86R1184 CJC-F
By: West S.B. No. 119
A BILL TO BE ENTITLED
AN ACT
relating to actions by a retailer that constitute engaging in
business in this state for purposes of the use tax and to the
allocation of certain revenue derived from that tax.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 151.107(a), Tax Code, is amended 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, distribution
center, sales or sample room or place, warehouse, storage place, or
any other physical location where 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 from the sale, 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;
(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) in the previous calendar year or the current
calendar year:
(A) has total receipts of more than $100,000 from
taxable items delivered in this state, including taxable items
delivered electronically to purchasers in this state; or
(B) has at least 200 sales of taxable items
delivered in this state, including taxable items delivered
electronically to purchasers in this state; or
(10) otherwise does business in this state.
SECTION 2. Section 151.801, Tax Code, is amended by
amending Subsection (a) and adding Subsection (c-3) to read as
follows:
(a) Except for the amounts allocated under Subsections (b),
(c), [and] (c-2), and (c-3), all proceeds from the collection of the
taxes imposed by this chapter shall be deposited to the credit of
the general revenue fund.
(c-3) Except to the extent Subsection (b), (c), or (c-2)
requires a different allocation, the comptroller shall deposit to
the credit of the property tax relief fund established under
Section 403.109, Government Code, the amount of the proceeds from
the tax imposed under Section 151.101 and received by the
comptroller that is attributable to the collection of that tax by
retailers considered to be engaged in business in this state solely
on the basis of Section 151.107(a)(9). The comptroller may require
a retailer described by this subsection to report to the
comptroller as necessary to make the allocation under this
subsection.
SECTION 3. (a) The state may bring an action for
declaratory judgment in a district court in Travis County under
Chapter 37, Civil Practice and Remedies Code, to determine the
constitutionality and other validity under the state or federal
constitution of all or any part of Section 151.107(a)(9), Tax Code,
as amended by this Act. This subsection applies without regard to
whether the state has initiated an audit of, or other tax collection
procedure against, any taxpayer involving Section 151.107(a)(9),
Tax Code, as amended by this Act. This subsection does not
authorize an award of attorney's fees against this state, and
Section 37.009, Civil Practice and Remedies Code, does not apply to
an action filed under this subsection.
(b) An appeal of a declaratory judgment or order, however
characterized, of a district court, including an appeal of the
judgment of an appellate court, holding or otherwise determining
that all or any part of Section 151.107(a)(9), Tax Code, as amended
by this Act, is constitutional or unconstitutional, or otherwise
valid or invalid, under the state or federal constitution is an
accelerated appeal.
(c) If the judgment or order is interlocutory, an
interlocutory appeal may be taken from the judgment or order and is
an accelerated appeal.
(d) A district court in Travis County may grant or deny a
temporary or otherwise interlocutory injunction or a permanent
injunction on the grounds of the constitutionality or
unconstitutionality, or other validity or invalidity, under the
state or federal constitution of all or any part of Section
151.107(a)(9), Tax Code, as amended by this Act.
(e) There is a direct appeal to the Texas Supreme Court from
an order, however characterized, of a trial court granting or
denying a temporary or otherwise interlocutory injunction or a
permanent injunction on the grounds of the constitutionality or
unconstitutionality, or other validity or invalidity, under the
state or federal constitution of all or any part of Section
151.107(a)(9), Tax Code, as amended by this Act.
(f) The direct appeal is an accelerated appeal.
(g) This section exercises the authority granted by Section
3-b, Article V, Texas Constitution.
(h) The filing of a direct appeal under this section will
automatically stay any temporary or otherwise interlocutory
injunction or permanent injunction granted in accordance with this
section pending final determination by the Texas Supreme Court.
(i) An appeal under this section, including an
interlocutory, accelerated, or direct appeal, is governed, as
applicable, by the Texas Rules of Appellate Procedure, including
Rules 25.1(d)(6), 26.1(b), 28.1, 28.3, 32.1(g), 37.3(a)(1),
38.6(a) and (b), 40.1, and 49.4.
SECTION 4. While a declaratory judgment action under
Section 3(a) of this Act or an appeal of a declaratory judgment or
order, however characterized, in an action under Section 3(a) of
this Act is pending, the state may not apply Section 151.107(a)(9),
Tax Code, as amended by this Act, to any person unless:
(1) the person consents to the application of Section
151.107(a)(9), Tax Code, as amended by this Act, to the person; or
(2) another court order or judgment has determined
that Section 151.107(a)(9), Tax Code, as amended by this Act, is
valid and constitutional as applied to the particular person.
SECTION 5. 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 6. This Act takes effect September 1, 2019.