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(i)Except as provided in paragraph (6) of this subsection,
when an order that is placed over the telephone, by any means other
than in person, or through a traveling salesperson is received by
the seller at a place of business of the seller in Texas, and the
seller fulfills the order at a location that is not a place of business
of the seller in Texas, such as a warehouse or distribution center,
the sale is consummated at the place of business of the seller at
which the order for the taxable item is received.
(ii)Orders taken by traveling salespersons operating
out of a place of business of the seller in Texas are received by
the seller at the place of business of the seller in Texas from which
the traveling salesperson operates. Orders taken by traveling salespersons
that are not operating out of a place of business of the seller in
Texas are not received by the seller at a place of business of the
seller in Texas. Orders taken by traveling salespersons are not received
by the seller at the purchaser's location.
(C)Order fulfilled at a place of business of the seller
in Texas. When an order is placed in person at a location that is
not a place of business of the seller in this state, such as a kiosk,
when an order is placed through a traveling salesperson, or when an
order is placed over the telephone, through the Internet, or by any
means other than in person, and the seller fulfills the order at a
location that is a place of business of the seller in Texas, the sale
is consummated at the place of business of the seller where the order
is fulfilled.
(D)Order fulfilled within the state at a location
that is not a place of business of the seller. When an order is received
by a seller at any location other than a place of business of the
seller in this state or by a traveling salesperson that does not operate
out of a place of business of the seller in Texas, and the seller
fulfills the order at a location in Texas that is not a place of business
of the seller, then the sale is consummated at the location in Texas
to which the order is shipped or delivered, or at which the purchaser
of the item takes possession.
(E)Order received outside of the state, fulfilled
outside of the state. When an order is received by a seller at a location
outside of Texas, including orders received by a traveling salesperson
operating from a location outside of Texas or by a remote seller,
and the order is shipped or delivered into a local taxing jurisdiction
from a location outside of the state, the sale is not consummated
at a location in Texas. However, local use tax is due based upon the
location in this state to which the item is shipped or delivered or
at which the purchaser of the item takes possession as provided in
subsection (d) of this section. Except as provided in subsection (i)(3)
of this section, a remote seller required to collect state use tax
under §3.286(b)(2) of this title must also collect local use
tax based on the location to which the item is shipped or delivered
or at which the purchaser of the item takes possession.
(F)Exception for qualifying economic development agreements
entered into before January 1, 2009, pursuant to Tax Code, §321.203(c-4)
- (c-5) or §323.203(c-4) - (c-5). This subparagraph is effective
until September 1, 2024. If applicable, the local sales tax due on
the sale of a taxable item is based on the location of the qualifying
warehouse, which is a place of business of the seller, from which
the item is shipped or delivered or at which the purchaser of the
item takes possession.
(2)Local sales taxes are due to each local taxing
jurisdiction in effect at the location where the sale is consummated.
Local use tax may also be due if the total amount of local sales taxes
due does not reach the two percent cap, and the item purchased is
shipped or delivered to a location in one or more different local
taxing jurisdictions, as provided in subsection (d) of this section.
(3)Multiple special purpose district taxes, multiple
transit authority sales taxes, or a combination of the two may apply
to a single transaction. If the sale of a taxable item is consummated
at a location within the boundaries of multiple special purpose districts
or transit authorities, local sales tax is owed to each of the jurisdictions
in effect at that location. For example, a place of business of the
seller located in the city of San Antonio is within the boundaries
of both the San Antonio Advanced Transportation District and the San
Antonio Metropolitan Transit Authority, and the seller is required
to collect sales tax for both transit authorities. Similarly, a place
of business of the seller in Flower Mound is located within the boundaries
of two special purpose districts, the Flower Mound Crime Control District
and the Flower Mound Fire Control District, and the seller is responsible
for collecting sales tax for both special purpose districts.
(4)Drop shipments.
(A)When an order for a taxable item is received at
a seller's place of business in Texas, or by a traveling salesperson
operating out of a place of business in this state, and the item is
drop-shipped directly to the purchaser from a third-party supplier,
the sale is consummated at, and local sales tax is due based upon,
the location of the place of business of the seller where the order
is received.
(B)When an order for a taxable item is received by
the seller at a location outside of Texas, or by a traveling salesperson
operating from a location outside of this state, and the item is drop-shipped
directly to the purchaser from a third-party supplier, the item is
subject to use tax. See subsection (d) of this section concerning
use tax.
(5)Itinerant vendors; vending machines.
(A)Itinerant vendors. Sales made by itinerant vendors
are consummated at, and itinerant vendors must collect sales tax based
upon, the location where the item is delivered or at which the purchaser
of the item takes possession. Itinerant vendors do not have any responsibility
to collect use tax.
(B)Vending machines. Sales of taxable items made from
a vending machine are consummated at the location of the vending machine.
