Wayfair is an online home décor store transforming the way we shop for things like rugs, couches and dining tables on the internet. But, with a recent loss in the U.S. Supreme Court, the e-commerce site is also transforming what sales taxes even small and mid-sized retailers are required to collect online.
If you sell your goods online, you’ve likely known about a beneficial loophole: you only needed to collect sales taxes from customers within your state. You may also remember when big retailers like Amazon were forced to start collecting sales tax nationwide because of their far-reaching presence of distribution centers. But now, with the Wayfair ruling, the need to pay every state’s sales tax is hitting home for small and mid-size retailers. You no longer need to have a physical presence in a state to be subject to its sales and use taxes.
Texas will likely amend its sales tax and use rules in 2019 in light of the Wayfair decision. As Bloomberg News’ Daily Tax Report points out, the Texas Comptroller’s Office issued draft legislation that allows sellers to opt out of following more than 1,500 local taxing jurisdiction rules and, instead, comply with a standard local rate of 1.75 percent, in addition to Texas’s 6.25 percent sales tax. The proposal is designed to reduce the administrative burden of understanding and following the state tax laws for each online customer.
If you sell goods online across state lines, it’s important to understand that legislation may move swiftly (and already has in most states). Keep an eye on changing regulations and have a strategy in place to stay compliant. In the meantime, let us know if you have any questions.
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