CHAPTER 321. MUNICIPAL SALES AND USE TAX ACT

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TAX CODE

TITLE 3. LOCAL TAXATION

SUBTITLE C. LOCAL SALES AND USE TAXES

CHAPTER 321. MUNICIPAL SALES AND USE TAX ACT

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 321.001. SHORT TITLE. This chapter may be cited as the

Municipal Sales and Use Tax Act.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987.

Sec. 321.002. DEFINITIONS. (a) In this chapter:

(1) "Additional municipal sales and use tax" means only the

additional tax authorized by Section 321.101(b).

(2) "Municipality" includes any incorporated city, town, or

village.

(3) "Place of business of the retailer" means an established

outlet, office, or location operated by the retailer or the

retailer's agent or employee for the purpose of receiving orders

for taxable items and includes any location at which three or

more orders are received by the retailer during a calendar year.

A warehouse, storage yard, or manufacturing plant is not a "place

of business of the retailer" unless at least three orders are

received by the retailer during the calendar year at the

warehouse, storage yard, or manufacturing plant. An outlet,

office, facility, or location that contracts with a retail or

commercial business engaged in activities to which this chapter

applies to process for that business invoices or bills of lading

onto which sales tax is added is not a "place of business of the

retailer" if the comptroller determines that the outlet, office,

facility, or location functions or exists to avoid the tax

imposed by this chapter or to rebate a portion of the tax imposed

by this chapter to the contracting business. Notwithstanding any

other provision of this subdivision, a kiosk is not a "place of

business of the retailer." In this subdivision, "kiosk" means 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 retailer, such as a department store or

shopping mall; and

delivery to a customer.

(b) Words used in this chapter and defined by Chapter 151 have

the meanings assigned by Chapter 151.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 2003, 78th Leg., ch. 1155, Sec. 1, eff.

Sept. 1, 2003.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

1360, Sec. 4, eff. September 1, 2009.

Sec. 321.003. OTHER PORTIONS OF TAX APPLICABLE. Subtitles A and

B, Title 2, and Chapters 142 and 151 apply to the taxes and to

the administration and enforcement of the taxes imposed by this

chapter in the same manner that those laws apply to state taxes,

unless modified by this chapter.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1989, 71st Leg., ch. 2, Sec. 14.13, eff.

Aug. 28, 1989; Acts 2003, 78th Leg., ch. 1310, Sec. 114, eff.

Oct. 1, 2003.

Sec. 321.004. REFERENCES TO SALES OR USE TAX. A reference to a

sales tax or a use tax imposed or authorized by this chapter is a

reference to both the taxes imposed under Sections 321.101(a) and

(b) unless otherwise provided.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987.

SUBCHAPTER B. IMPOSITION OF SALES AND USE TAXES BY MUNICIPALITIES

Sec. 321.101. TAX AUTHORIZED. (a) A municipality may adopt or

repeal a sales and use tax authorized by this chapter, other than

the additional municipal sales and use tax, at an election in

which a majority of the qualified voters of the municipality

approve the adoption or repeal of the tax.

(b) A municipality that is not disqualified may, by a majority

vote of the qualified voters of the municipality voting at an

election held for that purpose, adopt an additional sales and use

tax for the benefit of the municipality in accordance with this

chapter. A municipality is disqualified from adopting the

additional sales and use tax if the municipality:

(1) is included within the boundaries of a rapid transit

authority created under Chapter 451, Transportation Code;

(2) is included within the boundaries of a regional

transportation authority created under Chapter 452,

Transportation Code, by a principal municipality having a

population of less than 800,000, unless the municipality has a

population of 400,000 or more and is located in more than one

county;

(3) is wholly or partly located in a county that contains

territory within the boundaries of a regional transportation

authority created under Chapter 452, Transportation Code, by a

principal municipality having a population in excess of 800,000,

unless:

(A) the municipality is a contiguous municipality; or

(B) the municipality is not included within the boundaries of

the authority and is located wholly or partly in a county in

which fewer than 250 persons are residents of both the county and

the authority according to the most recent federal census; or

included within the boundaries of the authority; or

(4) imposes a tax authorized by Chapter 453, Transportation

Code.

" and "contiguous municipality " have the meanings assigned by

Section 452.001, Transportation Code.

(d) In any municipality in which an additional sales and use tax

has been imposed, in the same manner and by the same procedure

the municipality by majority vote of the qualified voters of the

municipality voting at an election held for that purpose may

reduce, increase, or abolish the additional sales and use tax.

