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A BILL TO BE ENTITLED
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AN ACT
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relating to the administration and collection of the state use tax |
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as applied to certain persons engaged in business in this state; |
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requiring a permit; creating an offense. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 151.008(b), Tax Code, is amended to read |
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as follows: |
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(b) "Seller" and "retailer" include: |
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(1) a person in the business of making sales at auction |
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of tangible personal property owned by the person or by another; |
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(2) a person who makes more than two sales of taxable |
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items during a 12-month period, including sales made in the |
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capacity of an assignee for the benefit of creditors or receiver or |
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trustee in bankruptcy; |
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(3) a person regarded by the comptroller as a seller or |
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retailer under Section 151.024; |
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(4) a hotel, motel, or owner or lessor of an office or |
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residential building or development that contracts and pays for |
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telecommunications services for resale to guests or tenants; |
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(5) a person who engages in regular or systematic |
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solicitation of sales of taxable items in this state by the |
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distribution of catalogs, periodicals, advertising flyers, or |
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other advertising, by means of print, radio, or television media, |
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or by mail, telegraphy, telephone, computer data base, cable, |
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optic, microwave, or other communication system for the purpose of |
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effecting sales of taxable items; [and] |
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(6) a person who, under an agreement with another |
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person, is: |
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(A) entrusted with possession of tangible |
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personal property with respect to which the other person has title |
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or another ownership interest; and |
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(B) authorized to sell, lease, or rent the |
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property without additional action by the person having title to or |
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another ownership interest in the property; |
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(7) a person who is a marketplace provider as defined |
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by Section 151.109; and |
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(8) a person who is a referrer as defined by Section |
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151.110. |
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SECTION 2. Subchapter D, Chapter 151, Tax Code, is amended |
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by adding Section 151.1065 to read as follows: |
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Sec. 151.1065. REFERRER'S PERMIT REQUIRED. (a) This |
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section applies only to a referrer as defined by Section 151.110 who |
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received: |
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(1) at least $10,000 in fees, commissions, or other |
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consideration from other retailers for services described by |
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Section 151.110(a) performed by the referrer in this state in the |
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year preceding the year in which an application under this section |
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is due; or |
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(2) at least $7,500 in fees, commissions, or other |
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consideration from other retailers for services described by |
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Section 151.110(a) performed by the referrer in this state in the |
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first three calendar quarters of the year in which an application |
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under this section is due. |
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(b) A referrer may not engage in activity described by |
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Section 151.110(a) in this state without a permit issued as |
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provided by this section. |
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(c) Not later than December 1 of each year, a referrer shall |
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apply to the comptroller for a referrer's permit. |
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(d) The comptroller shall issue a referrer's permit to an |
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applicant not later than the 15th day after the date the comptroller |
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receives the application for the permit. The permit is valid for |
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the 12-month period beginning on January 1 of the year following the |
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year in which the permit is issued. |
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(e) The comptroller may not charge, or require security |
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from, a referrer for a referrer's permit. |
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(f) A referrer's permit is valid only for the referrer to |
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which it is issued and may not be assigned. |
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(g) The comptroller shall revoke a referrer's permit if the |
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referrer fails to file the report or provide the notice required |
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under Section 151.111. |
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(h) The comptroller may adopt rules necessary to implement |
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and administer this section. |
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SECTION 3. Section 151.107, Tax Code, is amended by adding |
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Subsections (c-1), (c-2), (c-3), (c-4), and (c-5) to read as |
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follows: |
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(c-1) For purposes of this subchapter and in relation to the |
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use tax, a retailer is a retailer engaged in business in this state |
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if the retailer engages in any part of a sale, lease, or rental of a |
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taxable item to a purchaser in this state, regardless of whether the |
