LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION April 2, 2023 TO: Honorable Joan Huffman, Chair, Senate Committee on Finance FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB1053 by Hughes (Relating to the definition of marketplace seller for purposes of sales and use taxes.), As Introduced No fiscal implication to the State is anticipated. The bill would amend Section 151.0242(a)(3) of the Tax Code, regarding the state sales and use tax and marketplace providers and marketplace sellers, to exclude an affiliate of the marketplace provider from the definition of marketplace seller. Affiliate would be defined as a person who controls, is controlled by, or is under common control with another person.Under current law marketplace providers are required to collect sales and use tax on sales made by their affiliates through a marketplace. Under the provisions of the bill marketplace providers would no longer be responsible for collecting sales and use tax on sales made by their affiliates and those affiliates would instead be responsible for remitting sales and use taxes made through a marketplace. This analysis assumes there would be no impact to state revenue as affiliates are expected to comply with the law and remit all appropriate sales and use tax.The bill would take effect September 1, 2023. Local Government ImpactThe bill could impact local taxing jurisdictions as under current law sales and use tax due on a marketplace transaction is based on destination. Should the bill become law, affiliate sales would instead be sourced to where the order is received, fulfilled, or to destination, depending on the business model. This could increase or decrease the amount of local sales and use tax received by a particular unit of local government. These impacts cannot be determined. Source Agencies: b > td > 304 Comptroller of Public Accounts LBB Staff: b > td > JMc, KK, SD
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 88TH LEGISLATIVE REGULAR SESSION
April 2, 2023
TO: Honorable Joan Huffman, Chair, Senate Committee on Finance FROM: Jerry McGinty, Director, Legislative Budget Board IN RE: SB1053 by Hughes (Relating to the definition of marketplace seller for purposes of sales and use taxes.), As Introduced
TO: Honorable Joan Huffman, Chair, Senate Committee on Finance
FROM: Jerry McGinty, Director, Legislative Budget Board
IN RE: SB1053 by Hughes (Relating to the definition of marketplace seller for purposes of sales and use taxes.), As Introduced
Honorable Joan Huffman, Chair, Senate Committee on Finance
Honorable Joan Huffman, Chair, Senate Committee on Finance
Jerry McGinty, Director, Legislative Budget Board
Jerry McGinty, Director, Legislative Budget Board
SB1053 by Hughes (Relating to the definition of marketplace seller for purposes of sales and use taxes.), As Introduced
SB1053 by Hughes (Relating to the definition of marketplace seller for purposes of sales and use taxes.), As Introduced
No fiscal implication to the State is anticipated.
No fiscal implication to the State is anticipated.
The bill would amend Section 151.0242(a)(3) of the Tax Code, regarding the state sales and use tax and marketplace providers and marketplace sellers, to exclude an affiliate of the marketplace provider from the definition of marketplace seller. Affiliate would be defined as a person who controls, is controlled by, or is under common control with another person.Under current law marketplace providers are required to collect sales and use tax on sales made by their affiliates through a marketplace. Under the provisions of the bill marketplace providers would no longer be responsible for collecting sales and use tax on sales made by their affiliates and those affiliates would instead be responsible for remitting sales and use taxes made through a marketplace. This analysis assumes there would be no impact to state revenue as affiliates are expected to comply with the law and remit all appropriate sales and use tax.The bill would take effect September 1, 2023.
Local Government Impact
The bill could impact local taxing jurisdictions as under current law sales and use tax due on a marketplace transaction is based on destination. Should the bill become law, affiliate sales would instead be sourced to where the order is received, fulfilled, or to destination, depending on the business model. This could increase or decrease the amount of local sales and use tax received by a particular unit of local government. These impacts cannot be determined.
Source Agencies: b > td > 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: b > td > JMc, KK, SD
JMc, KK, SD