(e) An authority created under Chapter 451 or 452,

Transportation Code, is prohibited from imposing the tax provided

for by those chapters if within the boundaries of the authority

there is a municipality that has adopted the additional sales and

use tax provided for by this section.

(f) A municipality may not adopt or increase a sales and use tax

or an additional sales and use tax under this section if as a

result of the adoption or increase of the tax the combined rate

of all sales and use taxes imposed by the municipality and other

political subdivisions of this state having territory in the

municipality would exceed two percent at any location in the

municipality.

(g) For the purposes of Subsection (f), "territory" in a

municipality having a population of 5,000 or less and bordering

on the Gulf of Mexico does not include any area covered by water

and in which no person has a place of business to which a sales

tax permit issued under Subchapter F of Chapter 151 applies.

(h) Expired.

(i) A municipality for which the adoption or increase of a sales

and use tax approved by the voters in an election held after May

1, 1995, and before December 31, 1995, is invalid because the

election combined into a single proposition proposal for adopting

an economic development sales and use tax under Chapter 505,

Local Government Code, and an additional sales and use tax under

Subsection (b) may adopt or increase the sales and use tax

previously approved by the voters by ordinance or resolution of

the governing body of the municipality. If the governing body of

the municipality adopts or increases the sales and use tax under

this subsection, the municipal secretary shall send to the

comptroller by certified or registered mail a certified copy of

the ordinance or resolution. The tax takes effect on the first

day of the month following the expiration of the calendar quarter

occurring after the date on which the comptroller receives the

ordinance or resolution.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1987, 70th Leg., 2nd C.S., ch. 54, Sec. 1,

eff. Oct. 20, 1987; Acts 1989, 71st Leg., ch. 2, Sec. 14.14(a),

eff. Aug. 28, 1989; Acts 1989, 71st Leg., ch. 489, Sec. 1, eff.

Aug. 28, 1989; Acts 1991, 72nd Leg., ch. 184, Sec. 2, eff. May

24, 1991; Acts 1991, 72nd Leg., ch. 223, Sec. 1, eff. May 29,

1991; Acts 1993, 73rd Leg., ch. 320, Sec. 1, eff. May 28, 1993;

Acts 1993, 73rd Leg., ch. 1031, Sec. 25, eff. Sept. 1, 1993; Acts

1997, 75th Leg., ch. 65, Sec. 1, eff. May 9, 1997; Acts 1997,

75th Leg., ch. 165, Sec. 30.264, eff. Sept. 1, 1997; Acts 1997,

75th Leg., ch. 705, Sec. 1, eff. Sept. 1, 1997.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

885, Sec. 3.73, eff. April 1, 2009.

Sec. 321.102. EFFECTIVE DATES: NEW TAX, TAX REPEAL, BOUNDARY

CHANGE. (a) A tax imposed under this chapter or the repeal of a

tax abolished under this chapter takes effect on the first day of

the first calendar quarter occurring after the expiration of the

first complete calendar quarter occurring after the date on which

the comptroller receives a notice of the action as required by

Section 321.405(b). This subsection does not apply to the

additional municipal sales and use tax.

(b) The additional municipal sales and use tax takes effect or

is increased, reduced, or repealed in the municipality on the

October 1st after the expiration of the first complete calendar

quarter after the date on which the comptroller receives notice

from the municipality of the adoption, increase, reduction, or

repeal of the additional municipal sales and use tax.

chapter is in effect changes its boundaries, the municipal

secretary shall send by United States registered or certified

mail to the comptroller a certified copy of the ordinance that

adds or detaches municipal territory and that shows the effective

date of the boundary change. The ordinance must be accompanied by

a map clearly showing the added or detached territory. Except as

provided by Subsection (d), the tax takes effect in the added

territory or is inapplicable to the detached territory on the

first day of the first calendar quarter after the comptroller

receives the ordinance and map.

(d) If, within 10 days after the receipt of an ordinance and map

sent under Subsection (c), the comptroller notifies the secretary

of the municipality that more time is required, the effective

date of the application of the tax in the added or detached area

is the first day of the first calendar quarter after the

expiration of the first complete calendar quarter occurring after

the date on which the comptroller receives the ordinance and map.

