Sales Tax For Out-Of-State Businesses

The word "nexus" is merely Latin for connection. But it stands for one of the most complicated aspects of tax law in Texas or any other state:

When does a state or local government have a sufficiently close connection to impose sales taxes on a company that operates from another state?

At Brown, PC, we know how vexing this question can be for you. Since leaving the Tax Division of the U.S. Department of Justice in 1992, Lawrence Brown has built a legal team that provides skilled counsel on all aspects of tax law, including compliance with remote taxation requirements in Texas. We are proud of our record of success in helping clients resolve these issues.

Does Your Business Have Tax Nexus In Texas?

Getting skilled legal guidance on sales tax issues is especially important now, as standards for what is considered tax nexus in a state are evolving rapidly in the internet age.

In 2018, in a case called Wayfair v. South Dakota, the U.S. Supreme Court held that states may tax an out-of-state retailer even if it lacks a physical presence in the state. The Court explicitly overruled a 1992 decision, Quill v. North Dakota, which interpreted the Commerce Clause as preventing states from requiring a remote seller to collect sales taxes unless the seller has a physical presence in the state.

The Court qualified its Wayfair ruling, however, by reiterating the long-standing constitutional principle that a tax on interstate commerce cannot be unreasonable. Considerable uncertainty therefore exists around how far Texas and other states can go in the taxation of online businesses.

For example, some states have a small-seller exemption for sellers who deliver less than a certain dollar amount of goods and services or have fewer than a specified number of transactions. Adding to the complexity, Texas is among the states that are increasingly looking for ways to tax not only retailers, but also third-party sellers and online platforms such as Uber.

In short, in the wake of the Wayfair decision, the complex compliance landscape concerning Texas sales tax collection requirements is especially challenging for out-of-state businesses. We can assist you with strategic decision making based on our decades of experience analyzing sales taxation issues.

Sophisticated Guidance On Sales Tax Compliance

Using our up-to-date knowledge, we can take a deep dive into your business to gather the facts needed to advise you as to whether you have nexus that would create a state tax obligation.

Our lawyers can also advise on how to handle a situation where a company has nexus to Texas and has not been filing state returns or paying state taxes.

Call today to arrange a confidential consultation with an experienced tax attorney. Or, if you prefer, complete our brief online form.

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