Sales, Use and International Tax Activity Update - August 2009

Texas Turns the Tables on Multiple Location Sourcing

A special mailing has been issued by the Tax Policy Division of the Texas Comptroller of Public Accounts to outline the change to local sourcing as a result of Senate Bill 636.  This change affects the collection of local sales taxes beginning September 1, 2009, for vendors with multiple places of business in Texas.

Currently, sales by a vendor with multiple places of business in Texas are sourced to the location from which the items were shipped.  Senate Bill 636 states that effective September 1, 2009, sales by a vendor with multiple places of business in Texas will be sourced to the location where the retailer first accepts the order, provided that the order is placed in person by the purchaser.  Orders not placed in person, including over the Internet, by telephone or through the mail, are still sourced at the vendor’s place of business in Texas from which the items are shipped.

A five year exclusion to this new rule applies to warehouses that are places of business of the vendor, as long as the vendor has an existing economic development agreement with the city or county in which it is located.  The agreement must have been entered into prior to 2009.  Appropriate documentation must be provided by the city or county, with assistance from the vendor, to the Comptrollers’ office on or before September 1, 2009, in order to be eligible for the exclusion.

View the special mailing on the Texas Window on State Government Website.

View the Senate bill on the Texas Legislature Online Website.

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