Sales/Use:
Texas Comptroller Says it Won’t Enforce Some Rule Changes Involving Local Tax Sourcing
Local Sales and Use Tax Rule Changes, Tex. Comptroller (9/21). The Texas Comptroller of Public Accounts (Comptroller) states that it will not enforce some provisions of its local sales and use tax sourcing rule [see Title 34 Tex. Admin. Code section 3.334 (“Rule 3.334”) for more details on this rule] that came into effect on October 1, 2021, due to ongoing litigation challenging their validity. The Comptroller explains that while Rule 3.334 generally came into effect on May 31, 2020, it delayed implementing two provisions within it so that effective October 1, 2021, local tax sourcing in Texas changes as follows:
An order received by a salesperson while traveling will be treated as being received at the location from which the salesperson operates if the location independently meets the definition of a place of business; and
An order not received by a salesperson, such as an order received by a shopping website or shopping application, is received at a location that is not a place of business of the seller.
However, referencing ongoing litigation regarding Rule 3.334, the Comptroller explains that “pursuant to an agreed temporary injunction, the agency has agreed not to enforce the second of these provisions while its validity is being challenged in district court.” The Comptroller also states that the temporary injunction does not change the effective date of this provision and that “if the courts ultimately determine that the rule follows the statute, taxpayers as well as the agency will be bound by that determination.”
According to the Comptroller, Rule 3.334 generally:
Implements several provisions related to local tax collection by remote sellers and marketplace providers;
Clarifies the definition of a place of business; and
Clarifies that sales personnel must be present for a location to be considered a “place of business,” and that a place of business does not include a computer server, internet protocol (IP) address, domain name, website or software application.
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