, use or consume taxable items from a remote seller using the flat rate will not be liable for any additional amount of local use tax as long as the tax is paid to the remote seller. (H.B. 2153, effective October 1, 2019)

Posted on May 30, 2019