Texas Administrative Code › Title 34 - PUBLIC FINANCE › Part 1 - COMPTROLLER OF PUBLIC ACCOUNTS › Chapter 3 - TAX ADMINISTRATION › Subchapter O - STATE AND LOCAL SALES AND USE TAXES › Section 3.286 - Seller's and Purchaser's Responsibilities

Current through Reg. 49, No. 28; July 12, 2024
(a) Definitions. The following words and
				  terms, when used in this section, shall have the following meanings, unless the
				  context clearly indicates otherwise.
(1)
				  Consignment sale--The sale, lease, or rental of tangible personal property by a
				  seller who, under an agreement with another person, is entrusted with
				  possession of tangible personal property with respect to which the other person
				  has title or another ownership interest, and is authorized to sell, lease, or
				  rent the tangible personal property without additional action by the person
				  having title to or another ownership interest in the tangible personal
				  property.
(2) Direct sales
				  organization--A person that typically sells taxable items directly to
				  purchasers through independent salespersons and not in or through a place of
				  business of the seller. The term "independent salespersons" includes, but is
				  not limited to, distributors, representatives, and consultants. Items are
				  typically sold person-to-person through in-home product demonstrations,
				  parties, catalogs, and one-on-one selling. The term includes, but is not
				  limited to, direct marketing and multilevel marketing organizations.
(3) Disaster- or emergency-related
				  work--Repairing, renovating, installing, building, rendering services, or
				  performing other business activities relating to the repair or replacement of
				  equipment and property, including buildings, offices, structures, lines, poles,
				  and pipes, that:
(A) is owned or used by or
				  for:
(i) a telecommunications provider or
				  cable operator;
(ii) communications
				  networks;
(iii) electric
				  generation;
(iv) electric
				  transmissions and distribution systems;
(v) natural gas and natural gas liquids
				  gathering, processing, and storage, transmission and distribution systems;
				  or
(vi) water pipelines and related
				  support facilities, equipment, and property that serve multiple persons;
				  and
(B) is damaged,
				  impaired, or destroyed by a declared state disaster or emergency.
(4) Engaged in business--Except as
				  provided in subparagraphs (L) and (M) of this paragraph, a seller is engaged in
				  business in this state if the seller:
(A)
				  maintains, occupies, or uses in this state, permanently or temporarily,
				  directly or indirectly, or through an agent by whatever name called, a kiosk,
				  office, distribution center, sales or sample room or place, warehouse or
				  storage place, or any other physical location where business is
				  conducted;
(B) has any
				  representative, agent, salesperson, canvasser, or solicitor who operates under
				  the authority of the seller to conduct business in this state, including
				  selling, delivering, or taking orders for taxable items;
(C) promotes a flea market, arts and crafts
				  show, trade day, festival, or other event in this state that involves sales of
				  taxable items;
(D) uses independent
				  salespersons, who may include, but are not limited to, distributors,
				  representatives, or consultants, in this state to make direct sales of taxable
				  items;
(E) derives receipts from
				  the sale, lease, or rental of tangible personal property that is located in
				  this state or owns or uses tangible personal property that is located in this
				  state, including a computer server or software to solicit orders for taxable
				  items, unless the seller uses the server or software as a purchaser of an
				  Internet hosting service;
(F)
				  allows a franchisee or licensee to operate under its trade name in this state
				  if the franchisee or licensee is required to collect sales or use tax in this
				  state;
(G) otherwise conducts
				  business in this state;
(H) is
				  formed, organized, or incorporated under the laws of this state and the
				  seller's internal affairs are governed by the laws of this state,
				  notwithstanding the fact that the seller may not be otherwise engaged in
				  business in this state pursuant to this section;
(I) engages in regular or systematic
				  solicitation of sales of taxable items in this state by the distribution of
				  catalogs, periodicals, advertising flyers, or other advertising, by means of
				  print, radio, or television media, or by mail, telegraphy, telephone, computer
				  data base, cable, optic, microwave, or other communication system for the
				  purpose of effecting sales of taxable items;
(J) solicits orders for taxable items by mail
				  or through other media including the Internet or other media that may be
				  developed in the future; or
(K)
				  holds a substantial ownership interest in, or is owned in whole or substantial
				  part by, another person who:
(i) maintains a
				  distribution center, warehouse, or similar location in this state and delivers
				  property sold by the seller to purchasers in this state;
(ii) maintains a location in this state from
				  which business is conducted, sells the same or substantially similar lines of
				  products as the seller, and sells such products under a business name that is
				  the same or substantially similar to the business name of the seller;
				  or
(iii) maintains a location in
				  this state from which business is conducted if the person with the location in
				  this state uses its facilities or employees:
(I) to advertise, promote, or facilitate
				  sales by the seller to purchasers; or
(II) to otherwise perform any activity on
				  behalf of the seller that is intended to establish or maintain a marketplace
				  for the seller in this state, including receiving or exchanging returned
				  merchandise.
