(A) The governing bodies of a district, as defined
in Local Government Code, §43.0751, and a city may enter into
a limited-purpose annexation agreement known as a strategic partnership
agreement. Under this agreement, the city may impose sales and use
tax within all or part of the boundaries of a district. Areas within
a district that are annexed for this limited purpose are treated as
though they are within the boundaries of the city for purposes of
city sales and use tax.
(B) Counties, transit authorities, and special purpose
districts may not enter into strategic partnership agreements. Sales
and use taxes imposed by those taxing jurisdictions do not apply in
the limited-purpose annexed area as part of a strategic partnership
agreement between a city and an authorized district. However, a county,
special purpose district, or transit authority sales and use tax,
or any combination of these three types of taxes, may apply at locations
included in a strategic partnership agreement between a city and an
authorized district if the tax is imposed in that area by the applicable
jurisdiction as allowed under its own controlling authorities.
(C) Prior to September 1, 2011, the term "district"
was defined in Local Government Code, §43.0751 as a municipal
utility district or a water control and improvement district. The
definition was amended effective September 1, 2011, to mean a conservation
and reclamation district operating under Water Code, Chapter 49.
(e) Place of business - special definitions. In addition
to the general definition of the term "place of business" in subsection
(a)(14) of this section, the following rules apply.
(1) Administrative offices supporting traveling salespersons.
Any outlet, office, or location operated by a seller that serves as
a base of operations for a traveling salesperson or that provides
administrative support to a traveling salesperson is a place of business.
(2) Distribution centers, manufacturing plants, storage
yards, warehouses, and similar facilities.
(A) A distribution center, manufacturing plant, storage
yard, warehouse, or similar facility operated by a seller at which
the seller receives three or more orders for taxable items during
the calendar year is a place of business.
(B) If a salesperson who receives three or more orders
for taxable items within a calendar year is assigned to work from,
or to work at, a distribution center, manufacturing plant, storage
yard, warehouse, or similar facility operated by a seller, then the
facility is a place of business.
(C) If a location that is a place of business of the
seller, such as a sales office, is in the same building as a distribution
center, manufacturing plant, storage yard, warehouse, or similar facility
operated by a seller, then the entire facility is a place of business
of the seller.
(3) Kiosks. A kiosk is not a place of business for
the purpose of determining where a sale is consummated for local tax
purposes. A seller who owns or operates a kiosk in Texas is, however,
engaged in business in this state as provided in §3.286 of this
title.
(4) Purchasing offices.
(A) A purchasing office is not a place of business
if the purchasing office exists solely to rebate a portion of the
local sales and use tax imposed by Tax Code, Chapter 321 or 323 to
a business with which it contracts; or if the purchasing office functions
or exists to avoid the tax legally due under Tax Code, Chapter 321
or 323. A purchasing office does not exist solely to rebate a portion
of the local sales and use tax or to avoid the tax legally due under
Tax Code, Chapter 321 or 323 if the purchasing office provides significant
business services, beyond processing invoices, to the contracting
business, including logistics management, purchasing, inventory control,
or other vital business services.
(B) When the comptroller determines that a purchasing
office is not a place of business, the sale of any taxable item is
deemed to be consummated at the place of business of the seller from
whom the purchasing office purchased the taxable item for resale and
local sales and use taxes are due according to the following rules.
(i) When taxable items are purchased from a Texas seller,
local sales taxes are due based on the location of the seller's place
of business where the sale is deemed to be consummated, as determined
in accordance with subsection (h) of this section.
(ii) When the sale of a taxable item is deemed to be
consummated at a location outside of this state, local use tax is
due based on the location where the items are first stored, used or
consumed by the entity that contracted with the purchasing office
in accordance with subsection (i) of this section.
(C) In making a determination under subparagraph (A)
of this paragraph, as to whether a purchasing office provides significant
business services to the contracting business, the comptroller will
look to the books and records of the purchasing office to determine
whether the total value of the business services provided to the contracting
business equals or exceeds the total value of processing invoices.
If the total value of the business services provided, including logistics
management, purchasing, inventory control, or other vital business
services, is less than the total value of the service to process invoices,
then the purchasing office will be presumed not to be a place of business
of the seller.
(f) Places of business and job sites crossed by local
taxing jurisdiction boundaries.
(1) Places of business crossed by local taxing jurisdiction
boundaries. If a place of business is crossed by one or more local
taxing jurisdiction boundaries so that a portion of the place of business
is located within a taxing jurisdiction and the remainder of the place
of business lies outside of the taxing jurisdiction, tax is due to
the local taxing jurisdictions in which the sales office is located.
If there is no sales office, sales tax is due to the local taxing
jurisdictions in which any cash registers are located.
(2) Job sites.
(A) Residential repair and remodeling; new construction
of an improvement to realty. When a contractor is improving real property
under a separated contract, and the job site is crossed by the boundaries
of one or more local taxing jurisdictions, the local taxes due on
any separately stated charges for taxable items incorporated into
the real property must be allocated to the local taxing jurisdictions
based on the total square footage of the real property improvement
located within each jurisdiction, including the square footage of
any standalone structures that are part of the construction, repair,
or remodeling project. For more information about tax due on materials
used at residential and new construction job sites, refer to §3.291
of this title (relating to Contractors).
(B) Nonresidential real property repair and improvement.
When taxable services are performed to repair, remodel, or restore
nonresidential real property, including a pipeline, transmission line,
or parking lot, that is crossed by the boundaries of one or more local
taxing jurisdictions, the local taxes due on the taxable services,
including materials and any other charges connected to the services
performed, must be allocated among the local taxing jurisdictions
based upon the total mileage or square footage, as appropriate, of
the repair, remodeling, or restoration project located in each jurisdiction.
For more information about tax due on materials used at nonresidential
real property repair and remodeling job sites, refer to §3.357
of this title (relating to Nonresidential Real Property Repair, Remodeling,
and Restoration; Real Property Maintenance).
(g) Sellers' and purchasers' responsibilities for collecting
or accruing local taxes.
(1) Sale consummated in Texas; seller responsible for
collecting local sales taxes and applicable local use taxes. When
a sale of a taxable item is consummated at a location in Texas as
provided by subsection (h) of this section, the seller must collect
each local sales tax in effect at the location except as provided
in paragraph (3) of this subsection. If the total rate of local sales
tax due on the sale does not reach the two percent cap, and the seller
ships or delivers the item into another local taxing jurisdiction
in which the seller is engaged in business, then the seller is required
to collect additional local use taxes due, if any, based on the location
to which the item is shipped or delivered. For more information regarding
local use taxes, refer to subsection (i) of this section.
(2) Out-of-state sale; seller engaged in business in
Texas. A seller who is engaged in business in this state is required
to collect and remit local use taxes due, if any, on orders of taxable
items shipped or delivered at the direction of the purchaser into
a local taxing jurisdiction in this state in which the seller is engaged
in business.
(3) A seller is only required to collect local sales
or use taxes for a local taxing jurisdiction in which the seller is
engaged in business.
Cont'd... |