79R9567 MFC-F

By:  Rose                                                         H.B. No. 3406



A BILL TO BE ENTITLED

AN ACT

relating to the collection of sales or use taxes by certain 
businesses.     
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  DEFINITIONS.  In this Act:                                         
		(1)  "Nexus" means substantial physical presence in 
this state in the form of facilities, plants, distribution centers, 
offices, property, or employees.
		(2)  "State" includes any political subdivision of a 
state.                 
	SECTION 2.  DECLARATORY JUDGMENTS INVOLVING BUSINESSES; 
CAUSE OF ACTION.  (a)  A district court has original jurisdiction of 
a proceeding seeking declaratory judgment that involves:
		(1)  a party seeking declaratory relief that is a 
business that is:         
			(A)  organized under the laws of this state or is 
otherwise owned by a resident of this state; or
			(B)  otherwise qualified to do business in this 
state; and                 
		(2)  a responding party that:                                                 
			(A)  is an official of another state; and                                    
			(B)  asserts a claim that the party seeking 
declaratory relief is required to collect sales or use taxes for 
that state based on conduct of the business that occurs in whole or 
in part within this state.
	(b)  A business described by Subsection (a)(1) is entitled to 
declaratory relief on the issue of whether the requirement of 
another state that the business collect and remit sales or use taxes 
to that state constitutes an undue burden on interstate commerce 
under Section 8, Article I, United States Constitution.
	(c)  In determining whether to grant declaratory relief to a 
business under this section, a court shall consider:
		(1)  the factual circumstances of the business's 
operations that give rise to the demand by the other state; and
		(2)  the decisions of other courts interpreting Section 
8, Article I, United States Constitution.
	SECTION 3.  COMMERCIAL NEXUS; LIABILITY FOR TAX.  (a)  A 
business is not liable for the collection and remittance of sales 
and use taxes to this state unless the business has sufficient nexus 
to this state.
	(b)  A business may not be considered to have sufficient 
nexus for purposes of this section without evidence of sufficient 
contacts in this state in addition to participation in this state in 
any of the following economic activities:
		(1)  directing business activities by use of 
telecommunications or common carrier;
		(2)  advertising;                                                             
		(3)  licensing software;                                                      
		(4)  deriving income or revenue from customers;                               
		(5)  sending representatives to generate business;                            
		(6)  attending trade shows;                                                   
		(7)  conducting seminars; or                                                  
		(8)  assessing competitors' products.                                         
	SECTION 4.  TRANSITION.  This Act applies to a cause of 
action that accrues on or after the effective date of this Act.  A 
cause of action that accrues before the effective date of this Act 
is governed by the law in effect at the time the action accrued, and 
the former law is continued in effect for that purpose.
	SECTION 5.  EFFECTIVE DATE.  This Act takes effect September 
1, 2005.