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Engaged in Business (Sales and Use Tax)

November 2006

Out-of-state sellers engaged in business in Texas must collect state use tax on taxable goods or services delivered into Texas. Texas sellers as well as out-of-state sellers that provide taxable goods or services to customers in local taxing jurisdictions (i.e., cities, counties, transit authorities, or special purpose districts) may be required to collect the local use tax if they are engaged in business in the local jurisdictions. (See Guidelines for Collecting Local Sales and Use Taxes.)

An out-of-state seller that has no physical presence in Texas and conducts business in the state only by telephone, Internet, catalog sales, or through shipments by common carrier or the U.S. mail is not engaged in business in Texas and has no responsibility to collect and remit state or local Texas taxes.

If you are engaged in business in Texas and need a sales tax permit, you can apply online. You can also visit one of our local field offices or call our toll-free number 1-800-252-5555 to request an application.

Collection Responsibility Continues for Twelve Months

A seller that engages in business in Texas must continue to collect and remit the state use tax and all applicable taxes for local taxing jurisdictions for 12 months after it last engaged in business in Texas.

What is "Engaged in Business "?

A seller of taxable goods or services that engages in any of the following activities or with any of the following items in Texas is engaged in business and must collect sales or use tax on taxable goods or services sold, delivered, or provided in Texas.

  • Physical location - This includes both permanent and temporary locations, whether operated by the retailer directly or by an agent. It may be an office, warehouse, distribution center, storage place, sales or sample room, or any other business location.
  • Agent - A representative operating under the authority of the retailer for the purpose of selling, delivering, or taking orders for taxable goods or services.
  • Texas franchisee or licensee who sells taxable goods or services.
  • Trade show participant - An out-of-state seller that participates in a trade show for the purpose of soliciting or taking orders for taxable goods or services sold, shipped, or delivered in Texas.
  • Delivery of taxable items to Texas customers via company vehicles (whether owned, leased, or rented).
  • Deriving income from the rental or lease of equipment or other tangible personal property in Texas.
  • Providing taxable services through company employees, authorized repair or service agents, or independent contractors.
  • Using independent salespersons to make sales or take orders for taxable goods or services on behalf of an out-of-state seller.

94-108
(11/2006)

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