(e) If as a result of the imposition or increase in a sales and

use tax by a municipality in which there is located all or part

of a local governmental entity that has adopted a sales and use

tax or as a result of the annexation by a municipality of all or

part of the territory in a local governmental entity that has

adopted a sales and use tax the overlapping local sales and use

taxes in the area will exceed two percent, the entity's sales and

use tax is automatically reduced in that area to a rate that when

added to the combined rate of local sales and use taxes will

equal two percent.

(f) If an entity's rate is reduced in accordance with Subsection

(e), the comptroller shall withhold from the municipality's

monthly sales and use tax allocation an amount equal to the

amount that would have been collected by the entity had the

municipality not imposed or increased its sales and use tax or

annexed the area in the entity less amounts that the entity

collects following the municipality's levy of or increase in its

sales and use tax or annexation of the area in the entity. The

comptroller shall withhold and pay the amount withheld to the

entity under policies or procedures that the comptroller

considers reasonable.

(g) Subsections (e) and (f) do not apply if and during any

period in which a local governmental entity has outstanding

indebtedness or obligations that are payable wholly or partly

from the sales and use tax revenue of the entity. A municipality

may not implement the imposition or increase of the sales and use

tax as a result of the circumstances described by Subsection (e)

if, as a result of the implementation of that imposition or

increase, the combined rate of all sales and use taxes imposed by

the municipality, the local governmental entity, and any other

political subdivisions having territory in the district would

exceed two percent at any location in the municipality.

(h) A transit authority is not a local governmental entity for

the purposes of Subsections (e) and (f).

(i) Subsection (g) does not apply to a local governmental entity

or political subdivision created under Chapter 326, Local

Government Code.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1989, 71st Leg., ch. 256, Sec. 1, eff.

Sept. 1, 1989; Acts 1991, 72nd Leg., ch. 184, Sec. 3, eff. May

24, 1991; Acts 1999, 76th Leg., ch. 1467, Sec. 2.67, eff. June

19, 1999; Acts 2001, 77th Leg., ch. 1263, Sec. 74, eff. Sept. 1,

2001.

Sec. 321.1025. ANNEXATION TO CERTAIN REGIONAL TRANSPORTATION

AUTHORITIES. (a) A municipality that is wholly or partly

located in a county that contains territory within the boundaries

of a regional transportation authority created under Chapter 452,

Transportation Code, by a principal municipality having a

population of more than 800,000 and that has adopted an

additional sales and use tax for the benefit of the municipality

may hold an election on the question of whether the municipality

shall be annexed to the authority.

(b) The election must be held in the manner required by Chapter

452, Transportation Code.

to be treated for all purposes as an election to abolish the

additional sales and use tax in the municipality and the tax is

repealed in the manner provided by this chapter.

Added by Acts 1991, 72nd Leg., ch. 223, Sec. 2, eff. May 29,

1991. Amended by Acts 1997, 75th Leg., ch. 165, Sec. 30.265, eff.

Sept. 1, 1997.

Sec. 321.103. SALES TAX. (a) In a municipality that has

adopted the tax authorized by Section 321.101(a), there is

imposed a tax on the receipts from the sale at retail of taxable

items within the municipality at the rate of one percent and at

the same rate on the receipts from the sale at retail within the

municipality of gas and electricity for residential use.

(b) In a municipality that has adopted the additional municipal

sales and use tax, the tax is imposed at the rate approved by the

voters. The rate, when the tax is adopted, must be equal to

either one-eighth, one-fourth, three-eighths, or one-half of one

percent. The rate may be reduced in one or more increments of

one-eighth of one percent to a minimum of one-eighth of one

percent or increased in one or more increments of one-eighth of

one percent to a maximum of one-half of one percent, or the tax

may be abolished. The rate that the municipality adopts is on the

receipts from the sale at retail of all taxable items within the

municipality and at the same rate on the receipts from the sale

at retail within the municipality of gas and electricity for

residential use unless the residential use of gas and electricity

is exempted from the tax imposed under Section 321.101(a), in

which case the residential use of gas and electricity is exempted

under this subsection also.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1991, 72nd Leg., ch. 184, Sec. 4, eff. May

24, 1991.

Sec. 321.104. USE TAX. (a) In a municipality that has adopted

the tax authorized by this chapter, there is imposed an excise

tax on the use, storage, or other consumption within the

municipality of taxable items purchased, leased, or rented from a

retailer during the period that the tax is effective within the

municipality. The rate of the excise tax is the same as the rate

of the sales tax portion of the tax and is applied to the sales

price of the taxable items.

