By: Otto, et al. (Senate Sponsor - West) H.B. No. 2403
(In the Senate - Received from the House April 28, 2011;
May 3, 2011, read first time and referred to Committee on Finance;
May 11, 2011, reported favorably by the following vote: Yeas 14,
Nays 0; May 11, 2011, sent to printer.)
A BILL TO BE ENTITLED
AN ACT
relating to retailers engaged in business in this state for
purposes of sales and use taxes.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 151.008(b), Tax Code, is amended to read
as follows:
(b) "Seller" and "retailer" include:
(1) a person in the business of making sales at auction
of tangible personal property owned by the person or by another;
(2) a person who makes more than two sales of taxable
items during a 12-month period, including sales made in the
capacity of an assignee for the benefit of creditors or receiver or
trustee in bankruptcy;
(3) a person regarded by the comptroller as a seller or
retailer under Section 151.024 [of this code];
(4) a hotel, motel, or owner or lessor of an office or
residential building or development that contracts and pays for
telecommunications services for resale to guests or tenants; [and]
(5) a person who engages 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; and
(6) a person who, under an agreement with another
person, is:
(A) entrusted with possession of tangible
personal property with respect to which the other person has title
or another ownership interest; and
(B) authorized to sell, lease, or rent the
property without additional action by the person having title to or
another ownership interest in the property.
SECTION 2. Section 151.107, Tax Code, is amended by
amending Subsection (a) and adding Subsection (d) to read as
follows:
(a) For the purpose of this subchapter and in relation to
the use tax, a retailer is engaged in business in this state if the
retailer:
(1) maintains, occupies, or uses in this state
permanently, temporarily, directly, or indirectly or through a
subsidiary or agent by whatever name, an office, [place of]
distribution center, sales or sample room or place, warehouse,
storage place, or any other physical location where [place of]
business is conducted;
(2) has a representative, agent, salesman, canvasser,
or solicitor operating in this state under the authority of the
retailer or its subsidiary for the purpose of selling or delivering
or the taking of orders for a taxable item;
(3) derives receipts [rentals] from the sale, [a]
lease, or rental of tangible personal property situated in this
state;
(4) engages 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;
(5) solicits orders for taxable items by mail or
through other media and under federal law is subject to or permitted
to be made subject to the jurisdiction of this state for purposes of
collecting the taxes imposed by this chapter;
(6) has a franchisee or licensee operating under its
trade name if the franchisee or licensee is required to collect the
tax under this section; [or]
(7) holds a substantial ownership interest in, or is
owned in whole or substantial part by, a person who maintains a
location in this state from which business is conducted and if:
(A) the retailer sells the same or a
substantially similar line of products as the person with the
location in this state and sells those products under a business
name that is the same as or substantially similar to the business
name of the person with the location in this state; or
(B) the facilities or employees of the person
with the location in this state are used to:
(i) advertise, promote, or facilitate sales
by the retailer to consumers; or
(ii) perform any other activity on behalf
of the retailer that is intended to establish or maintain a
marketplace for the retailer in this state, including receiving or
exchanging returned merchandise;
(8) holds a substantial ownership interest in, or is
owned in whole or substantial part by, a person that:
(A) maintains a distribution center, warehouse,
or similar location in this state; and
(B) delivers property sold by the retailer to
consumers; or
(9) otherwise does business in this state.
(d) In this section:
(1) "Ownership" includes:
(A) direct ownership;
(B) common ownership; and
(C) indirect ownership through a parent entity,
subsidiary, or affiliate.
(2) "Substantial" means, with respect to an ownership
interest, an interest in an entity that is:
(A) if the entity is a corporation, at least 50
percent, directly or indirectly, of:
(i) the total combined voting power of all
classes of stock of the corporation; or
(ii) the beneficial ownership interest in
the voting stock of the corporation;
(B) if the entity is a trust, at least 50 percent,
directly or indirectly, of the current beneficial interest in the
trust corpus or income;
(C) if the entity is a limited liability company,
at least 50 percent, directly or indirectly, of:
(i) the total membership interest of the
limited liability company; or
(ii) the beneficial ownership interest in
the membership interest of the limited liability company; or
(D) for any entity, including a partnership or
association, at least 50 percent, directly or indirectly, of the
capital or profits interest in the entity.
SECTION 3. The change in law made by this Act does not
affect tax liability accruing before the effective date of this
Act. That liability continues in effect as if this Act had not been
enacted, and the former law is continued in effect for the
collection of taxes due and for civil and criminal enforcement of
the liability for those taxes.
SECTION 4. This Act takes effect January 1, 2012.
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