A Texas sales tax permit is an important business license for retailers who sell their goods and services to customers located in Texas. The permit identifies and connects your business for compliance with the sales and use tax obligations it may have to the Texas Comptroller’s Office. These obligations generally include reporting through filing a Texas sales and use tax return and remitting owed or collected taxes to the state. The need for a permit can apply to businesses not only located in Texas but that operate as remote sellers with sufficient economic nexus. In this article, we explain the entire sales tax permit registration process in Texas from start to finish and answer other common questions for retailers curious about their sales and use tax compliance obligations in the state.
When Does a Business Needs a Sales Tax Permit in Texas?
Your business will likely need a sales tax permit if it engages in business and conducts any of the following activities in Texas:
- Selling tangible personal property;
- Leasing or renting tangible personal property; or
- Selling taxable services.
Common examples of being engaged in business in Texas for sales and use tax purposes could include any of the following explained in Publication 94-108:
- Performing services in Texas through employees, agents, or contractors;
- Having employees or representatives sell, deliver, or take orders;
- Having a temporary or permanent location in Texas for operating the business;
- Allowing a franchisee or licensee to operate under your trade name;
- Owning or using tangible personal property in Texas; or
- You organized or incorporated the business in Texas and Texas law governs its internal affairs.
In addition to these broad physical connections to Texas, a business may also need a Texas sales tax permit as a remote seller or marketplace facilitator with economic nexus to the state. The sales tax code defines this economic nexus as total Texas revenue greater than $500,000 in the preceding 12 calendar months. This means a business could establish economic nexus in the middle of a calendar year based on their revenue from applicable months in the prior year. Remote sellers generally refer to businesses that solicit sales from Texas customers using internet, telephone, radio, television, or hard mail. Marketplace facilitators are companies that operate as platforms for retailers to offer and process sales of their goods or services to customers in Texas.
How to Obtain a Texas Sales Tax Permit
Businesses can obtain a Texas sales tax permit through the Comptroller Office’s eSystems portal. The application requires owners and representatives to supply basic information about the business, including the following types of data:
- The legal entity and structure of the business;
- The legal name of the business;
- Identification of the individuals responsible for the business and its tax obligations;
- The location and contact information for the business;
- Banking and payment processing information for the business;
Applicants will also need to supply several pieces of required documentation, including relevant social security number(s) and FEIN of the business, the file number for a Texas corporation registered with the Secretary of State, and the NAICS code for the business. While there is no fee to file an application for a Texas sales tax permit, a business may need to post a security bond depending on the circumstances. Additionally, applicants must be at least 18 years old. The Comptroller’s Office states that receiving a permit after filing the application can take anywhere from two to three weeks.
Changing or Updating Your Texas Sales Tax Permit
Information about your business may change over time and require an update to your sales tax permit account. For example, changing the business address, adding or removing business locations, and email notifications regarding filed sales tax returns. Business owners or their sales tax representatives in Texas can update this information through their eSystems portal at the Texas Comptroller’s office.
FAQs for Texas Sales Tax Permits
Do You Need a New Sales Tax Permit if You Recently Purchased a Business in Texas?
Yes, Texas requires businesses to obtain a new sales tax permit if their ownership changes in any way or changes its legal entity structure. For example, a business transitioning from a sole proprietorship to a corporation may need a new Texas sales tax permit.
Do You Need Multiple Sales Tax Permits for Different Locations or Businesses?
Texas requires a permit for each active place of business, which the state defines as any location that receives three or more orders for taxable items in a calendar year. The Comptroller’s Office will issue multiple permits with the same taxpayer identification number but with unique outlet numbers.
How Often Does Your Business Need to Report and Remit Sales Tax to the Texas Comptroller’s Office?
The frequency of filing sales tax returns and remitting collected taxes will depend on the amount of a business’s sales tax volume but could be monthly, quarterly, or annually depending on the circumstances. The Texas Comptroller’s Office should notify you by letter after applying for a sales tax permit about the filing frequency. Returns are typically due on the 20th of the month following the end of the taxable period.
What Can You Do if You Should Have Obtained a Texas Sales Tax Permit a Long Time Ago and Haven’t Been Paying Taxes?
Businesses that have not timely obtained a Texas sales tax permit, filed returns, and paid taxes will need to carefully consider their limited options for getting compliant with their obligations. Our Texas sales tax professionals can help business owners and their CPAs navigate their available options including paying back taxes, including penalties and interest, or applying for a voluntary disclosure agreement, which may offer several benefits through limited lookbacks and penalty waivers.
Work with a Texas Sales Tax Professional at Sales Tax Helper
Obtaining a Texas sales tax permit is the first step toward a business’s successful compliance with the Texas Comptroller’s Office. While simple in many cases, the process can be confusing for businesses in certain complex cases, such as those operating as remote sellers or with many locations that require multiple permits. Our experienced team of Texas sales tax professionals at Sales Tax Helper, LLC provide clients with personalized service in managing their sales tax issues and disputes from start to finish.