Texas – Determining a Retailer’s Place of Business

SALT Report 2593 – Recently passed legislation in Texas amends the factors used to determine a retailer’s place of business for local sales and use tax remittance purposes. Specifically, Senate Bill 1533 address a problem that is created when a business establishes or creates a billing office in a jurisdiction that offers a lower sales tax rate from one with a higher tax rate, while not actually doing business in the location with the lower rate.

Under current law, an outlet, office, facility, or other location that contracts with a business to process invoices or other business records is not considered “a place of business of the retailer” if the Comptroller determines that the location is used to avoid tax; or exists solely to rebate a portion of the sales tax to the business.

The amended law clarifies this provision and provides that an outlet, office, facility, or other location does not exist to avoid tax, or exist solely to rebate a portion of the taxes if the location also provides significant business services beyond processing invoices, such as logistics management, purchasing, inventory control, or other essential business services.

The provisions in this Bill are effective September 1, 2013.

For Further Information

Texas State Legislature – Senate Bill 1533, Laws 2013