CHAPTER 142. SIMPLIFIED SALES AND USE TAX ADMINISTRATION ACT

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TAX CODE

TITLE 2. STATE TAXATION

SUBTITLE D. COMPACTS AND UNIFORM LAWS

CHAPTER 142. SIMPLIFIED SALES AND USE TAX ADMINISTRATION ACT

Sec. 142.001. TITLE. This chapter may be cited as the

Simplified Sales and Use Tax Administration Act.

Added by Acts 2001, 77th Leg., ch. 1053, Sec. 1, eff. June 15,

2001.

Sec. 142.002. DEFINITIONS. In this chapter:

(1) "Agreement" means the Streamlined Sales and Use Tax

Agreement as amended and adopted on November 12, 2002.

(2) "Certified automated system" means software certified under

the agreement to calculate the tax imposed by each jurisdiction

on a transaction, determine the amount of tax to remit to the

appropriate state, and maintain a record of the transaction.

(3) "Certified service provider" means an agent certified under

the agreement to perform all of the seller's sales tax functions,

other than the seller's obligation to remit tax on the seller's

own purchases.

(3-a) "Model 1 seller" means a seller that has selected a

certified service provider as the seller's agent to perform all

of the seller's sales and use tax functions, other than the

seller's obligation to remit tax on the seller's own purchases.

(3-b) "Model 2 seller" means a seller that has selected a

certified automated system to perform part of the seller's sales

and use tax functions, but retains responsibility for remitting

the tax.

(3-c) "Model 3 seller" means a seller that has sales in at least

five member states, has total annual sales revenue of at least

$500 million, has a proprietary system that calculates the amount

of tax due each jurisdiction, and has entered into a performance

agreement with the member states that establishes a tax

performance standard for the seller. The term includes an

affiliated group of sellers using the same proprietary system.

(4) "Sales tax" means a sales tax administered or computed under

Chapter 151.

(5) "Seller" means a person who sells, leases, or rents personal

property or services.

(6) "Use tax" means a use tax administered or computed under

Chapter 151.

Added by Acts 2001, 77th Leg., ch. 1053, Sec. 1, eff. June 15,

2001. Amended by Acts 2003, 78th Leg., ch. 1310, Sec. 93, eff.

Oct. 1, 2003.

Sec. 142.003. LEGISLATIVE FINDING. The legislature finds that a

simplified sales and use tax system will reduce and over time

eliminate the burden and costs of all vendors to collect this

state's sales and use tax. The legislature also finds that this

state should participate in multistate discussions to review or

amend the terms of the agreement to simplify and modernize sales

and use tax administration to reduce the burden of tax compliance

for all sellers and for all types of commerce.

Added by Acts 2001, 77th Leg., ch. 1053, Sec. 1, eff. June 15,

2001.

Sec. 142.004. NEGOTIATIONS. This state shall enter into

multistate discussions for the purposes of reviewing or amending

the agreement embodying the simplification requirements

prescribed by Section 142.007. This state may be represented by

not more than four delegates for purposes of those discussions.

Added by Acts 2001, 77th Leg., ch. 1053, Sec. 1, eff. June 15,

2001.

Sec. 142.005. AUTHORITY TO ENTER INTO AGREEMENT. (a) The

comptroller is authorized and directed to participate in the

development of the Streamlined Sales and Use Tax Agreement with

one or more states to simplify and modernize sales and use tax

administration in order to substantially reduce the burden of tax

compliance for all sellers and for all types of commerce. In the

development of the agreement, the comptroller may act jointly

with other states that are members of the agreement to establish

standards for certification of a certified service provider and

certified automated system and establish performance standards

for multistate sellers.

(b) The comptroller or the comptroller's designee may represent

this state before the other states that are signatories to the

agreement.

this state if the governor, lieutenant governor, speaker of the

house of representatives, and comptroller unanimously agree that

it would be in this state's best interest to be a signatory to

the agreement.

Added by Acts 2001, 77th Leg., ch. 1053, Sec. 1, eff. June 15,

2001. Amended by Acts 2003, 78th Leg., ch. 1310, Sec. 94, eff.

Oct. 1, 2003.

Sec. 142.0055. RULES. The comptroller may adopt rules relating

to the administration and collection of the sales and use tax as

necessary to comply with the agreement, including rules

establishing the requirements for a seller to be a Model 1

seller, Model 2 seller, or Model 3 seller.

Added by Acts 2003, 78th Leg., ch. 1310, Sec. 95, eff. Oct. 1,

2003.

Sec. 142.006. RELATIONSHIP TO STATE LAW. The agreement

authorized by this chapter does not, in whole or part, invalidate

or amend a law of this state. Adoption of the agreement by this

state does not amend or modify a law of this state.

Implementation of a condition of the agreement in this state,

whether adopted before, at, or after membership of this state in

the agreement, must be by the action of this state.

Added by Acts 2001, 77th Leg., ch. 1053, Sec. 1, eff. June 15,

2001.

Sec. 142.007. AGREEMENT REQUIREMENTS. (a) The comptroller may

not enter into the agreement authorized by this chapter unless

the agreement requires each state to comply with the requirements

prescribed by this section.

(b) The agreement must set restrictions to limit over time the

number of state rates.

