(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,
or village.
(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: https://comptroller.texas.gov/taxes/sales/ [
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
the purchaser.
(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
purchaser. The term does not include tracking an order, determining
shipping costs, managing inventory, or other activities that do not
involve the transfer, shipment, or delivery of a taxable item to the
purchaser or a location designated by the purchaser.
(10)Internet order--An order placed
on a website, software application, or other method using the Internet
by a purchaser using a computer or mobile device that does not belong
to the seller. Internet order does not include an order placed by
phone call using Voice over Internet Protocol or a mobile device.
(11)[(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.
(12)[(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.
(13)[(12)] Local taxes--Sales
and use taxes imposed by any local taxing jurisdiction.
(14)[(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.
(15)Marketplace provider--This term
has the meaning given in §3.286 of this title.
(16)Order placed in person--An order
placed by a purchaser with the seller while physically present at
the seller's place of business on the system, computer, or other device
of the seller, regardless of whether the seller uses the Internet,
a phone, or a catalog to make the order. The term does not include
Internet orders.
(17)[(14)] Place of business of
the seller - 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 and that receives
three or more orders for taxable items during the calendar year.
Places of business of the seller 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.]
A website, software application, or other method used to place an
Internet order is not a place of business of the seller. Additional
criteria for determining when a location is a place of business of
the seller are provided in subsection (b)[(e)]
of this section for [administrative offices;] distribution
centers, manufacturing plants, storage yards, warehouses and similar
facilities; kiosks; and purchasing offices. 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,
is not a "place of business of the retailer" if the comptroller determines
that the outlet, office, facility, or location functions or exists
to avoid the tax legally due under this chapter or exists solely to
rebate a portion of the tax imposed by this chapter to the contracting
business. An outlet, office, facility, or location does not exist
to avoid the tax legally due under this chapter or solely to rebate
a portion of the tax imposed by this chapter if the outlet, office,
facility, or location provides significant business services, beyond
processing invoices, to the contracting business, including logistics
management, purchasing, inventory control, or other vital business
services.
(18)[(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.
(19)Remote Seller--As defined in
§3.286 of this title, remote seller is a seller engaged in business
in this state whose only activity in the state is:
(A)engaging in regular or systematic solicitation
of sales of taxable items in this state by the distribution of catalogs,
periodicals, advertising flyers, or other advertising, by means of
print, radio, or television media, or by mail, telegraphy, telephone,
computer data base, cable, optic, microwave, or other communication
system for the purpose of effecting sales of taxable items; or
(B)soliciting orders for taxable items by mail or
through other media including the Internet or other media that may
be developed in the future.
(20)[(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.
(21)[(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.
(22)[(18)] Storage--This term
has the meaning given in §3.346 of this title (relating to Use
Tax).
(23)[(19)] Temporary place of
business of the seller--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. A
temporary place of business of the seller includes a sale outside
of a distribution center, manufacturing plant, storage yard, warehouse,
or similar facility of the seller in a parking lot or similar space
sharing the same physical address as the facility but not within the
walls of the facility.
(24)[(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.
(25)[(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 for sale.
(26)[(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
(27)[(23)] Use--This term has
the meaning given in §3.346 of this title.
(28)[(24)] Use tax--A tax imposed
on the storage, use or other consumption of a taxable item in this
state.
(b)Place of business of the seller
- special definitions. In addition to the general definition of the
term "place of business of the seller" in subsection (a)(17) of this
section, the following rules apply.
(1)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 of taxable items during a
calendar year from persons other than employees, independent contractors,
and natural persons affiliated with the seller.
(B)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.
(2)Kiosks. A kiosk is not a place of business of the
seller 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.
(3)Purchasing offices.
(A)A purchasing office is not a place of business
of the seller 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 to the contracting business beyond processing
invoices, including logistics management, purchasing, inventory control,
or other vital business services.
(B)In making a determination under subparagraph (A)
of this paragraph, as to whether a purchasing office provides significant
business services to the contracting business beyond processing invoices,
the comptroller will compare the total value of the other business
services to the value of processing invoices. If the total value of
the other business services, including logistics management, purchasing,
inventory control, or other vital business services, is less than
the value of the service to process invoices, then the purchasing
office will be presumed not to be a place of business of the seller.
(C)If the comptroller determines that a purchasing
office is not a place of business of the seller, 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 (c) 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 (d) of this section.
(c)Local sales tax. Determining the
local taxing jurisdictions to which sales tax is due; consummation
of sale.
(1)General sales tax rules applied to specific situations.
Except for the special rules applicable to remotes sellers in subsection
(i)(3) of this section, direct payment permit purchases in subsection
(j) of this section, and certain taxable items, including taxable
items sold by a marketplace provider, as provided in subsection (k)
of this section, each sale of a taxable item is consummated at the
location indicated by the provisions of this subsection. The following
rules, taken from Tax Code, §321.203 and §323.203, apply
to all sellers engaged in business in this state, regardless of whether
they have no place of business in Texas, a single place of business
in Texas, or multiple places of business in the state.
(A)Order placed in person at a seller's place of business
in Texas. Except as described in subparagraph (F) of this paragraph
and paragraph (6) of this subsection, for an order placed in person
by a purchaser for a taxable item at a seller's place of business
in Texas, including at a temporary place of business of the seller,
the sale of that item is consummated at that place of business of
the seller, regardless of the location where the order is fulfilled.
Orders taken by traveling salespersons are not placed in person at
the seller's place of business in Texas.
(B)Order received at a place of business of the seller
in Texas, fulfilled at a location that is not a place of business
of the seller.
Cont'd...
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