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(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 comptroller's website
concerning local taxes located at: https://comptroller.texas.gov/taxes/sales/.
(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).
(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 possession
of a taxable item to a purchaser, or to ship or deliver a taxable
item to a location designated by the purchaser. The term does not
include receiving or 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)Itinerant vendor--A seller who travels to various
locations for the purpose of receiving orders and making sales of
taxable items and who has no place of business in this state. A person
who sells items through vending machines is also an itinerant vendor.
A salesperson that operates out of a place of business in this state
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)Marketplace provider--This term has the meaning
given in §3.286 of this title.
(15)Order placed in person--An order placed by a purchaser
with the seller while physically present at the seller's place of
business regardless of how the seller subsequently enters the order.
(16)Place of business of the seller - general definition--A
place of business of the seller must be an established outlet, office,
or location operated by a seller for the purpose of receiving orders
for taxable items from persons other than employees, independent contractors,
and natural persons affiliated with the seller. An "established outlet,
office, or location" usually requires staffing by one or more sales
personnel. The term does not include a computer server, Internet protocol
address, domain name, website, or software application. The "purpose"
element of the definition may be established by proof that the sales
personnel of the seller receive three or more orders for taxable items
at the facility during the calendar year. Additional criteria for
determining when a location is a place of business of the seller are
provided in subsection (b) of this section for 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 seller if the comptroller determines that the outlet,
office, facility, or location functions or exists to avoid the tax
legally due under Tax Code, Chapters 321, 322, and 323 or exists solely
to rebate a portion of the tax imposed by those chapters to the contracting
business. An outlet, office, facility, or location does not exist
to avoid the tax legally due under Tax Code, Chapters 321, 322, and
323 or solely to rebate a portion of the tax imposed by those chapters
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.
(17)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.
(18)Remote Seller--As defined in §3.286 of this
title, a 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.
(19)Seller--This term has the meaning given in §3.286
of this title and also refers to any agent or employee of the seller.
(20)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.
(21)Storage--This term has the meaning given in §3.346
of this title (relating to Use Tax).
(22)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.
(23)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.
(24)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.
(25)Use--This term has the meaning given in §3.346
of this title.
(26)Use tax--A tax imposed on the storage, use or
other consumption of a taxable item in this state.
(b)Determining the place of business of a seller.
(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 for the
purpose of selling taxable items where sales personnel of the seller
receive three or more orders for taxable items during the calendar
year from persons other than employees, independent contractors, and
natural persons affiliated with the seller is a place of business
of the seller. Forwarding previously received orders to the facility
for fulfilment does not make the facility a place of business.
(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, Chapters 321,
322, 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, Chapters 321, 322, 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, Chapters 321, 322, 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.
(4)An order that is received by a salesperson who
is not at a place of business of the seller when the salesperson receives
the order is treated as being received at the location from which
the salesperson operates. Examples include orders that a salesperson
receives by mail, telephone, including Voice over Internet Protocol
and cellular phone calls, facsimile, and email while traveling. The
location from which the salesperson operates is the principal fixed
location where the salesperson conducts work-related activities. The
location from which a salesperson operates will be a place of business
of the seller only if the location meets the definition of a "place
of business of a seller" in subsection (a)(16) of this section on
its own, without regard to the orders imputed to that location by
this paragraph.
(5)A facility without sales personnel is usually not
a "place of business of the seller." A vending machine is not "an
established outlet, office, or location," and does not constitute
a "place of business of the seller." Instead, a vending machine sale
is treated as a sale by an itinerant vendor. See subsections (a)(10)
and (c)(6) of this section. However, a walk-in retail outlet with
a stock of goods available for immediate purchase through a cashier-less
point of sale terminal at the outlet would be "an established outlet,
office, or location" so as to constitute a "place of business of the
seller" even though sales personnel are not required for every sale.
A computer that operates an automated shopping cart software program
is not an established outlet, office, or location," and does not constitute
a "place of business of the seller." A computer that operates an automated
telephone ordering system is not "an established outlet, office, or
location," and does not constitute a "place of business of the seller."
(c)Local sales tax - Consummation of sale - determining
the local taxing jurisdictions to which sales tax is due. Except for
the special rules applicable to remote 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 Texas, regardless of whether they have
no place of business in Texas, a single place of business in Texas,
or multiple places of business in Texas.
(1)Consummation of sale - order received at a place
of business of the seller in Texas.
(A)Order placed in person. Except as provided by paragraph
(3) of this subsection, when an order for a taxable item is placed
in person at a seller's place of business in Texas, including at a
temporary place of business of the seller in Texas, the sale of that
item is consummated at that place of business of the seller, regardless
of the location where the order is fulfilled.
(B)Order not placed in person.
(i)Order fulfilled at a place of business of the seller
in Texas. When an order is received at a place of business of the
seller in Texas and is fulfilled at a place of business of the seller
in Texas, the sale is consummated at the place of business where the
order is fulfilled.
(ii)Order not fulfilled at a place of business of
the seller in Texas. When an order is received at a place of business
of the seller in Texas and is fulfilled at a location that is not
a place of business of the seller in Texas, the sale is consummated
at the place of business where the order is received.
(2)Consummation of sale - order not received at a
place of business of the seller in Texas.
Cont'd...
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