(b) In a municipality that has adopted the tax authorized by

this chapter, there is imposed an excise tax on the use, storage,

or other consumption of gas or electricity for residential

purposes and purchased from any retailer during the period that

the tax is effective within the municipality. The tax is imposed

at the same rate as the tax provided by Subsection (a).

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1991, 72nd Leg., ch. 705, Sec. 25, eff.

Sept. 1, 1991.

Sec. 321.105. RESIDENTIAL USE OF GAS AND ELECTRICITY. (a)

There are exempted from the taxes imposed by a municipality under

this chapter the sale, production, distribution, lease, or rental

of, and the use, storage, or other consumption within the

municipality of gas and electricity for residential use in any

municipality that:

(1) adopted the tax on or after October 1, 1979; or

(2) adopted the tax before that time but:

(A) failed to exempt the residential use of gas and electricity

before May 1, 1979; and

(B) has not reimposed the tax as provided by Subsection (c).

(b) A governing body of a municipality that adopted the taxes

under this chapter before October 1, 1979, may, by ordinance

adopted by a vote of a majority of the membership of the

governing body and recorded in the municipal minutes, exempt from

the taxes authorized by this chapter the receipts from the sale,

production, distribution, lease, or rental of, and the use,

storage, or other consumption of gas and electricity for

residential use.

taxes authorized by this chapter before May 1, 1979, and in which

residential use of gas and electricity is exempted within the

municipality, may reimpose the taxes on gas and electricity for

residential use by ordinance adopted by a vote of the majority of

the membership of the governing body and entered in the municipal

minutes.

(d) The municipal secretary shall send to the comptroller by

United States certified or registered mail a copy of an ordinance

exempting or imposing the taxes on residential use of gas and

electricity.

(e) The exemption or reimposition of taxes on residential use of

gas and electricity takes effect within the municipality as

provided by Section 321.104(a) after receipt of a copy of the

ordinance.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987.

Sec. 321.1055. IMPOSITION OF FIRE CONTROL OR CRIME CONTROL

DISTRICT TAX ON THE RESIDENTIAL USE OF GAS AND ELECTRICITY. (a)

This section applies to a fire control, prevention, and emergency

medical services district or crime control and prevention

district located in all or part of a municipality that imposes a

tax on the residential use of gas and electricity under Section

321.105.

(b) The board of directors of a district to which this section

applies may, by order or resolution adopted in a public hearing

by a vote of a majority of the membership of the board and

recorded in the district's minutes:

(1) impose a tax adopted under Section 321.106 or 321.108, as

applicable, on receipts from the sale, production, distribution,

lease, or rental of, and the use, storage, or other consumption

within the district of, gas and electricity for residential use;

(2) exempt from taxation the items described by Subdivision (1);

(3) reimpose the tax under Subdivision (1).

Subsection (b) shall:

(1) send a copy of the order or resolution to the comptroller by

United States certified or registered mail;

(2) send a copy of the order or resolution and a copy of the

district's boundaries to each gas and electric company whose

customers are subject to the tax by United States certified or

registered mail; and

(3) publish notice of the order or resolution in a newspaper of

general circulation in the district.

(d) If the residential use of gas and electricity ceases to be

taxable in the municipality in which a district is located, then

the residential use of gas and electricity is not taxable by the

district.

(e) The provisions of Sections 321.201 and 321.204 that govern

the computation of municipal taxes on gas and electricity for

residential use apply to the computation of district taxes on gas

and electricity for residential use under this section.

Added by Acts 2009, 81st Leg., R.S., Ch.

1420, Sec. 2, eff. January 1, 2010.

Sec. 321.106. FIRE CONTROL DISTRICT TAX. (a) Subject to an

election held in accordance with Chapter 344, Local Government

Code, a municipality in which a fire control, prevention, and

emergency medical services district is established shall adopt a

sales and use tax in the area of the district for the purpose of

financing the operation of the fire control, prevention, and

emergency medical services district. The revenue from the tax may

be used only for the purpose of financing the operation of the

fire control, prevention, and emergency medical services

district. The proposition for adopting a tax under this section

and the proposition for creation of a fire control, prevention,

and emergency medical services district shall be submitted at the

same election. For purposes of Section 321.101, a tax under this

section is not an additional sales and use tax.

