Economic Nexus: When a business sells goods worth $500,000 or more in the state within the previous or current tax year.
Physical Location: This could be a warehouse, office, or distribution center.
Employee Location: If a company has employees or any other type of representation in the state or a particular city, they should pay taxes.
Affiliate Nexus: When an out-of-state business receives substantial referrals from in-state businesses.
Trade Shows: Businesses that participate in a single day of trade show activities create a sales tax nexus for an entire year following the date of trade show participation.
Tangible Personal Property: Sales of tangible personal property like equipment, supplies, or IT systems. Tangible personal properties used for a final sale and those that help make a chemical or physical change in final products are exempt from sales taxes.
What Products Are Exempt from Dallas Sales Tax?
Dallas doesn’t have a separate tax exemption for taxpayers. They are granted by the Texas Comptroller of Public Affairs and apply to Dallas as well.
Some of the tax exemptions according to the Texas sales tax law are:
Baby products like baby food (canned, packaged, etc.) and medicated products.
Bakery items (nontaxable when sold at a grocery and convenience store without eating utensils or heated). For example, bagels, biscuits, and cookies. This also includes baking supplies such as almond paste, marzipan, and dried fruits.
Condiments and spices like catsup and herbs.
Food produce like canned, dried, frozen, packaged vegetables, rice mixes, and fresh fruits and vegetables. This also includes dairy products like butter and lactose-reduced milk produce.
Snacks (unless sold in an individual-sized portion), for example, breakfast bars and chips.
Beverages like coffee (beans, ground, and instant), fruit and vegetable juices (more than 50 percent fruit or vegetable juice, canned, bottled, or frozen), and water.
Eggs and other egg substitutes.
Grains and pasta like beans and cereals.
Meat, poultry, and fish, like canned meats and dried meats.
Nutritional supplements like herbal and mineral products. The product should either fulfill the criteria for dietary supplements or be labeled with a “Supplement Facts” panel according to the regulations of the FDA.
Over-the-counter drugs and medicines (when required by the FDA to be labeled with a Drug Facts panel), like acne treatment products and allergy treatment products. This also includes wound care itemslike adhesive bandages (including strip adhesive bandages, large adhesive bandages, and butterfly closures) and corn cushions.
Note: The Texas Tax Code provides an exemption from franchise tax and sales tax to nonprofit organizations with an exemption from Internal Revenue Service (IRS).
Who Needs a Sales Tax Permit in Dallas?
A sales tax permit is issued by states in the United States. In Dallas, Texas issues sales permits, and you’ll need one if you:
Sell tangible personal property in Texas.
Lease or rent tangible personal property in Texas.
Sell taxable services in Texas.
Sell or lease tangible personal property or taxable services to customers in Texas from an out-of-state business and have revenue from Texas of $500,000 or more in the past 12 months.
How to Collect Sales Tax in Dallas?
Texas collects tax revenue in its counties and cities. It’s an origin-based sourcing state for intrastate sales and a destination-based sales tax sourcing state for interstate sales:
To collect sales tax on:
Intrastate Texas sales: A sale is considered intrastate if it ships from an origin in Texas to a buyer's address in Texas.
For example, if a small business owner in Round Rock, Texas, makes a sale to a buyer in Marathon, Texas, they will have to charge the sales tax rate at Round Rock.
Interstate Texas sales: A sale is considered interstate if the item ships from outside Texas and the seller isn’t otherwise “engaged in the business” in the state. In such cases, you’d generally charge the sales tax rate at the buyer’s location.
For instance, if the business owner is located in Leander, Idaho, and sells to a buyer in Alpine, Texas, they will charge the buyer the Alpine sales tax rate.
How to File and Pay Sales Tax in Dallas?
Some ways to file and pay your sales tax return are:
File by mail by using sales tax form 01-117 or 01-114 (short form)
File by phone if you have zero returns or no sales tax to report.
You have another option to file your sales tax return too!
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