How to pay sales tax in Texas?


#9

Again, you and your friend are each a little right and a little wrong.

You only pay the state a lump sum for all sales taxes but you must indicate in which municipality the revenue was generated. This is because some counties/municipalities have higher sales tax rates than others (the Amazon Tax Collection Service knows the tax rates for every municipality and charges the customer accordingly). The state, based on your reporting of where your income was generated, then distributes the money to the municipalities in accordance to their tax rates. So you have to say where the revenue was generated but you only send one check.


#10

NOPE… You are wrong…

I’ve been paying Texas sales tax for the last 17 years in my business… I file and pay annually. You do NOT have to indicate where the income was generated from…

Here is the basic Texas sales tax form.

  1. Gross Sales
  2. Gross Sales were tax is collected
  3. Gross Sales where taxes have been collected X 8.25%
  4. That is how much you pay the state comptrollers office.

#11

My business is headquartered in Illinois. I do not use the ATCS, but set up my amazon account to collect tax in Illinois. The tax is displayed and is included in my sales revenue, from Amazon. I am responsible for remitting the tax collected to Illinois, for Illinois sales. However, many states have enacted legislation and are going after Amazon (the deep pockets) to collect tax, for items sold online, to customers’ in their respective states. In these states, Amazon collects the tax (without you having to sign up for anything). The tax amount is displayed in your sales revenue summary, for each order, but you do not receive this tax income, from Amazon in their bi-weekly payouts (in my bookkeeping records, despite having the tax collection displayed in my order total, from Amazon, I do not record sales tax collected, as I did not collect it, nor receive it). Amazon remits to these tax entities on your behalf. Each year, more and more states enact legislation and Amazon does this, again, on your behalf. California seems to be the most aggressive, sending letters to individual sellers, trying to collect.

In your home state, if tax is not displayed in your orders, you have not collected it, but are responsible for it’s remittance. Some sellers, who have to follow Minimum Advertised Pricing (MAP), deliberately choose not to collect sales tax, within their tax area, to make their offer competitive with other sellers, in other states (that do not collect tax, in your home state), but these sellers still have to remit the sales tax owed, to their taxing entity. In your example, not seeing sales tax displayed, means you did not configure your account settings, to collect it, and that will have to come out of your bottom line.


#12

Well I called TX comptrollers office and they said what I am doing is right which is go to the comptrollers website and put in one by one each value to each govt entity. There are hundreds of entities in TX. So it is one check but needs to be allocated and entered to each entity on their website.

It takes so much time but since I am small I do it only once a year


#13

I am confused

It you are selling on Amazon and you are registered in TX and say you sold to several counties and municiaplities in TX, then at the end of the year you need to go to the comptroller website log in to your account and enter allocated tax to each entity one by one

You know you can download tax report from Amazon

Here is the website


#14

Pay em in cattle?


#15

I can only tell you what I have been doing for the past 17 years. The State sends me the form each year.

On that form is 10 lines.

1 TOTAL SALES
2. TAXABLE SALES
3. TAXABLE PURCHASES
4. TOTAL AMOUNT SUBJECT TO TAX
5. TAX DUE
6. TIMELY FILING DISCOUNT
7. PRIOR PAYMENTS
8 NEST TAX DUE
9. PENALTY AND INTEREST
10. TOTAL AMOUNT DUE AND PAYABLE.

That’s it… I fill out line 1 - 4, calculate the gross amount I collected in Texas and give them 8.25%


#16

are you selling online? If so you must have customers from all over TX

How do you assign tax to each county?

See form below


#17

Ok, I looked it up and you are right. You are correct in that you do not have to identify where the purchaser was in Texas. This is different than in most other states where the buyer’s location controls the tax rate. In Texas you collect and pay the tax rate based on where you are located, not your buyer. So you were correct.

However, 8.25% is not the universal tax rate in Texas and the OP might be required to collect as little as 6.25%, depending on where they are located.

I like the Texas system.


#18

This last response is correct…I’m in Texas as well. Local taxes, which vary by county and municipality, do not have to be paid…just the state rate… unless, there are sales delivered within that same local jurisdiction.


#19

What??

I called the comptroller office they told me I was doing it right

I am in TX and I am selling to a customer in say Dallas x county. How will X county in Dallas collect their tax money from me if I do not specifically allocate it in comptroller’s website?

Otherwise why would they have a website that shows each county and tax entity one by one on their website?


#20

where did you get the bold statement from? I was under the impression that I needed to pay according to where the customer is not where I am


#21

http://texreg.sos.state.tx.us/public/readtac$ext.TacPage?sl=T&app=9&p_dir=F&p_rloc=175827&p_tloc=14554&p_ploc=1&pg=2&p_tac=&ti=34&pt=1&ch=3&rl=334

Read much of this for more understanding and definitions and so forth, but look at (g) (3)…
"A seller is only required to collect local sales or use taxes for a local taxing jurisdiction in which the seller is engaged in business."

