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Texas: A different approach to collecting taxes from online purchases

We recently discussed New York’s attempt to tax online purchases by requiring online marketplaces with more than $100 million in annual sales to collect the state’s sales tax from customers who are New York residents, regardless of whether the seller is located in or outside of New York. Even though the measure was estimated to bring in $275 million in fiscal year 2018-19, a robust campaign to kill it was successful.

Other states continue trying with their own measures. In Texas, Senate Bill 1713 (SB 1713) is now making its way through the law-making process, having been introduced in March. It passed out of the Senate in mid-May, by a vote of 31 to 0, and is now pending with the House Ways and Means Committee. Though its only effect is to study methods that would increase sales and use tax collections, it floats the possibility of subjecting third party “persons who refer purchasers in [Texas] to out of state retailers” to registration or information reporting requirements.

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