(b) A tax adopted for a district under this section for

financing the operation of the district may be decreased in

increments of one-eighth of one percent by order of the board of

directors of the district.

may be increased in increments of one-eighth of one percent, not

to exceed a total tax rate of one-half percent, for financing the

operation of the fire control, prevention, and emergency medical

services district by order of the board of directors of the fire

control, prevention, and emergency medical services district if

approved by a majority of the qualified voters voting at an

election called by the board and held in the district on the

question of increasing the tax rate. At the election, the ballot

shall be printed to provide for voting for or against the

proposition: "The increase of the __________ (name of the

municipality that created the district) Fire Control, Prevention,

and Emergency Medical Services District sales and use tax rate to

______ percent." If there is an increase or decrease under this

section in the rate of a tax imposed under this section, the new

rate takes effect on the first day of the next calendar quarter

after the expiration of one calendar quarter after the

comptroller receives notice of the increase or decrease. However,

if the comptroller notifies the president of the board of

directors of the district in writing within 10 days after receipt

of the notification that the comptroller requires more time to

implement reporting and collection procedures, the comptroller

may delay implementation of the rate change for one calendar

quarter, and the new rate takes effect on the first day of the

calendar quarter that follows the elapsed quarter.

(d) The comptroller shall remit to the municipality amounts

collected at the rate imposed under this section as part of the

regular allocation of other municipal tax revenue collected by

the comptroller. The municipality shall remit that amount to the

district. A retailer may not be required to use allocation and

reporting procedures in the collection of taxes under this

section that are different from the procedures that retailers use

in the collection of other sales and use taxes under this

chapter. An item, transaction, or service that is taxable in a

municipality under a sales or use tax authorized by another

section of this chapter is taxable under this section. An item,

transaction, or service that is not taxable in a municipality

under a sales or use tax authorized by another section of this

chapter is not taxable under this section.

(e) If, in a municipality where a fire control, prevention, and

emergency medical services district is composed of the whole

municipality, a municipal sales and use tax or a municipal sales

and use tax rate increase for the purpose of financing a fire

control, prevention, and emergency medical services district is

approved, the municipality is responsible for distributing to the

district that portion of the municipal sales and use tax revenue

received from the comptroller that is to be used for the purposes

of financing the fire control, prevention, and emergency medical

services district. Not later than the 10th day after the date the

municipality receives money under this section from the

comptroller, the municipality shall make the distribution in the

proportion that the fire control, prevention, and emergency

medical services portion of the tax rate bears to the total sales

and use tax rate of the municipality. The amounts distributed to

a fire control, prevention, and emergency medical services

district are not considered to be sales and use tax revenue for

the purpose of property tax reduction and computation of the

municipal tax rate under Section 26.041.

(f) For purposes of the tax imposed under this section, a

reference in this chapter to the municipality as the territory in

which the tax or an incident of the tax applies means only the

territory located in the fire control, prevention, and emergency

medical services district, if that district is composed of an

area less than an entire municipality.

(g) The comptroller may adopt rules and the municipality's

governing body may adopt orders to administer this section.

Added by Acts 2001, 77th Leg., ch. 1295, Sec. 2, eff. June 1,

2001.

Sec. 321.107. ADMINISTRATION OF LOCAL SALES AND USE TAXES

IMPOSED BY OTHER GOVERNMENTAL ENTITIES. The imposition,

computation, administration, enforcement, and collection of any

local sales and use tax imposed by any other local governmental

entity is governed by this chapter, except as otherwise provided

by law. In this section, "other local governmental entity"

includes any governmental entity created by the legislature that

has a limited purpose or function, that has a defined or

restricted geographic territory, and that is authorized by law to

impose a local sales and use tax. The term does not include a

county, county health services district, county landfill and

criminal detention center district, metropolitan transportation

authority, coordinated county transportation authority, economic

development district, crime control district, hospital district,

emergency services district, or library district.

Added by Acts 2003, 78th Leg., ch. 209, Sec. 54, eff. Oct. 1,

2003.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

326, Sec. 21, eff. September 1, 2007.

Sec. 321.108. MUNICIPAL CRIME CONTROL AND PREVENTION DISTRICT

TAX. (a) Subject to an election held in accordance with Chapter

363, Local Government Code, a municipality in which a crime

control and prevention district is established shall adopt a

sales and use tax in the area of the district for the purpose of

financing the operation of the crime control and prevention

district. The revenue from the tax may be used only for the

purpose of financing the operation of the crime control and

prevention district. The proposition for adopting a tax under

this section and the proposition for creation of a crime control

and prevention district shall be submitted at the same election.