(1) the sourcing of transactions to taxing jurisdictions;

(2) the administration of exempt sales; and

(3) sales and use tax returns and remittances.

(d) The agreement must provide a central, electronic

registration system that allows a seller to register to collect

and remit sales and use taxes for all signatory states.

(e) The agreement must provide that registration with the

central registration system and the collection of sales and use

taxes in the signatory states will not be used as a factor in

determining whether the seller has nexus with a state for any

tax.

(f) The agreement must provide for reduction of the burdens of

complying with local sales and use taxes through:

(1) restricting variances between the state and local tax bases;

(2) requiring states to administer any sales and use taxes

levied by local jurisdictions within the state so that sellers

collecting and remitting these taxes will not have to register or

file returns with, remit funds to, or be subject to independent

audits from local taxing jurisdictions;

(3) restricting the frequency of changes in the local sales and

use tax rates and setting effective dates for the application of

local jurisdictional boundary changes to local sales and use

taxes; and

(4) providing notice of changes in local sales and use tax rates

and of changes in the boundaries of local taxing jurisdictions.

(g) The agreement must outline any monetary allowances that are

to be provided by the states to sellers or certified service

providers. The agreement must allow for a joint public and

private sector study of the compliance cost on sellers and

certified service providers to collect sales and use taxes for

state and local governments under various levels of complexity to

be completed by July 1, 2002.

(h) The agreement must require each state to certify compliance

with the terms of the agreement before joining and to maintain

compliance, under the laws of the member state, with all

provisions of the agreement while a member.

(i) The agreement must require each state to adopt a uniform

policy for certified service providers that protects the privacy

of consumers and maintains the confidentiality of tax

information.

(j) The agreement must provide for the appointment of an

advisory council of private sector representatives and an

advisory council of nonmember state representatives to consult

with in the administration of the agreement.

Added by Acts 2001, 77th Leg., ch. 1053, Sec. 1, eff. June 15,

2001.

Sec. 142.008. COOPERATING SOVEREIGNS. The agreement authorized

by this chapter is an accord among individual cooperating

sovereigns in furtherance of their governmental functions. The

agreement provides a mechanism among the member states to

establish and maintain a cooperative, simplified system for the

application and administration of sales and use taxes under the

duly adopted law of each member state.

Added by Acts 2001, 77th Leg., ch. 1053, Sec. 1, eff. June 15,

2001.

Sec. 142.009. LIMITED BINDING AND BENEFICIAL EFFECT. (a) The

agreement authorized by this chapter binds and inures only to the

benefit of this state and the other member states. A person,

other than a member state, is not an intended beneficiary of the

agreement. A benefit to a person other than a state is

established by the law of this state and the other member states

and not by the terms of the agreement.

(b) Consistent with Subsection (a), a person does not have a

cause of action or defense under the agreement or by virtue of

this state's approval of the agreement. A person may not

challenge, in any action brought under any law, an action or

inaction by any department, agency, or other instrumentality of

this state, or any political subdivision of this state, on the

ground that the action or inaction is inconsistent with the

agreement.

be declared invalid as to any person or circumstance on the

ground that the provision or application is inconsistent with the

agreement.

Added by Acts 2001, 77th Leg., ch. 1053, Sec. 1, eff. June 15,

2001.

Sec. 142.010. SELLER AND THIRD PARTY LIABILITY. (a) A

certified service provider is the agent of a seller, with whom

the certified service provider has contracted, for the collection

and remittance of sales and use taxes. As the seller's agent, the

certified service provider is liable for sales and use tax due

each member state on all sales transactions the provider

processes for the seller except as provided by this section.

(b) A seller that contracts with a certified service provider is

not liable to this state for sales or use tax due on transactions

processed by the certified service provider unless the seller

misrepresented the type of items it sells or committed fraud. In

the absence of probable cause to believe that the seller has

committed fraud or made a material misrepresentation, the seller

is not subject to audit on the transactions processed by the

certified service provider. A seller is subject to audit for

transactions not processed by the certified service provider. The

member states acting jointly may perform a system check of the

seller and review the seller's procedures to determine if the

certified service provider's system is functioning properly and

the extent to which the seller's transactions are being processed

by the certified service provider.

responsible for the proper functioning of that system and is

liable to this state for underpayments of tax attributable to

errors in the functioning of the certified automated system. A

seller that uses a certified automated system remains responsible

and is liable to this state for reporting and remitting tax.

(d) A seller that has a proprietary system for determining the

amount of tax due on transactions and has signed an agreement

establishing a performance standard for that system is liable for

the failure of the system to meet the performance standard.

Added by Acts 2001, 77th Leg., ch. 1053, Sec. 1, eff. June 15,

2001.

Sec. 142.011. SETTLEMENT OF TAX, PENALTY, AND INTEREST. On or

after the later of the date on which the agreement takes effect

as provided by the terms of the agreement or this state becomes a

signatory to the agreement, the comptroller may settle a claim

for tax, penalty, or interest on tax imposed by Chapter 151 if

necessary for the comptroller to comply with the terms of the

agreement.

Added by Acts 2003, 78th Leg., ch. 1310, Sec. 96, eff. Oct. 1,

2003.

State Codes and Statutes

State Codes and Statutes

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