Texas Administrative Code › Title 34 - PUBLIC FINANCE › Part 1 - COMPTROLLER OF PUBLIC ACCOUNTS › Chapter 3 - TAX ADMINISTRATION › Subchapter V - FRANCHISE TAX › Section 3.586 - Margin: Nexus

Current through Reg. 49, No. 28; July 12, 2024
(a) Effective date.
				  The provisions of this section apply to franchise tax reports originally due on
				  or after January 1, 2008, unless otherwise noted.
(b) Foreign taxable entity. A taxable entity
				  that is not chartered or organized in Texas.
(c) Nexus. A taxable entity is subject to
				  Texas franchise tax when it has sufficient contact with this state to be taxed
				  without violating the United States Constitution. Nexus is determined on an
				  individual taxable entity level.
(d) Physical presence. Some specific
				  activities that subject a taxable entity to Texas franchise tax include, but
				  are not limited to, the following:
(1)
				  advertising: entering Texas to purchase, place, or display advertising when the
				  advertising is for the benefit of another and in the ordinary course of
				  business (e.g., the foreign taxable entity makes signs and brings them into
				  Texas, sets them up, and maintains them);
(2) consignments: having consigned goods in
				  Texas;
(3) contracting: performance
				  of a contract in Texas regardless of whether the taxable entity brings its own
				  employees into the state, hires local labor, or subcontracts with
				  another;
(4) delivering: delivering
				  into Texas items it has sold;
(5)
				  employees or representatives: having employees or representatives in Texas
				  doing the business of the taxable entity;
(6) federal enclaves: doing business in any
				  area within Texas, even if the area is leased by, owned by, ceded to, or under
				  the control of the federal government;
(7) franchisors: entering into one or more
				  contracts with persons, corporations, or other business entities located in
				  Texas, by which:
(A) the franchisee is
				  granted the right to engage in the business of offering, selling, or
				  distributing goods or services under a marketing plan or system prescribed in
				  substantial part by the franchisor; and
(B) the operation of a franchisee's business
				  pursuant to such plan is substantially associated with the franchisor's
				  trademark, service mark, trade name, logotype, advertising, or other commercial
				  symbol designating the franchisor or its affiliate.
(8) holding companies: maintaining a place of
				  business in Texas or managing, directing, and/or performing services in Texas
				  for subsidiaries or investee entities;
(9) inventory: having an inventory in Texas
				  or having spot inventory for the convenient delivery to customers, even if the
				  bulk of orders are filled from out of state;
(10) leasing: leasing tangible personal
				  property which is used in Texas;
(11) loan production activities: soliciting
				  sales contracts or loans, gathering financial data, making credit checks,
				  collecting accounts, repossessing property or performing other financial
				  activities in Texas through employees, independent contractors, or agents,
				  regardless of whether they reside in Texas;
(12) partners:
(A) acting as a general partner in a general
				  partnership that is doing business in Texas;
(B) acting as a general partner in a limited
				  partnership that is doing business in Texas (a foreign taxable entity that is a
				  limited partner in a limited partnership does not have physical presence in
				  Texas, if that is the limited partner's only connection with Texas);
(13) place of business:
				  maintaining a place of business in Texas;
(14) processing: assembling, processing,
				  manufacturing, or storing goods in Texas;
(15) real estate: holding, acquiring,
				  leasing, or disposing of any property located in Texas;
(16) services, including, but not limited to
				  the following:
(A) providing any service in
				  Texas, regardless of whether the employees, independent contractors, agents, or
				  other representatives performing the services reside in Texas;
(B) maintaining or repairing property located
				  in Texas whether under warranty or by separate contract;
(C) installing, erecting, or modifying
				  property in Texas;
(D) conducting
				  training classes, seminars or lectures in Texas;
(E) providing any kind of technical
				  assistance in Texas, including, but not limited to, engineering services;
				  or
(F) investigating, handling or
				  otherwise assisting in resolving customer complaints in Texas.
(17) shipment: sending materials
				  to Texas to be stored awaiting orders for their shipment;
(18) shows and performances: the staging of
				  or participating in shows, theatrical performances, sporting events, or other
				  events within Texas;
(19)
				  solicitation: having employees, independent contractors, agents, or other
				  representatives in Texas, regardless of whether they reside in Texas, to
				  promote or induce sales of the foreign taxable entity's goods or
				  services;
(20) telephone listing:
				  having a telephone number that is answered in Texas; or
(21) transportation:
(A) carrying passengers or freight (any
				  personal property including oil and gas transmitted by pipeline) from one point
				  in Texas to another point within the state, if pickup and delivery, regardless
				  of origination or ultimate destination, occurs within Texas; or
(B) having facilities and/or employees,
				  independent contractors, agents, or other representatives in Texas, regardless
				  of whether they reside in Texas:
(i) for
				  storage, delivery, or shipment of goods;
(ii) for servicing, maintaining, or repair of
				  vehicles, trailers, containers, and other equipment;
(iii) for coordinating and directing the
				  transportation of passengers or freight; or
(iv) for doing any other business of the
				  taxable entity.