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retailer contracts with a third party to perform all or any part of |
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the transaction, or whether the retailer performs all or any part of |
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the transaction through an entity in which the retailer holds a |
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substantial ownership interest or that holds a substantial |
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ownership interest in the retailer. For purposes of this |
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subsection, the sale, lease, or rental of an item includes listing |
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the item for sale, lease, or rent, soliciting an order for the item, |
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branding the item, processing or fulfilling the order for the item, |
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providing customer service relating to the item, and accepting or |
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assisting with the return or exchange of the item. The act of |
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shipping an item by common carrier to a purchaser in this state is |
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not considered engaging in the sale, lease, or rental of a taxable |
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item for purposes of this subsection. |
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(c-2) For purposes of this subchapter and in relation to the |
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use tax, a retailer is a retailer engaged in business in this state |
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if, to facilitate the sale, lease, or rental of a taxable item to a |
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purchaser in this state, the retailer directly or through a third |
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party uses: |
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(1) direct response marketing; |
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(2) a referrer with a significant economic presence in |
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this state; or |
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(3) another person who has a significant economic |
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presence in this state and with whom the retailer enters into an |
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agreement for the person to refer potential purchasers to the |
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retailer, regardless of whether the referral is not related to a |
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sale, lease, or rental of tangible personal property but |
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subsequently results in a sale, lease, or rental of that property. |
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(c-3) An agreement described by Subsection (c-2)(3) does |
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not include an agreement under which a retailer purchases |
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advertisements from a person in this state to be delivered by |
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television or radio, in print, on the Internet, or through another |
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means, unless the agreement includes the payment of advertising |
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revenue to the person based wholly or partly on the sales resulting |
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from the advertising. |
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(c-4) Subsection (c-2) does not apply to a retailer |
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described by that subsection if each person with whom the retailer |
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has entered into an agreement to refer potential purchasers to the |
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retailer: |
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(1) does not have a significant economic presence in |
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this state; and |
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(2) certifies to the retailer annually that the person |
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meets the requirement of Subdivision (1). |
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(c-5) The comptroller shall prescribe the form of the |
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certification described by Subsection (c-4). A person who |
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intentionally or negligently provides false information in the |
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certification commits an offense punishable in the same manner as |
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an offense under Section 151.708. |
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SECTION 4. Section 151.107(d), Tax Code, is amended by |
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amending Subdivision (1) and adding Subdivisions (1-a) and (1-b) to |
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read as follows: |
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(1) "Direct response marketing" means, for the purpose |
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of facilitating the sale, lease, or rental of tangible personal |
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property of a retailer to a purchaser in this state, any of the |
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following activities: |
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(A) transmitting or broadcasting flyers, |
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newsletters, telephone calls, targeted electronic mail, text |
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messages, social media messages, or targeted mailings; |
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(B) collecting, analyzing, and using individual |
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data on purchasers or potential purchasers in this state; |
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(C) using information or software, including |
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cached files, cached software, or cookies or other data tracking |
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tools, that is stored on property in this state or that is |
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distributed within this state; or |
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(D) conducting any other actions that use |
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persons, tangible or intangible property, digital files or |
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information, or software in this state in an effort to enhance the |
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probability that a person's contacts with a purchaser in this state |
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will result in a sale, lease, or rental to that purchaser. |
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(1-a) "Ownership" includes: |
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(A) direct ownership; |
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(B) common ownership; and |
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(C) indirect ownership through a parent entity, |
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subsidiary, or affiliate. |
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(1-b) "Referrer" has the meaning assigned by Section |
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151.110. |
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SECTION 5. Subchapter D, Chapter 151, Tax Code, is amended |