See §3.293 of this title (relating to Food; Food Products; Meals;
Food Service) for more information about vending machine sales.
(6)Internet orders. Subparagraphs (A) - (E) of this
paragraph become effective April 1, 2020.
(A)General rule. Except as provided in this paragraph,
Internet orders are not received at a place of business of the seller
in Texas.
(B)Orders placed using the seller's device. When a
purchaser places an order for a taxable item with a seller using the
Internet on a computer or device of the seller at the seller's place
of business in Texas, the sale is consummated at the place of business
where the order is placed, regardless of where the order is fulfilled.
(C)Internet order fulfilled from a place of business
of the seller in Texas. When a seller fulfills an Internet order at
a location that is a place of business of the seller in Texas, the
sale is consummated at the place of business of the seller where the
order is fulfilled.
(D)Internet order fulfilled from a location in Texas
that is not a place of business of the seller in Texas. When a seller
fulfills an Internet order at a location in Texas that is not a place
of business of the seller in Texas, the sale is consummated at the
location in Texas to which the order is shipped or delivered, or at
which the purchaser of the item takes possession.
(E)Internet order fulfilled from a location outside
of the state. When an Internet order is shipped or delivered into
a local taxing jurisdiction from a location outside of Texas, the
sale is not consummated at a location in Texas. However, local use
tax is due based upon the location in this state to which the item
is shipped or delivered or at which the purchaser of the item takes
possession as provided in subsection (d) of this section.
(F)Exception for certain economic development agreements.
Subparagraphs (A) - (E) of this paragraph do not apply to sales of
taxable items for Internet orders made by a seller who has entered
into an economic development agreement pursuant to Local Government
Code, Chapters 380 and 381 with a local taxing jurisdiction before
September 1, 2019. This subparagraph is effective until December 31,
2022.
(d)Local use tax. The provisions
addressing the imposition of state use tax in §3.346 of this
title also apply to the imposition of local use tax. For example,
consistent with §3.346(e) of this title, all taxable items that
are shipped or delivered to a location in this state that is within
the boundaries of a local taxing jurisdiction are presumed to have
been purchased for use in that local taxing jurisdiction as well as
presumed to have been purchased for use in the state.
(1)General rules.
(A)When local use taxes are due in addition to local
sales taxes as provided by subsection (c) of this section, all applicable
use taxes must be collected or accrued in the following order until
the two percent cap is reached: city, county, special purpose district,
and transit authority. If more than one special purpose district use
tax is due, all such taxes are to be collected or accrued before any
transit authority use tax is collected or accrued. See subparagraphs
(D) and (E) of this paragraph.
(B)If a local use tax cannot be collected or accrued
at its full rate without exceeding the two percent cap, the seller
cannot collect it, or any portion of it, and the purchaser is not
responsible for accruing it.
(C)If a seller collects a local sales tax on an item,
or a purchaser accrues a local sales tax on an item, a use tax for
the same type of jurisdiction is not due on the same item. For example,
after a city sales tax has been collected or accrued for an item,
no use tax is due to that same or a different city on that item, but
use tax may be due to a county, special purpose district, or transit
authority. Similarly, if one or more special purpose district sales
taxes have been collected or accrued for an item, no special purpose
district use tax is due on that item, and if one or more transit authority
sales taxes have been collected or accrued for an item, no transit
authority use tax is due on that item.
(D)Collection or accrual of use tax for multiple special
purpose districts. If more than one special purpose district use tax
is in effect at the location where use of an item occurs, the special
purpose district taxes are due in the order of their effective dates,
beginning with the earliest effective date, until the two percent
cap is met. The effective dates of all special purpose district taxes
are available on the comptroller's website. However, if the collection
or accrual of use tax for the district with the earliest effective
date would exceed the two percent cap, the tax for that district is
not due and the seller or purchaser should determine, following the
criteria in subparagraphs (A) - (C) of this paragraph, whether use
tax is due for the district that next became effective.
(i)If the competing special purpose district taxes
became effective on the same date, the special purpose district taxes
are due in the order of the earliest date for which the election in
which the district residents authorized the imposition of sales and
use tax by the district was held.
(ii)If the elections to impose the local taxes were
held on the same date, the special purpose district taxes are due
in the order of the earliest date for which the enabling legislation
under which each district was created became effective.
(E)Collection or accrual of use tax for multiple transit
authorities. If more than one transit authority use tax is in effect
at the location where use of an item occurs, and the two percent cap
has not been met, the transit authority taxes are due in the order
of their effective dates, beginning with the earliest effective date,
until the two percent cap is met. The effective dates of all transit
authority taxes are available on the comptroller's website. However,
if the collection or accrual of use tax for the authority with the
earliest effective date would 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) Cont'd...
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