Sales And Use Taxes | TaxConnections

11 Jul 2023

Texas Sales And Use Tax Implications Of Oil And Gas Well Servicing

In certain circumstances, services performed on oil and gas wells or related equipment may be subject to Texas sales or use tax. The taxability of these services is fraught with complexity, but is discussed briefly below.

General Taxability

At a high level, services performed on oil and gas wells are generally subject to tax as either (i) commercial repair and remodeling services (i.e., services performed on real property) or (ii) repair, remodeling, or maintenance of tangible personal property (i.e., services performed on portions of the well or related equipment). [1]

Nontaxable Services

Comptroller Rule § 3.324 carves out certain services as specifically nontaxable. This Rule lays out two general categories of nontaxable services.

First, no Texas sales or use tax is due on “[t]he labor to perform those services subject to the 2.42% oil well service tax imposed under Tax Code, Chapter 191”. [2] In this context, Chapter 191 applies “oil well services” which are defined to include:
Read More

Written by Jason Hendrix | Posted in Oil And Gas Well Servicing • Sales And Use Taxes • TaxConnections

14 Jan 2021

On-Line Retailers And Remote Sellers: Sales And Use Taxes

The Supreme Court of the United States’ decision in Wayfair, in June 2018, changed the landscape for sales and use taxes nexus for on-line retailers and remote sellers. Due to budgetary deficits the states are facing due to the downturn in the economy and the Covid-19 Pandemic, states will increase audit activity to raise money. Companies must be prepared and be proactive in order to avoid or reduce any state tax assessments.

The Wayfair decision lowered the bar in which a company has nexus with a state. Prior to Wayfair, a company needed a physical presence in the state to be required to collect and remit sales and use taxes. After Wayfair, states now require an economic presence, generally based on a threshold of sales into the state to create nexus with the state. Please note, even if a company does not meet the economic thresholds for sales or transactions, as the case may be, but has a physical presence in the state, then the company has nexus with the state because of the physical presence and must register for sales and use taxes in such state.

Written by George Rendziperis, J.D. | Posted in Remote Sellers • Sales And Use Taxes

05 Jan 2021

Frequently Asked Questions: Sales And Use Taxes Economic Nexus And Wayfair (Part 2)

PART 2: IF A TAXPAYER MEETS THE SALES THRESHOLD IN A STATE, WHAT MUST WE DO NOW?

These frequently asked questions build on our prior series of FAQs.

Q: Once a taxpayer meets the sales threshold of a state, what must be done to be compliant with the state’s tax laws?

A: You must register for sales and use taxes with the state. Depending on the state and jurisdiction, you may need to register with the local jurisdiction or parish. Please note some states may require you to register with the state’s Secretary of State before obtaining a sales tax permit from the state.

Q: How often will I need to file sales and use tax returns?

A: It will depend on each state. The state will assign you a filing frequency based on certain criteria it has established. The frequency will be either monthly, quarterly or yearly.

Written by George Rendziperis, J.D. | Posted in Economic Nexus • Sales And Use Tax • Wayfair Case