Sales Tax Follows The Buyer, With A Carve-Out Through 2030

The text as introduced · 1,224 words

89R12869 CJC-F

By: Meyer
H.B. No. 134

A BILL TO BE ENTITLED

AN ACT

relating to the location at which certain sales are consummated for

purposes of local sales and use taxes.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 321.002(a)(3)(A), Tax Code, is amended

to read as follows:

(3)(A) "Place of business of the retailer" means an

established outlet, office, or location operated by the retailer or

the retailer's agent or employee for the purpose of receiving

orders for taxable items and includes any location at which three or

more orders are received by the retailer during a calendar year.

The term does not include a computer server, Internet protocol

address, domain name, website, or software application. A

warehouse, storage yard, or manufacturing plant is not a "place of

business of the retailer" unless at least three orders are received

by the retailer during the calendar year at the warehouse, storage

yard, or manufacturing plant.

SECTION 2. Section 321.002(a), Tax Code, is amended by

amending Subdivision (1) and adding Subdivisions (1-a), (1-b), (4),

and (5) to read as follows:

(1) "Active economic development agreement" means an

agreement under Chapter 380, 381, 504, or 505, Local Government

Code, under which the local government made payments on or before

January 1, 2025, based on local sales and use tax collections.

(1-a) "Additional municipal sales and use tax" means

only the additional tax authorized by Section 321.101(b).

(1-b) "Affiliated group" has the meaning assigned by

Section 171.0001.

(4) "Principal business location" means the business

location where the decision makers of a business conduct the daily

affairs of the organization.

(5) "Small business" means a sales tax permit holder

that has:

(A) its principal business location in this

state;

(B) not more than 20 employees, including all

employees of each member of an affiliated group that includes the

permit holder; and

(C) total combined gross receipts from the sale

of tangible personal property and services in the preceding 12

calendar months of less than $500,000, including the gross receipts

of each member of an affiliated group that includes the permit

holder.

SECTION 3. Section 321.203, Tax Code, is amended by

amending Subsections (b), (c), (c-1), (d), and (e-1) and adding

Subsections (o), (p), and (q) to read as follows:

(b) Except as otherwise provided by this section, the sale

of a taxable item by a small business is consummated at the

principal business location of the small business [ If a retailer

has only one place of business in this state, all of the retailer's

retail sales of taxable items are consummated at that place of

business except as provided by Subsection (e) ].

(c) Each [ If a retailer has more than one place of business

in this state, each ] sale of each taxable item by a [ the ] retailer

other than a small business is consummated at the place of business

of the retailer in this state where the retailer [ first ] receives

the order, provided that the order is placed in person by the

purchaser or lessee of the taxable item at the place of business of

the retailer in this state where the retailer [ first ] receives the

order.

(c-1) If Subsections (b) and (c) do [ the retailer has more

than one place of business in this state and Subsection (c) does ]

not apply, the sale is consummated at the location in this state to

which the item is shipped or delivered or at which possession is

taken by the purchaser [ place of business of the retailer in this

state:

[ (1) from which the retailer ships or delivers the

item, if the retailer ships or delivers the item to a point

designated by the purchaser or lessee; or

[ (2) where the purchaser or lessee takes possession of

and removes the item, if the purchaser or lessee takes possession of

and removes the item from a place of business of the retailer ].

(d) If [ the retailer has more than one place of business in

this state and ] Subsections (b), (c) , and (c-1) do not apply, the

sale is consummated at:

(1) the place of business of the retailer in this state

where the order is received; or

(2) if the order is not received at a place of business

of the retailer, the place of business from which the retailer's

agent or employee who took the order operates.

(e-1) Except as otherwise provided by Subsection (f), (g),

(g-1), (g-2), (g-3), (h), (i), (j), (k), (m), [ or ] (n), (p), or (q),

a sale of a taxable item made by a marketplace seller through a

marketplace as provided by Section 151.0242 is consummated at the

location in this state to which the item is shipped or delivered or

at which possession is taken by the purchaser.

(o) An order is received at the location where all of the

information from the purchaser necessary to determine whether the

order can be accepted has been received by or on behalf of the

seller. The order is not received at a location where the order is

subsequently accepted, completed, or fulfilled.

(p) A retailer that has an active economic development

agreement with a municipality and has a single place of business in

this state that is within the municipality may elect to collect and

report the sales tax authorized by this chapter based on the

location of the retailer's single place of business. An election

under this subsection is binding on the retailer and the purchaser.

This subsection expires December 31, 2030.

(q) A retailer that has an active economic development

agreement with a municipality may elect to collect and report the

sales tax authorized by this chapter based on the location of the

retailer within the municipality from which an item is shipped

directly to the purchaser or the purchaser's designee. An election

under this subsection is binding on the retailer and the purchaser.

This subsection expires December 31, 2030.

SECTION 4. The heading to Section 323.203, Tax Code, is

amended to read as follows:

Sec. 323.203. CONSUMMATION OF SALE : CERTAIN PROVISIONS OF

MUNICIPAL SALES AND USE TAX APPLICABLE .

SECTION 5. Section 323.203(a), Tax Code, is amended to read

as follows:

(a) Sections 321.002 and 321.203 apply to the taxes

authorized by this chapter in the same manner as those sections

apply to the taxes authorized under Chapter 321 [ A sale of a taxable

item occurs within the county in which the sale is consummated. A

sale is consummated as provided by this section regardless of the

place where transfer of title or possession occurs ].

SECTION 6. The following laws are repealed:

(1) Section 3853.202(d), Special District Local Laws

Code; and

(2) Sections 323.203(b), (c), (c-1), (d), (e), (e-1),

(f), (g), (g-1), (g-2), (g-3), (h), (i), (j), (k), and (m), Tax

Code.

SECTION 7. The changes in law made by this Act do not affect

tax liability accruing before the effective date of this Act. That

liability continues in effect as if this Act had not been enacted,

and the former law is continued in effect for the collection of

taxes due and for civil and criminal enforcement of the liability

for those taxes.

SECTION 8. This Act takes effect January 1, 2026.