|(a) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Cable system--The system through which a cable
service provider delivers cable television or bundled cable service,
as those terms are defined in §3.313 of this title (relating
to Cable Television Service and Bundled Cable Service).
(2) City--An incorporated city, municipality, town,
(3) City sales and use tax--The tax authorized under
Tax Code, §321.101(a), including the additional municipal sales
and use tax authorized under Tax Code, §321.101(b), the municipal
sales and use tax for street maintenance authorized under Tax Code, §327.003,
the Type A Development Corporation sales and use tax authorized under
Local Government Code, §504.251, the Type B Development Corporation
sales and use tax authorized under Local Government Code, §505.251,
a sports and community venue project sales and use tax adopted by
a city under Local Government Code, §334.081, and a municipal
development corporation sales and use tax adopted by a city under
Local Government Code, §379A.081. The term does not include the
fire control, prevention, and emergency medical services district
sales and use tax authorized under Tax Code, §321.106, or the
municipal crime control and prevention district sales and use tax
authorized under Tax Code, §321.108.
(4) Comptroller's website--The agency's website concerning
local taxes located at: http://comptroller.texas.gov/taxinfo/local/.
(5) County sales and use tax--The tax authorized under
Tax Code, §323.101, including a sports and community venue project
sales and use tax adopted by a county under Local Government Code, §334.081.
The term does not include the county health services sales and use
tax authorized under Tax Code, §324.021, the county landfill
and criminal detention center sales and use tax authorized under Tax
Code, §325.021, or the crime control and prevention district
sales and use tax authorized under Tax Code, §323.105.
(6) Drop shipment--A transaction in which an order
is received by a seller at one location, but the item purchased is
shipped by the seller from another location, or is shipped by the
seller's third-party supplier, directly to a location designated by
(7) Engaged in business--This term has the meaning
given in §3.286 of this title (relating to Seller's and Purchaser's
Responsibilities, including Nexus, Permits, Returns and Reporting
Periods, and Collection and Exemption Rules).
(8) Extraterritorial jurisdiction--An unincorporated
area that is contiguous to the corporate boundaries of a city as defined
in Local Government Code, §42.021
(9) Fulfill--To complete an order by transferring a
taxable item directly to a purchaser at a Texas location, or to ship
or deliver a taxable item to a location in Texas designated by the
(10) Itinerant vendor--A person who travels to various
locations for the purpose of receiving orders and making sales of
taxable items and who does not operate a place of business. For example,
a person who sells rugs from the back of a truck that the person drives
to a different location each day is an itinerant vendor. A person
who sells items through vending machines is also an itinerant vendor.
A salesperson that operates out of an office, place of business, or
other location that provides administrative support to the salesperson
is not an itinerant vendor.
(11) Kiosk--A small stand-alone area or structure:
(A) that is used solely to display merchandise or to
submit orders for taxable items from a data entry device, or both;
(B) that is located entirely within a location that
is a place of business of another seller, such as a department store
or shopping mall; and
(C) at which taxable items are not available for immediate
delivery to a purchaser.
(12) Local taxes--Sales and use taxes imposed by any
local taxing jurisdiction.
(13) Local taxing jurisdiction--Any of the following:
(A) a city that imposes sales and use tax as provided
under paragraph (3) of this subsection;
(B) a county that imposes sales and use tax as provided
under paragraph (5) of this subsection;
(C) a special purpose district created under the Special
District Local Laws Code or other provisions of Texas law that is
authorized to impose sales and use tax by the Tax Code or other provisions
of Texas law and as governed by the provisions of Tax Code, Chapters
321 or 323 and other provisions of Texas law; or
(D) a transit authority that imposes sales and use
tax as authorized by Transportation Code, Chapters, 451, 452, 453,
457, or 460 and governed by the provisions of Tax Code, Chapter, 322.
(14) Place of business - general definition--An established
outlet, office, or location operated by a seller for the purpose of
selling taxable items to those other than employees, independent contractors,
and natural persons affiliated with the seller. Places of business
include, but are not limited to, call centers, showrooms, and clearance
centers. The term also includes any location operated by a seller
at which the seller receives three or more orders for taxable items
during a calendar year. For example, a home office at which three
or more items are sold through an online auction website is a place
of business. Additional criteria for determining when a location is
a place of business are provided in subsection (e) of this section
for administrative offices; distribution centers, manufacturing plants,
storage yards, warehouses and similar facilities; kiosks; and purchasing
(15) Purchasing office--An outlet, office, facility,
or any location that contracts with a retail or commercial business
to process for that business invoices, purchase orders, bills of lading,
or other equivalent records onto which sales tax is added, including
an office operated for the purpose of buying and selling taxable goods
to be used or consumed by the retail or commercial business.
(16) Seller--This term has the meaning given in §3.286
of this title and also refers to any agent or employee of the seller.
(17) Special purpose district--A local governmental
entity authorized by the Texas legislature for a specific purpose,
such as crime control, a local library, emergency services, county
health services, or a county landfill and criminal detention center.
(18) Storage--This term has the meaning given in §3.346
of this title (relating to Use Tax).
(19) Temporary place of business--A location operated
by a seller for a limited period of time for the purpose of selling
and receiving orders for taxable items and where the seller has inventory
available for immediate delivery to a purchaser. For example, a person
who rents a booth at a weekend craft fair or art show to sell and
take orders for jewelry, or a person who maintains a facility at a
job site to rent tools and equipment to a contractor during the construction
of real property, has established a temporary place of business.
(20) Transit authority--A metropolitan rapid transit
authority (MTA), advanced transportation district (ATD), regional
or subregional transportation authority (RTA), city transit department
(CTD), county transit authority (CTA), regional mobility authority
(RMA) or coordinated county transportation authority created under
Transportation Code, Chapters 370, 451, 452, 453, 457, or 460.
(21) Traveling salesperson--A seller, or an agent or
employee of a seller, who visits potential purchasers in person to
solicit sales, and who does not carry inventory ready for immediate
sale, but who may carry samples or perform demonstrations of items
(22) Two percent cap--A reference to the general rule
that, except as otherwise provided by Texas law and as explained in
this section, a seller cannot collect, and a purchaser is not obligated
to pay, more than 2.0% of the sales price of a taxable item in total
local sales and use taxes for all local taxing jurisdictions
(23) Use--This term has the meaning given in §3.346
of this title.
(24) Use tax--A tax imposed on the storage, use or
other consumption of a taxable item in this state.
(b) 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.
(c) 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%.
(d) 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
(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.
(2) Combined areas. A combined area is an area where
the boundaries of a city overlap the boundaries of one or more other
local taxing jurisdictions as a result of an annexation of additional
territory by the city, and where, as the result of the imposition
of the city tax in the area in addition to the local taxes imposed
by the existing taxing jurisdictions, the combined local tax rate
would exceed 2.0%. The comptroller shall make accommodations to maintain
a 2.0% rate in any combined area. Sellers engaged in transactions
on which local sales or use taxes are due in a combined area, or persons
who must self-accrue and remit tax directly to the comptroller, must
use the combined area local code when reporting the tax rather than
the codes for the individual city, county, special purpose districts,
or transit authorities that make up the combined area. The comptroller
shall distribute the tax revenue generated in these combined areas
to the local taxing jurisdictions located in the combined areas as
provided in Tax Code, §321.102 or Health and Safety Code, §775.0754.
Combined areas are identified on the comptroller's website.
(3) City tax imposed through strategic partnership