By Saabir Kapoor and Timothy Gustafson

Texas has clarified the Comptroller’s authority to disregard certain retail business locations in determining the situs of a sale for local sales tax purposes. Current law requires retailers to collect and remit local sales tax based on the ship-from location on all delivery sales of taxable items that are shipped from a “place of business” in Texas when the order is not placed in person by the purchaser or lessee. Texas Senate Bill (S.B.) 1533, which becomes effective on September 1, 2013, allows the Comptroller to disregard a business location only if the location functions or exists to “avoid the tax legally due” or “exists solely to rebate a portion of the tax imposed.” S.B. 1533 also provides that an outlet, office, facility or location will not be disregarded if such location “provides significant business services, beyond processing invoices, to the contracting business, including logistics management, purchasing, inventory control, or other vital business services.” The legislation specifies that the changes do not affect tax liability accruing before September 1, 2013, and that any accrued liability continues in effect as if S.B. 1533 had not been enacted. Tex. S.B. 1533; Tex. Tax Code § 321.002(a)(3), eff. Sept. 1, 2013.