(iv) For
				  purposes of this subparagraph only, "ownership" includes direct ownership,
				  common ownership, or indirect ownership through a parent entity, subsidiary, or
				  affiliate, and "substantial," with respect to ownership, constitutes an
				  interest, whether direct or indirect, of at least 50% of:
(I) the total combined voting power of all
				  classes of stock of a corporation;
(II) the beneficial ownership interest in the
				  voting stock of the corporation;
(III) the current beneficial interest in the
				  corpus or income of a trust;
(IV)
				  the total membership interest of a limited liability company;
(V) the beneficial ownership interest in the
				  membership interest of a limited liability company; or
(VI) the profits or capital interest of any
				  other entity, including, but not limited to, a partnership, joint venture, or
				  association.
(L) Effective June 16, 2015, a seller is not
				  engaged in business in this state if the seller is an out-of-state business
				  entity whose physical presence in this state is solely from the entity's
				  performance of disaster- or emergency-related work during a disaster response
				  period. An out-of-state business entity that remains in this state after a
				  disaster response period has ended is engaged in business in this state if the
				  entity conducts any of the activities described in subparagraphs (A) - (K) of
				  this paragraph.
(i) For purposes of this
				  subparagraph only, an "affiliate" is a member of a combined group as that term
				  is described by Tax Code, §
													171.1014
				  (Combined Reporting; Affiliated Group Engaged in Unitary Business).
(ii) For purposes of this subparagraph only,
				  a "disaster response period" is:
(I) the
				  period that:
(-a-) begins on the 10th day
				  before the date of the earliest event establishing a declared state of disaster
				  or emergency by the issuance of an executive order or proclamation by the
				  governor or a declaration of the president of the United States; and
(-b-) ends on the earlier of the 120th day
				  after the start date or the 60th day after the ending date of the disaster or
				  emergency period established by the executive order or proclamation or
				  declaration, or on a later date as determined by an executive order or
				  proclamation by the governor; or
(II) the period that, with respect to an
				  out-of-state business entity:
(-a-) begins on
				  the date that the out-of-state business entity enters this state in good faith
				  under a mutual assistance agreement and in anticipation of a state of disaster
				  or emergency, regardless of whether a state of disaster or emergency is
				  actually declared; and
(-b-) ends
				  on the earlier of the date that the work is concluded or the seventh day after
				  the out-of-state business entity enters this
				  state.
(iii)
				  For purposes of this subparagraph only, a "mutual assistance agreement" is an
				  agreement to which one or more business entities are parties and under which a
				  public utility, municipally owned utility, or joint agency owning, operating,
				  or owning and operating critical infrastructure used for electric generation,
				  transmission, or distribution in this state may request that an out-of-state
				  business entity perform work in this state in anticipation of a state of
				  disaster or emergency.
(iv) For
				  purposes of this subparagraph only, an "out-of-state business entity" is a
				  foreign entity that:
(I) enters this state at
				  the request of, or is an affiliate of, an in-state business entity and performs
				  work in Texas under a mutual assistance agreement; or
(II) enters this state at the request of an
				  in-state business entity, under a mutual assistance agreement, or is an
				  affiliate of an in-state business entity and enters this state at the request
				  of an in-state business entity, the state of Texas, or a political subdivision
				  of this state to perform disaster- or emergency-related work in this state
				  during the disaster response period, and:
(-a-) except with respect to the performance
				  of disaster- or emergency-related work, has no physical presence in this state
				  and is not authorized to transact business in this state immediately before a
				  disaster response period; and
(-b-)
				  is not registered with the secretary of state to transact business in this
				  state, does not file a tax report with this state, or a political subdivision
				  of this state, and is not engaged in business with this state for the purpose
				  of taxation during the tax year immediately preceding the disaster response
				  period.