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by adding Sections 151.1075, 151.109, 151.110, and 151.111 to read |
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as follows: |
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Sec. 151.1075. RETAILER PRESUMED TO BE ENGAGED IN BUSINESS |
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IN THIS STATE. (a) For purposes of this subchapter and in relation |
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to the use tax, a retailer is presumed to be engaged in business in |
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this state if, in the previous calendar year or the current calendar |
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year, the retailer: |
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(1) has total receipts of more than $1 million from |
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taxable items delivered in this state, including taxable items |
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delivered electronically to purchasers in this state; or |
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(2) has at least 2,000 sales of taxable items |
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delivered in this state, including taxable items delivered |
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electronically to purchasers in this state. |
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(b) A retailer described by Subsection (a) is required to |
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comply with the requirements of this chapter unless the retailer |
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rebuts the presumption under that subsection by proving that it |
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does not have substantial economic nexus with this state. |
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(c) For purposes of this subchapter and in relation to the |
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use tax, a retailer is presumed to be engaged in business in this |
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state if the retailer is related, as provided by Subsection (d), to |
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a person engaged in business in this state who: |
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(1) sells under the same or a similar business name |
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taxable items similar to those sold by the retailer; |
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(2) maintains an office, distribution facility, |
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salesroom, warehouse, storage place, or other similar place of |
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business in this state to facilitate the delivery of taxable items |
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sold by the retailer to purchasers in this state; |
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(3) uses in this state, with the retailer's knowledge |
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or consent, trademarks, service marks, or trade names that are the |
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same or substantially similar to those used by the retailer; |
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(4) delivers, installs, assembles, or performs |
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maintenance or repair services in this state on tangible personal |
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property sold by the retailer to purchasers in this state; |
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(5) facilitates the delivery of tangible personal |
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property to the retailer's customers in this state by allowing the |
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customers to pick up tangible personal property sold by the |
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retailer at an office, distribution facility, salesroom, |
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warehouse, storage place, or other similar place of business |
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maintained by the person in this state; or |
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(6) shares management, business systems, business |
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practices, or employees with the retailer or engages in |
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intercompany transactions with the retailer related to the |
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activities that establish or maintain the retailer's market in this |
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state. |
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(d) For purposes of Subsection (c), a retailer is related to |
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a person engaged in business in this state if the retailer and the |
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person: |
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(1) have a relationship described by Section 267(b) or |
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707(b)(1), Internal Revenue Code of 1986; or |
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(2) have an ownership relationship designed with a |
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principal purpose of avoiding the application of Subsection (c). |
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(e) A retailer may rebut the presumption under Subsection |
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(c) for a reporting period by proving by a preponderance of evidence |
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that the person engaged in business in this state did not engage in |
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any activities on the retailer's behalf during the reporting period |
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sufficient to establish the retailer's substantial economic nexus |
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with this state. |
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Sec. 151.109. MARKETPLACE PROVIDERS. (a) In this section, |
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"marketplace provider" means a person who: |
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(1) facilitates the sale, lease, or rental of the |
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tangible personal property of a retailer that is not the person to a |
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purchaser in this state in any manner, including by the use of a |
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catalog or an Internet website; |
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(2) directly or indirectly collects from a purchaser |
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in this state receipts derived from the sale, lease, or rental of |
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the retailer's tangible personal property to the purchaser and |
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transmits those receipts to the retailer, other than any amount the |
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person is authorized to retain as a fee for facilitating the sale, |
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lease, or rental; and |
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(3) is engaged in business in this state by means of |
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any of the activities listed in Section 151.107(a), (c-1), or (c-2) |
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or because of an unrebutted presumption under Section 151.1075(a). |
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(b) A marketplace provider's facilitation of a sale, lease, |
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or rental described by Subsection (a)(1) that results in a sale, |
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lease, or rental by the other retailer is considered the making of a |
