Sales Tax Exposure in Arlington, Texas

What is Sales Tax Exposure in Arlington?

Sales tax exposure refers to the potential tax liabilities a business may face if it fails to comply with Arlington’s local and state tax regulations. This could be due to applying incorrect tax rates, not accounting for special districts, or failing to properly calculate nexus. These errors can lead to penalties, back taxes, and increased audit risk for businesses.

Understanding Sales Tax Nexus in Arlington

• Physical Nexus: Businesses with a physical presence in Arlington, such as offices, warehouses, employees, or inventory, are required to collect and remit sales tax on all taxable sales made in the city.
• Economic Nexus: Arlington, like the rest of Texas, enforces economic nexus laws. If a business exceeds $500,000 in sales in Texas, it is required to collect and remit sales tax, even if it doesn’t have a physical presence in Arlington.

Special Tax Districts in Arlington

Arlington is subject to multiple special purpose districts that impose additional sales taxes. These districts can include:

• Transit authorities
• Municipal utility districts
• Development and improvement districts

Each district can add a percentage to the standard sales tax rate. Businesses must understand which special districts apply to their location to ensure accurate tax collection.

Arlington's tax exposure may vary depending on special districts. Learn more on our Special Tax Districts page.

Sales Tax Rates in Arlington

• Texas State Sales Tax: 6.25%
• Arlington City Sales Tax: 2.00%
• Combined Sales Tax Rate: The total combined rate for Arlington is 8.25% in most areas, though this rate can vary depending on specific district participation.

It's important for businesses to apply the correct rate based on the transaction location in Arlington, as special districts can affect the overall rate.

Use Tax Exposure in Arlington

Use tax applies when businesses purchase goods or services from out-of-state vendors who do not charge Texas sales tax. Arlington businesses may face use tax exposure in these situations:

• Out-of-state purchases of equipment, machinery, or inventory.
• Software and digital tools used by Arlington-based teams but purchased from vendors outside Texas.
• Transactions that occur across city or county lines, where sales tax was not properly collected.

Out-of-state purchases may bring use tax exposure to Arlington businesses. Visit our Use Tax page.

Common Sales Tax Mistakes in Arlington

Businesses in Arlington often make the following mistakes, leading to sales tax exposure:

• Relying on ZIP codes rather than properly determining jurisdiction boundaries for tax calculation.
• Misapplying nexus rules, assuming there’s no nexus because the business lacks a physical location in Arlington.
• Ignoring special districts, which can significantly affect the sales tax rate.
• Misapplying origin vs. destination sourcing rules for taxable sales.

These mistakes can accumulate over time, leading to large tax liabilities and audits.

How Sales Tax Exposure Builds Over Time in Arlington

Sales tax exposure in Arlington typically doesn’t result from a single mistake, but from a series of small errors over time. As businesses fail to properly apply the correct tax rates, overlook special districts, or miscalculate nexus, exposure increases, leading to audits and penalties.

Common causes include:

• Incorrect tax rate application.
• Missed special district taxes.
• Failure to register for sales tax in time.
• Incomplete use tax reporting.

Related Resources

• Learn more about sales tax exposure in Dallas, Fort Worth, and Mckinney.
• For more on special tax districts in Arlington, visit the Special Tax Districts page.
• Use our Sales Tax Exposure Calculator to determine your Arlington exposure.