AUTHOR'S / SPONSOR'S STATEMENT OF INTENT
In 2011, the 82nd Legislature passed H.B. 590, which amended Chapter 321 (Municipal Sales and Use Tax Act) of the Tax Code to address a problem created when a business establishes a billing office as a means to move the sales tax from one jurisdiction to another for economic benefit, while not actually doing business in that location. During the passage of this legislation, it was made clear through legislative intent that the bill was not intended to impact traditional purchasing companies that had a significant economic presence in a community and also had established incentive agreements under Chapter 380 (Miscellaneous Provisions Relating to Municipal Planning and Development), Local Government Code. (Senate Journal, Friday, May 20, 2011, page 2632-2633). Chapter 380, Local Government Code, provides that local governments may enter into agreements with a corporation to establish incentives in order to stimulate economic development and promote business and economic activity.
In August of 2011, the comptroller of pubic accounts of the State of Texas issued new guidance based on language included in H.B. 590, which invalidates any purchasing company or office location as a place of business if the company also has an incentive agreement with the local government under Chapter 380, Local Government Code. However, the guidance did not take legislative intent into consideration.
S.B. 1533 clarifies the definition of “place of business” in Chapter 321, Tax Code, making it consistent with the legislative intent for H.B. 590, in order to ensure that it includes traditional purchasing companies that have a significant economic presence in a community.
S.B. 1533 amends current law relating to municipal sales and use tax remittances by certain retailers.
RULEMAKING AUTHORITY
This bill does not expressly grant any additional rulemaking authority to a state officer, institution, or agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 321.002(a)(3), Tax Code, as follows:
(a)(3)(A) Creates this paragraph from existing text and makes no further change.
(B) Creates this paragraph from existing text. Provides that 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 of public accounts of the State of Texas determines that the outlet, office, facility, or location functions or exists to avoid the tax legally due under, rather than imposed by, this chapter or exists solely to rebate a portion of the tax imposed by this chapter to the contracting business. Provides that an outlet, office, facility, or location does not exist to avoid the tax legally 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) Creates this paragraph from existing text and makes nonsubstantive changes.
SECTION 2. Provides that the change in law made by this Act does not affect tax liability accruing before the effective date of this Act. Provides that 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. Effective date: September 1, 2013.