exceed the two percent cap, the tax
for that authority is not due and the seller or purchaser should determine,
following the criteria in subparagraphs (A) - (D) of this paragraph,
whether use tax is due for the authority that next became effective.
(i) If the competing transit authorities became effective
on the same date, the transit authority taxes are due in the order
of the earliest date for which the election in which the authority
residents authorized the imposition of sales and use tax by the authority
was held.
(ii) If the elections to impose local taxes were held
on the same date, the transit authority use taxes are due in the order
of the earliest date for which the enabling legislation under which
each authority was created became effective.
(2) General use tax rules applied to specific situations.
The following fact patterns explain how local use tax is to be collected
or accrued and remitted to the comptroller based on, and subject to,
the general rules in paragraph (1) of this subsection.
(A) Sale consummated outside the state, item delivered
from outside the state or from a location in Texas that is not operated
by the seller - local use tax due. Except as provided in subsection
(i)(3) of this section, if a sale is consummated outside of this state
according to the provisions of subsection (c) of this section, and
the item purchased is either shipped or delivered to a location in
this state as designated by the purchaser from a location outside
of the state, or if the order is drop shipped directly to the purchaser
from a third-party supplier, local use tax is owed based upon the
location in this state to which the order is shipped or delivered
or at which the purchaser of the item takes possession. The seller
is responsible for collecting the local use tax due on the sale. If
the seller does not collect the local use taxes due on the sale, the
purchaser is responsible for accruing such taxes and remitting them
directly to the comptroller according to the provisions in paragraph
(1) of this subsection. For example, if an order for a taxable item
is received by a seller at a location outside of Texas, and the order
is shipped to the purchaser from a location outside of the state,
local use tax is due based upon the location to which the order is
shipped or delivered or at which the purchaser of the item takes possession.
(B) Sale consummated in Texas outside a local taxing
jurisdiction, item delivered into one or more local taxing jurisdictions
- local use tax due. If a sale is consummated at a location in Texas
that is outside of the boundaries of any local taxing jurisdiction
according to the provisions of subsection (c) of this section, and
the order is shipped or delivered to the purchaser at a location in
this state that is within the boundaries of one or more local taxing
jurisdictions, local use tax is due based on the location to which
the items are shipped or delivered or at which the purchaser of the
item takes possession. The seller is responsible for collecting the
local use taxes due on the sale, regardless of the location of the
seller in Texas. If the seller fails to collect any local use taxes
due, the purchaser is responsible for accruing such taxes and remitting
them directly to the comptroller.
(C) Sale consummated in any local taxing jurisdictions
imposing less than 2.0% in total local taxes - local sales taxes and
use taxes due. If a sale is consummated at a location in Texas where
the total local sales tax rate imposed by the taxing jurisdictions
in effect at that location does not equal 2.0% according to the provisions
of subsection (c) of this section, and the item is shipped or delivered
to the purchaser at a location in this state that is inside the boundaries
of a different local taxing jurisdiction, additional local use tax
may be due based on the location to which the order is shipped or
delivered or at which the purchaser of the item takes possession,
subject to the two percent cap. The seller is responsible for collecting
any additional local use taxes due on the sale, regardless of the
location of the seller in Texas. See subsection (i) of this section.
If the seller fails to collect the additional local use taxes due,
the purchaser is responsible for accruing such taxes and remitting
them directly to the comptroller.
(i) Example one - if an order is received in person
at a place of business of the seller, such that the sale is consummated
at the location where the order is received as provided under subsection
(c)(1)(A) of this section, and the local sales tax due on the sale
does not meet the two percent cap, additional local use taxes are
due based on the location to which the order is shipped or delivered
or at which the purchaser of the item takes possession, subject to
the provisions in paragraph (1) of this subsection.
(ii) Example two - if a seller receives an order for
a taxable item at a seller's place of business in Texas, and the seller
ships or delivers the item from an out-of-state location to a location
in this state as designated by the purchaser, local sales tax is due
based upon the location of the place of business of the seller where
the order is received. If the local sales tax due on the item does
not meet the two percent cap, use taxes, subject to the provisions
in paragraph (1) of this subsection, are due based upon the location
where the items are shipped or delivered or at which the purchaser
of the item takes possession.
(e) Effect of other law.
(1) Tax Code, Title 2, Subtitles A (General Provisions)
and B (Enforcement and Collection), Tax Code, Chapter 141 (Multistate
Tax Compact) and Tax Code, Chapter 151 (Limited Sales, Excise, and
Use Tax) apply to transactions involving local taxes. Related sections
of this title and comptroller rulings shall also apply with respect
to local taxes. This includes authorities such as court cases and
federal law that affect whether an item is taxable or is excluded
or exempt from taxation.
(2) Permits, exemption certificates, and resale certificates
required by Tax Code, Chapter 151, shall also satisfy the requirements
for collecting and remitting local taxes, unless otherwise indicated
by this section or other sections of this title. For example, see
subsection (n) of this section concerning prior contract exemptions.
(3) Any provisions in this section or other sections
of this title related to a seller's responsibilities for collecting
and remitting local taxes to the comptroller shall also apply to a
purchaser if the seller does not collect local taxes that are due.
The comptroller may proceed against the seller or purchaser for the
local tax owed by either.
(f) Tax rates. Except as otherwise provided by law,
no local governmental entity may adopt or increase a sales and use
tax if, as a result of the adoption or increase of the tax, the combined
rate of all sales and use taxes imposed by local taxing jurisdictions
having territory in the local governmental entity would exceed 2.0%
at any location within the boundaries of the local governmental entity's
jurisdiction. The following are the local tax rates that may be adopted.
(1) Cities. Cities may impose sales and use tax at
a rate of up to 2.0%.
(2) Counties. Counties may impose sales and use tax
at rates ranging from 0.5% to 1.5%.
(3) Special purpose districts. Special purpose districts
may impose sales and use tax at rates ranging from 0.125% to 2.0%.
(4) Transit authorities. Transit authorities may impose
sales and use tax at rates ranging from 0.25% to 1.0%.
(g) Jurisdictional boundaries, combined areas, and
city tax imposed through strategic partnership agreements.
(1) Jurisdictional boundaries.
(A) City boundaries. City taxing jurisdictional boundaries
cannot overlap one another and a city cannot impose a sales and use
tax in an area that is already within the jurisdiction of another
city.
(B) County boundaries. County tax applies to all locations
within that county.
(C) Special purpose district and transit authority
boundaries. Special purpose districts and transit authorities may
cross or share boundaries with other local taxing jurisdictions and
may encompass, in whole or in part, other local taxing jurisdictions,
including cities and counties. A geographic location or address in
this state may lie within the boundaries of more than one special
purpose district or more than one transit authority.
(D) Extraterritorial jurisdictions. Except as otherwise
provided by paragraph (3) of this subsection concerning strategic
partnership agreements and subsection (l)(5) of this section concerning
the City of El Paso and Fort Bliss, city sales and use tax does not
apply to taxable sales that are consummated outside the boundaries
of the city, including sales made in a city's extraterritorial jurisdiction.
However, an extraterritorial jurisdiction may lie within the boundaries
of a special purpose district, transit authority, county, or any combination
of the three, and the sales and use taxes for those jurisdictions
would apply to those sales.
Cont'd... |