(M) A broadcaster, printer, outdoor
				  advertising firm, advertising distributor, or publisher that broadcasts,
				  publishes, displays, or distributes paid commercial advertising in this state
				  that is intended to be disseminated primarily to consumers located in this
				  state and is only secondarily disseminated to bordering jurisdictions,
				  including advertising appearing exclusively in a Texas edition or section of a
				  national publication, is considered for purposes of this subsection to be the
				  agent of the person placing the advertisement and is not considered to be
				  engaged in business in this state as a result of those acts.
(5) Internet hosting service--The
				  provision to an unrelated user of access over the Internet to computer services
				  using property that is owned or leased and managed by the service provider and
				  on which the unrelated user may store or process the user's own data or use
				  software that is owned, licensed, or leased by the unrelated user or service
				  provider. The term does not include telecommunications services as defined in
				  §
											3.344
				  of this title (relating to Telecommunications Services).
(6) Itinerant vendor--A seller who does not
				  operate a place of business in this state and who travels to various locations
				  in this state to solicit sales.
(7)
				  Kiosk--A small, stand-alone area or structure that:
(A) is used solely to display merchandise or
				  to submit orders for taxable items from a data entry device, or both;
(B) is located entirely within a location
				  that is a place of business of another seller, such as a department store or
				  shopping mall; and
(C) at which
				  taxable items are not available for immediate delivery to a
				  purchaser.
(8)
				  Marketplace--A physical or electronic medium through which persons other than
				  the owner or operator of the medium make sales of taxable items. The term
				  includes a store, internet website, software application, or catalog.
(9) Marketplace provider--A person who owns
				  or operates a marketplace and directly or indirectly processes sales or
				  payments for marketplace sellers.
(10) Marketplace seller--A seller, other than
				  the marketplace provider, who makes a sale of a taxable item through a
				  marketplace.
(11) Permit holder--A
				  person to whom the comptroller has issued a sales and use tax permit. The term
				  includes permitted sellers as well as permitted purchasers, but does not
				  include a person who does not hold a Texas sales and use tax permit or whose
				  sales and use tax permit is suspended, pursuant to subsection (l) of this
				  section, or cancelled, pursuant to subsection (n) of this section, or a person
				  who has not received a sales and use tax permit due to an unsigned or
				  incomplete application.
(12) Place
				  of business of the seller--This term has the meaning given in §
											3.334
				  of this title (relating to Local Sales and Use Taxes).
(13) Seller--Every retailer, wholesaler,
				  distributor, manufacturer, marketplace provider, or any other person who sells,
				  leases, rents, or transfers ownership of tangible personal property or performs
				  taxable services for consideration. Seller is further defined as follows:
(A) A promoter of a flea market, trade day,
				  or other event that involves the sales of taxable items is a seller responsible
				  for the collection and remittance of the sales tax that dealers, salespersons,
				  or individuals collect at such events, unless those persons hold active sales
				  and use tax permits that the comptroller has issued.
(B) A direct sales organization that is
				  engaged in business in this state is a seller responsible for the collection
				  and remittance of the sales and use tax collected by the organization's
				  independent salespersons.
(C)
				  Pawnbrokers, storage facility operators, mechanics, artisans, or others who
				  sell property to enforce a lien are sellers responsible for the collection and
				  remittance of sales and use tax on the sale of such tangible personal
				  property.
(D) A person engaged in
				  business in this state who sells, leases, or rents tangible personal property
				  owned by another person by means of a consignment sale is a seller responsible
				  for the collection and remittance of the sales tax on the consignment
				  sale.
(E) An auctioneer who owns
				  tangible personal property or to whom tangible personal property has been
				  consigned is a seller responsible for the collection and remittance of the
				  sales and use tax on tangible personal property sold at auction. For more
				  information, auctioneers should refer to §
												3.311
				  of this title (relating to Auctioneers, Brokers, and
				  Factors).
(14) Taxable
				  item--Tangible personal property and taxable services. Except as otherwise
				  provided in Tax Code, Chapter 151, the sale or use of a taxable item in
				  electronic form instead of on physical media does not alter the item's tax
				  status.
(A) Tangible personal property means
				  property that can be seen, weighed, measured, felt, or touched or that is
				  perceptible to the senses in any other manner, including a computer program as
				  defined in §
												3.308
				  of this title (relating to Computers--Hardware, Computer Programs, Services,
				  and Sales) and a telephone prepaid calling card, as defined in §
												3.344
				  of this title.
(B) Taxable services
				  are those identified in Tax Code, §
												151.0101
				  (Taxable Services).