87R7697 CJC-F
By: Schwertner S.B. No. 1038
A BILL TO BE ENTITLED
AN ACT
relating to the place of business of a retailer for purposes of
municipal sales and use taxes.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 321.002(a), Tax Code, is amended by
amending Subdivision (3) and adding Subdivision (4) to read as
follows:
(3)(A) "Place of business of the retailer" means an
established outlet, office, or location operated by the retailer or
the retailer's agent or employee for the purpose of receiving
orders for taxable items and includes any location at which three or
more orders are received by the retailer during a calendar year and
at which at least four primary selling activities occur. A
warehouse, storage yard, or manufacturing plant is not a "place of
business of the retailer" unless at least three orders are received
by the retailer during the calendar year and at least four primary
selling activities occur at the warehouse, storage yard, or
manufacturing plant.
(B) 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 retailer" if the comptroller determines
that the outlet, office, facility, or location functions or exists
to avoid the tax legally due under this chapter or exists solely to
rebate a portion of the tax imposed by this chapter to the
contracting business. An outlet, office, facility, or location
does not exist to avoid the tax legally due under this chapter or
solely to rebate a portion of the tax imposed by this chapter 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.
(C) Notwithstanding any other provision of this
subdivision, a kiosk is not a "place of business of the
retailer." In this subdivision, "kiosk" means a small stand-alone
area or structure that:
(i) is used solely to display merchandise
or to submit orders for taxable items from a data entry device, or
both;
(ii) is located entirely within a location
that is a place of business of another retailer, such as a
department store or shopping mall; and
(iii) at which taxable items are not
available for immediate delivery to a customer.
(4) "Primary selling activity" means:
(A) any of the following actions, if performed by
a retailer or the agent or employee of a retailer:
(i) exercising discretion and independent
authority to solicit customers on behalf of the retailer and to bind
the retailer to a sale;
(ii) taking an action that binds the
retailer to a sale, including accepting a purchase order or
submitting an offer to a buyer that is subject to the buyer's
unilateral acceptance;
(iii) receiving a payment or issuing an
invoice;
(iv) engaging in marketing and solicitation
activities on behalf of the retailer;
(v) procuring goods for sale by the
retailer;
(vi) receiving and accepting purchase
orders or, if the retailer's purchase orders are accepted,
processed, or fulfilled in another location, receiving and
accepting contracts and other documents;
(vii) transferring title to an item to a
buyer; or
(viii) displaying goods for sale to
prospective customers; or
(B) the use of a structure owned or leased by a
retailer to:
(i) store or otherwise hold the retailer's
inventory;
(ii) house the retailer's business
headquarters, meaning the location from which the retailer directs
or manages the retailer's business; or
(iii) provide office space for the
retailer's officers, executives, or other employees who have
authority to set prices and determine the terms of a sale.
SECTION 2. 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 3. This Act takes effect September 1, 2021.