Texas Adds Sales Tax Collection Requirement for Marketplace Providers and Remote Sellers

The Texas legislature passed HB 1525 on May 3, 2019, thereby joining California and many other states in the wake of the U.S. Supreme Court decision in South Dakota v. Wayfair, 138 S. Ct. 2080 (2018) requiring remote sellers and marketplace providers to collect and remit sales tax.


Effective October 1, 2019, out-of-state businesses with at least $500,000 in Texas sales during the preceding 12 calendar months will be required to register with the Texas Comptroller of Public Accounts and collect and remit sales tax. The initial 12 calendar months for calculating remote sales tax revenue is July 1, 2018, through June 30, 2019. Remote sellers whose sales into the state exceed $500,000 during that period will have to register with the Texas Comptroller of Public Accounts “no later than the first day of the fourth month after the month” in which the $500,000 threshold is exceeded.


Also effective October 1, 2019, Marketplace Providers, defined as "a person who owns or operates a marketplace and directly or indirectly processes sales or payments for marketplace sellers", will required to collect and remit sales tax on behalf of third-party sellers who utilize their platforms. Additionally, Marketplace Providers shall provide a certificate to each marketplace seller assuming all rights and duties of a seller or retailer with respect to sales made by the marketplace seller through the marketplace. A marketplace seller shall supply the marketplace provider with information that is required to correctly collect and remit taxes imposed.


A marketplace provider is not liable for failure to collect and remit the correct amount of taxes imposed if the marketplace provider demonstrates that the failure resulted from the marketplace provider’s good faith reliance on incorrect or insufficient information provided by the marketplace seller. In this instance, the marketplace seller is liable for a deficiency resulting from incorrect or insufficient information provided by the marketplace provider.




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