Texas Senate Bill SB70

Texas 2019 - 86th Regular

Caption

Relating to a single local use tax rate as an alternative to combined local use tax rates for computing the amount of local use taxes remote sellers are required to collect and to the allocation of tax revenue collected at that rate.

Summary

SB70, introduced in the Texas Legislature, establishes a framework for a single local use tax rate that remote sellers can opt to use when collecting and remitting local use taxes. The bill is a response to the U.S. Supreme Court's ruling in South Dakota v. Wayfair, Inc., which allowed states to impose sales taxes on out-of-state sellers. This proposed change aims to simplify tax collection for remote sellers by providing them an alternative to the combined local tax rates they are typically required to manage, thereby easing the administrative burden associated with such compliance. The implications of SB70 are significant for both remote sellers and local taxing units within Texas. By enabling remote sellers to choose a simplified single local use tax rate, the bill seeks to streamline the tax compliance process, potentially encouraging more businesses to engage in e-commerce within the state. Furthermore, it allows for a more predictable method of tax revenue calculation by setting the single local use tax rate based on an average of local sales and use taxes determined by the Texas Comptroller from the previous fiscal year. This could lead to more consistent revenue flows to local taxing units. However, the bill also faces potential points of contention. Critics may argue that while the intent is to simplify, it could inadvertently lead to reduced revenues for local jurisdictions that rely on specific local tax rates tailored to their needs. There is a concern about how a standard rate may not adequately reflect the unique economic conditions or public funding requirements of individual localities, which could negatively impact their public services funded by these taxes. Overall, SB70 represents an effort to modernize Texas tax law in the context of a rapidly evolving digital marketplace. Its success will depend on balancing the needs of remote sellers for simplicity and predictability with the financial realities of local governments that depend on diverse and potentially variable tax revenues.