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sale by the marketplace provider for purposes of Sections |
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151.008(a) and 151.103. Notwithstanding Section 151.103, the |
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marketplace provider is not required to collect a use tax imposed |
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under this subchapter that is due from a purchaser if the retailer |
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for whom the marketplace provider facilitates the sale, lease, or |
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rental collects the tax from the purchaser. |
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(c) For purposes of Subsection (b), a marketplace provider |
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may presume that a retailer registered with the comptroller under |
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Section 151.106 collects the use tax from a purchaser. |
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(d) Subject to Subsection (e), a marketplace provider is not |
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subject to liability under Subchapter L for failing to collect or |
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remit the appropriate amount of use tax if, in determining the |
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amount, the marketplace provider relies exclusively on information |
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provided by the retailer for whom the marketplace provider |
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facilitates the sale, lease, or rental of the tangible personal |
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property on which the tax is due. |
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(e) Subsection (d) does not apply if: |
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(1) the marketplace provider and the retailer for whom |
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the marketplace provider facilitated the sale, lease, or rental of |
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tangible personal property have an ownership relationship designed |
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with a principal purpose of relieving the marketplace provider of |
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liability as authorized by Subsection (d); or |
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(2) the marketplace provider and the other retailer |
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have a relationship described by Section 267(b) or 707(b)(1), |
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Internal Revenue Code of 1986. |
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(f) Nothing in this section may be construed as affecting |
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the ability of a marketplace provider and another retailer to enter |
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into an agreement regarding the requirements of this chapter. |
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(g) The comptroller may adopt rules necessary to implement |
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and administer this section, including rules establishing the |
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requirements for an entity to be considered a marketplace provider. |
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Sec. 151.110. REFERRERS. (a) In this section, "referrer" |
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means a person who: |
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(1) for the purpose of facilitating the sale, lease, |
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or rental of tangible personal property of a retailer that is not |
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the person to a purchaser in this state, agrees to list items of |
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tangible personal property and the prices of the items in any forum, |
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including in a catalogue or on an Internet website; |
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(2) receives a fee, commission, or other consideration |
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as part of the agreement with the retailer; |
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(3) transfers the purchaser to the retailer or the |
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retailer's Internet website by telephone, electronic link, or any |
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other means to complete a sale, lease, or rental of a listed item; |
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and |
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(4) does not collect from the purchaser receipts |
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derived from the sale of the item to the purchaser. |
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(b) For purposes of this subchapter and in relation to the |
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use tax, a referrer who makes a referral to another retailer that |
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results in a sale, lease, or rental of the other retailer's tangible |
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personal property to a purchaser in this state is a retailer engaged |
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in business in this state. |
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(c) A referrer's facilitation of a sale, lease, or rental |
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described by Subsection (a)(1) that results in a sale, lease, or |
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rental by the other retailer is considered the making of a sale by |
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the referrer for purposes of Sections 151.008(a) and 151.103, and |
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the listed price of the item for sale, lease, or rent is presumed to |
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be the sales price for purposes of Sections 151.101 and 151.103. |
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Notwithstanding Section 151.103, the referrer is not required to |
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collect a use tax imposed under this subchapter that is due from a |
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purchaser if: |
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(1) the retailer for whom the referrer facilitates the |
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sale, lease, or rental collects the tax from the purchaser; or |
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(2) the referrer: |
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(A) holds a referrer's permit issued under |
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Section 151.1065; and |
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(B) is in compliance with Section 151.111. |
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(d) For purposes of Subsection (c), a referrer may presume |
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that a retailer registered with the comptroller under Section |
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151.106 collects the use tax from a purchaser. |
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(e) Subject to Subsection (f), a referrer is not subject to |
|
liability under Subchapter L for failing to collect or remit the |
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appropriate amount of use tax if, in determining the amount, the |
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referrer relies exclusively on information provided by the retailer |
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for whom the referrer facilitates the sale, lease, or rental of the |
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tangible personal property on which the tax is due. |