That kind of answers the .0625 part as well. I would say the statement by RedWing is not really so “bold” :slight_smile:
BUT, if I were you, I would call again, and get someone else, and see what they say. I know that in the past, I was told differently than what you’re saying, so I have been operating accordingly ever since.

I hope that helps.


#22

One of the reasons why a lot of businesses like to move here…no state income tax either.


#23

In most places that is the way it works, but Texas uses an origin-based taxing system. Most other states use a destination-based system.

I found that information on the Texas Comptroller web site and in some Intuit Quickbooks documentation.

(And I understand you were not saying my statement was bold, but that you had bolded my statement :slight_smile: )


#24

(And I understand you were not saying my statement was bold, but that you had bolded my statement :slight_smile: )

Ah, I stand corrected…didn’t even catch that!


#25

Finally i learned that i was supposed to pay tax only to my jurisdiction where my warehouse is located. But this creates another question.

Why am i collecting tax from all texas residents in different rates as if my warehouse is located in each of these counties?

Is there somewhere in amazon settings i need to change so that the tax rate will be same accross the boatd which is my jurisdiction tax rate?

Because currently i am collecting with different tax rates depending on where the customer is


#26

A slight correction…You are to pay County and Municipal taxes to where your warehouse is located…IF the recipient is in same area,

Otherwise, ANY sale delivering in Texas is to be paid at the state .0625 rate. And those in your area will be paid at a little higher rate, in your case it sounds like another 2%.

You can set it up in different ways I guess, but one way would be to just set it up as .0625 and eat the little bit that happens in your area. That is likely relatively miniscule, but if not (depending on sale amounts and volumes), then you may want to go to more effort to set it up exactly as it should be.


#27

So this is a very confusing issue for Texas based FBA sellers. There are a multitude of reasons, but the biggest issue is the difference in how Amazon views Texas vs how everyone else seems to. I’ve just decided to change from letting Amazon collect their own way to actually entering a Texas tax rate override of 8.25%, and here’s why:

  1. Amazon identifies Texas as a destination based state, so the default if you’ve signed up for their tax collection service is to collect based on the buyer’s actual location in Texas (hundreds of various jurisdictions and rates). This is what a previous poster mentioned and is why they are having to remit to hundreds of different jurisdictions, line by line, on the comptroller website.

  2. Other entities, including Tax-Jar, instead identify Texas as an origin-based state, whereby the amount you charge for both state and local taxes is based on your location of business in Texas instead of the buyer’s location. If you choose to believe them and view Texas as origin-based, you must enter a tax rate override into Amazon’s tax collection system that covers the entire state, equal to your local total tax rate.

  3. Then you get to what the Texas Comptroller has to say, and sadly, it’s still a bit murky. Page 6, section 3 of the following PDF from the Comptroller: https://comptroller.texas.gov/taxes/publications/94-105.pdf
    Example Section states:

Order not fulfilled at a seller’s place of business in Texas, but received at a seller’s place of business in Texas – the sale is consummated at the place of business in Texas where the order is received. Example: A seller uses an online marketplace to sell discount merchandise. Customers place orders on the marketplace’s website, which sends automatically generated emails containing order information to the seller. The location where the seller receives these email orders is a place of business because the seller receives more than three orders there during a calendar year. The seller has contracted for a third party to store, pick, pack and ship merchandise on the seller’s behalf, so orders are not fulfilled at the seller’s place of business. The online sales are consummated at the seller’s office where the orders are received, and local sales tax is due based on the location of the seller’s office.

I believe the quoted section is the most applicable to FBA sellers residing in Texas, selling to Texans, and it’s clear enough to me that I should override Amazon’s automatic collection with a simple rate, and collect local and state tax based on my office location. It gets even murkier depending on how to interpret their section on where the item is coming from (out of state vs in-state fulfillment), but at this point I think we’re finding out there is no absolute clear cut response, so the most forgivable and future proof method is to collect where you reside, instead of at the destination level. In the event you have to redistribute taxes later, it seems a lot easier asking one jurisdiction for a refund as opposed to 150.

I’m not a CPA and this is not advice!!! Also, I’m only looking at this from the perspective of an FBA seller **that resides in Texas.


#28

We’re not in Texas but we do collect and remit sales tax there…for out of state sellers Texas is destination based. This is especially fun because everything is bigger in Texas including the number of different taxing jurisdictions (or whatever Texas calls them) you have to enter sales numbers for when you complete your return. Filing that return is our office’s least favorite quarterly administrative task.