Holiday Shopping Reminder
Texas – Internet sales are subject to sales and use tax in the same manner as sales made by any other business. Texas tax applies to taxable items on orders placed on the internet when shipped or delivered to a purchaser in Texas.
Online sellers engaged in business must obtain a sales and use tax permit and collect and remit tax on the sale of taxable items shipped or delivered into Texas.
Delivery Charges: Fees for shipping and handling charged by the seller of a taxable item are considered part of the sale price. Charges for transportation or delivery to a Texas location are considered to be services or expenses connected to the sale of a taxable item. Charges for shipping and handling, transportation or delivery are taxable if the item is taxable, even if separately stated on the invoice. If the item is not taxable, neither are shipping and handling, transportation or delivery charges.
Texas Buyer, Texas Seller: When a purchaser in Texas buys a taxable item from a Texas online seller for use in Texas, local sales taxes due are based on the location of the seller’s place of business. A seller may be required to collect local use taxes for local taxing jurisdictions in effect at the point of delivery if the seller is engaged in business in those jurisdictions.
Shipped from Seller’s Place of Business in Texas: When an item is shipped or delivered from the seller’s place of business in Texas, the seller charges sales taxes based on the location of the place of business, regardless of where the order was placed.
Shipped from a Texas Warehouse: If the order is shipped or delivered from a warehouse or other location in Texas that is not a place of business of the seller, the local sales tax due is based on the location of the seller’s place of business where the order is received.
Shipped from an Out-of-State Warehouse: If order is place with a seller in Texas, but drop-shipped to the purchaser by an out-of-state, third-party supplier, local sales tax is due based on the location of the seller’s place of business where the order was received.
Texas Buyer, Out-of-State Seller: When a purchaser buys a taxable item from an out-of-state seller for use in Texas, the seller must collect Texas use tax. If the seller is engaged in business at the point of delivery, the must also collect any local use tax due.
If the seller is not engaged in business in Texas or does not collect the Texas tax due, the customer owes Texas use tax. Customers should use the tax rate in effect at the location where the goods were received to calculate the amount of tax due. Tax is due on the entire amount charged by the seller, including shipping and handling even if separately stated.
Tax Paid to Another State: The purchaser can take a credit against the amount of Texas use tax due for legally imposed sales taxes the purchaser paid to another state or any subdivision of another state.
Texas Seller, Out-of-State Buyer: Texas sellers who sell a taxable item and ship or deliver it to an out-of-state location does not have to collect Texas state or local sales tax on the sale. Seller’s records must include proof of delivery out of state in order to document such sale. A texas seller engaged in business in another state may have to collect tax in that state.
Occasional Sales: Tangible personal property sold online when the property was originally purchased for persona use by a person who does not hold and is not required to hold a sales tax permit or similar license or permit in another state is exempt.
The person qualifying for the exemption must not be in business of selling taxable items and the receipts from these sales must not exceed $3,000 in a calendar year.
An exemption for the sale of up to two taxable items in a 12-month period by a person who does not hold a sales tax permit or similar license or permit in another state and who is not in the business of selling taxable items is also available.
Seller who have sales tax permits in Texas or similar licenses or permits in any other state may not sell items tax free claiming the occasional sale exemption.
Purchasers are not responsible for accruing use tax on purchases made under the occasional sale exemption. A purchase who holds a sales tax permit must accrue use tax on a taxable item purchased from a person who does not hold a sales tax permit and who has sold two or fewer taxable items during the 12-month period immediately prior to the sale.