Texas Tax Nexus

Businesses with nexus in Texas are required to register with the Comptroller of Texas and to charge, collect and remit the appropriate tax.

Generally, a business has nexus in Texas when it has a physical presence there, such as a retail store, warehouse, inventory, or the regular presence of traveling salespeople or representatives. However, out-of-state sellers can also establish nexus in the ways described below.

Texas nexus for out-of-state sellers

An out-of-state seller is not required to collect Texas tax if the seller only conducts business in Texas from out-of-state by mail, telephone, or via the internet. However, this seller can choose to apply for a permit and voluntarily collect Texas tax from its Texas customers. 

Affiliate nexus

If your business has ties to businesses in Texas, including affiliates, it may have nexus. Under Texas State Statutes Section 151.107, an out-of-state retailer is engaged in business in the state if the retailer holds a substantial ownership interest in, or is owned in whole or substantial part by, a person who maintains a location in this state from which business is conducted, provided at least one of the following conditions is true:

  • The out-of-state retailer sells the same or a substantially similar line of products as the person with the location in this state, and sells those products under a business name that is the same as or substantially similar to the business name of the person with the location in this state
  • The facilities or employees of the person with the location in this state are used to:
    • Advertise, promote, or facilitate sales by the retailer to consumers; or
    • Perform any other activity on behalf of the retailer that is intended to establish or maintain a marketplace for the retailer in this state, including receiving or exchanging returned merchandise
  • The retailer holds a substantial ownership interest in, or is owned in whole or substantial part by, a person that:
    • Maintains a distribution center, warehouse, or similar location in this state; and
    • Delivers property sold by the retailer to consumer       

See the Texas Comptroller, Internet Orders – Buying and Selling; and Texas State Statutes Section 151.107.