|
(f) Subsection (e) does not apply if: |
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(1) the referrer and the retailer for whom the |
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referrer facilitated the sale, lease, or rental of tangible |
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personal property have an ownership relationship designed with a |
|
principal purpose of relieving the referrer of liability as |
|
authorized by Subsection (e); or |
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(2) the referrer and the other retailer have a |
|
relationship described by Section 267(b) or 707(b)(1), Internal |
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Revenue Code of 1986. |
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(g) The comptroller may adopt rules necessary to implement |
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and administer this section, including rules establishing the |
|
requirements for an entity to be considered a referrer. |
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Sec. 151.111. REFERRER'S ANNUAL REPORT; NOTICE TO |
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RETAILERS. (a) This section applies only to a referrer who is |
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required to hold a referrer's permit under Section 151.1065. |
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(b) On January 1 of each year, a referrer shall: |
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(1) file with the comptroller a report that contains, |
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for the preceding 12-month period: |
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(A) the name and address of each retailer with |
|
whom the referrer entered into an agreement described by Section |
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151.110(a)(1); and |
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(B) to the extent practicable, for each retailer |
|
required to be included in the report under Paragraph (A): |
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(i) the estimated total amount of sales |
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attributable to referrals made by the referrer to that retailer; |
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(ii) the estimated total number of |
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referrals made by the referrer to that retailer and the estimated |
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number of those referrals that resulted in a purchase by a purchaser |
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in this state; and |
|
(iii) details about each referral made to |
|
the retailer, including the type and price of each item that was the |
|
subject of the referral; and |
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(2) provide notice to each retailer with whom the |
|
referrer entered into an agreement described by Section |
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151.110(a)(1) during the preceding 12-month period that: |
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(A) the retailer's sales in this state may be |
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subject to a use tax under the laws of this state; and |
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(B) the referrer is required to annually report |
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the information described by Subdivision (1) to this state. |
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(c) The report required under Subsection (b) may not contain |
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personally identifiable information of any purchaser. |
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(d) Notwithstanding Subsection (b), a referrer may exclude |
|
from the report required under that subsection the name of, and any |
|
information relating to referrals to, a retailer for whom the |
|
referrer makes referrals if the retailer collects the use tax |
|
imposed under this subchapter from purchasers in this state. For |
|
purposes of this subsection, a referrer may presume that a retailer |
|
registered with the comptroller under Section 151.106 collects the |
|
tax. |
|
(e) The comptroller may adopt rules necessary to implement |
|
and administer this section and may prescribe the form of the report |
|
and the notice required under this section. |
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SECTION 6. Section 151.403(b), Tax Code, is amended to read |
|
as follows: |
|
(b) A retailer engaged in business in this state as provided |
|
by Section 151.107, 151.1075, 151.109, or 151.110 [of this code] |
|
shall file a tax report with respect to the use tax. |
|
SECTION 7. The first report and notice required under |
|
Section 151.111, Tax Code, as added by this Act, are due January 1, |
|
2018. |
|
SECTION 8. 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 9. (a) The constitutionality and other validity |
|
under the state or federal constitution of all or any part of the |
|
amendments made to Chapter 151, Tax Code, by this Act may be |
|
determined in an action for declaratory judgment in a district |
|
court in Travis County under Chapter 37, Civil Practice and |
|
Remedies Code, except that this section does not authorize an award |
|
of attorney's fees against this state and Section 37.009, Civil |
|
Practice and Remedies Code, does not apply to an action filed under |
|
this section. |
|
(b) An appeal of a declaratory judgment or order, however |
|
characterized, of a district court, including an appeal of the |
|
judgment of an appellate court, holding or otherwise determining |
|
that all or any part of the amendments made to Chapter 151, Tax |
|
Code, by this Act is constitutional or unconstitutional, or |
|
otherwise valid or invalid, under the state or federal constitution |
|
is an accelerated appeal. |
|
(c) If the judgment or order is interlocutory, an |
|
interlocutory appeal may be taken from the judgment or order and is |
|
an accelerated appeal. |
|
(d) A district court in Travis County may grant or deny a |
|
temporary or otherwise interlocutory injunction or a permanent |
|
injunction on the grounds of the constitutionality or |
|
unconstitutionality, or other validity or invalidity, under the |
|
state or federal constitution of all or any part of the amendments |
|
made to Chapter 151, Tax Code, by this Act. |
|
(e) There is a direct appeal to the Texas Supreme Court from |
|
an order, however characterized, of a trial court granting or |
|
denying a temporary or otherwise interlocutory injunction or a |
|
permanent injunction on the grounds of the constitutionality or |
|
unconstitutionality, or other validity or invalidity, under the |
|
state or federal constitution of all or any part of the amendments |
|
made to Chapter 151, Tax Code, by this Act. |
|
(f) The direct appeal is an accelerated appeal. |
|
(g) This section exercises the authority granted by Section |
|
3-b, Article V, Texas Constitution. |
|
(h) The filing of a direct appeal under this section will |
|
automatically stay any temporary or otherwise interlocutory |
|
injunction or permanent injunction granted in accordance with this |
|
section pending final determination by the Texas Supreme Court, |
|
unless the supreme court makes specific findings that the applicant |
|
seeking such injunctive relief has pleaded and proved that: |
|
(1) the applicant has a probable right to the relief it |
|
seeks on final hearing; and |
|
(2) the applicant will suffer a probable injury that |
|
is imminent and irreparable, and that the applicant has no other |
|
adequate legal remedy. |
|
(i) An appeal under this section, including an |
|
interlocutory, accelerated, or direct appeal, is governed, as |
|
applicable, by the Texas Rules of Appellate Procedure, including |
|
Rules 25.1(d)(6), 26.1(b), 28.1, 28.3, 32.1(g), 37.3(a)(1), |
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38.6(a) and (b), 40.1(b), and 49.4. |
|
SECTION 10. This Act takes effect September 1, 2017. |