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New tax codes for online retailers

The U.S. Supreme Court ruled against the Boston-based Wayfair Inc. in 2018, determining that states could levy sales tax upon internet retailers who are based in other states. The court also suggested that there should be a checklist of rules that go with this new tax law.

How it works

So far, 32 states including Texas are acting to pass laws to address this, although we are not as far along as most in this process. Each state will have a gross sales threshold for taxable items delivered. The threshold could also be a number of transactions. South Dakota, which spearheaded this new law, has set $100,000 as the sales threshold and 200 unique transactions as the number threshold.

As of now

The Comptroller of Texas is not currently enforcing any new changes to the tax law. Therefore, Texas will continue to follow the physical presence standard. However, it appears that the law will be enacted using number of sales and gross sales thresholds. The anticipated effective date for the new rules is early 2019. Per the Supreme Court’s recommendation, there is no anticipated retroactive enforcement.

Ignorance is no excuse

Changes in tax laws happen. It is always wise to look them over and figure out how they apply, but an attorney may be the best guide for determining how these laws change your tax obligation. Those who are not compliant to applicable laws could find themselves audited or worse. It is best to contact an attorney with tax law experience here Texas to unpack this emerging issue and how it applies to individuals and businesses.

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William T. Peckham
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