(b) A tax adopted for a district under this section for

financing the operation of the district may be decreased in

increments of one-eighth of one percent by order of the board of

directors of the district.

creation of the crime control and prevention district may call an

election in the district on the question of decreasing the tax

rate in increments of one-eighth of one percent in the district.

At the election, the ballot shall be printed to provide for

voting for or against the following proposition: "The decrease

of the ____________________ Crime Control and Prevention District

sales and use tax rate to ____________ percent."

(d) The rate of a tax adopted for a district under this section

may be increased in increments of one-eighth of one percent, not

to exceed a total tax rate of one-half percent for financing the

operation of the crime control and prevention district, by order

of the board of directors of the crime control and prevention

district if approved by a majority of the voters voting at an

election called by the board and held in the district on the

question of increasing the tax rate. At the election, the ballot

shall be printed to provide for voting for or against the

following proposition: "The increase of the ______________ Crime

Control and Prevention District sales and use tax rate to

____________ percent." If there is an increase or decrease under

this subsection in the rate of a tax imposed under this section,

the new rate takes effect on the first day of the next calendar

quarter after the expiration of one calendar quarter after the

comptroller receives notice of the increase or decrease.

However, if the comptroller notifies the president of the board

of directors of the district in writing within 10 days after

receipt of the notification that the comptroller requires more

time to implement reporting and collection procedures, the

comptroller may delay implementation of the rate change for

another calendar quarter, and the new rate takes effect on the

first day of the next calendar quarter following the elapsed

quarter.

(e) The comptroller shall remit to the municipality amounts

collected at the rate imposed under this section as part of the

regular allocation of municipal tax revenue collected by the

comptroller if the district is composed of the entire

municipality. The comptroller shall, if the district is composed

of an area less than the entire municipality, remit that amount

to the district. Retailers may not be required to use allocation

and reporting procedures in the collection of taxes under this

section that are different from the procedures that retailers use

in the collection of other sales and use taxes under this

chapter. An item, transaction, or service that is taxable in a

municipality under a sales or use tax authorized by another

section of this chapter is taxable under this section. An item,

transaction, or service that is not taxable in a municipality

under a sales or use tax authorized by another section of this

chapter is not taxable under this section.

(f) If, in a municipality in which a crime control and

prevention district is composed of the whole municipality, a

municipal sales and use tax or a municipal sales and use tax rate

increase for the purpose of financing a crime control and

prevention district is approved, the municipality is responsible

for distributing to the district that portion of the municipal

sales and use tax revenue received from the comptroller that is

to be used for the purposes of financing the crime control and

prevention district. Not later than the 10th day after the date

the municipality receives money under this section from the

comptroller, the municipality shall make the distribution in the

proportion that the crime control and prevention portion of the

tax rate bears to the total sales and use tax rate of the

municipality. The amounts distributed to a crime control and

prevention district are not considered to be additional municipal

sales and use tax revenue for the purpose of property tax

reduction and computation of the municipal tax rate under Section

26.041.

(g) For purposes of the tax imposed under this section, a

reference in this chapter to the municipality as the territory in

which the tax or an incident of the tax applies means only the

territory located in the crime control and prevention district,

if that district is composed of an area less than an entire

municipality.

(h) The comptroller may adopt rules and the governing body of

the municipality may adopt orders to administer this section.

Added by Acts 2007, 80th Leg., R.S., Ch.

1101, Sec. 5, eff. June 15, 2007.

SUBCHAPTER C. COMPUTATION OF TAXES

Sec. 321.201. COMPUTATION OF SALES TAXES. (a) Each retailer in

a municipality that has adopted a tax authorized by this chapter

shall add each sales tax imposed by the municipality under this

chapter and by Chapter 151 to the sales price, and the sum of the

taxes is a part of the price, a debt of the purchaser to the

retailer until paid, and recoverable at law in the same manner as

the purchase price. If the municipality imposes the tax on gas

and electricity for residential use, only the municipal tax is

added to the sales price of sales of gas and electricity for

residential use.

(b) The amount of the total tax is computed by multiplying the

combined applicable tax rates, or the rate of the municipal tax

only for sales of gas and electricity for residential use in a

municipality that imposes the tax on gas and electricity for

residential use, by the amount of the sales price. If the product

results in a fraction of a cent less than one-half of one cent,

the fraction of a cent is not collected. If the fraction of a

cent is one-half of one cent or more, the fraction shall be

collected as one cent.

amounts of taxes based on the formula provided by Subsection (b)

for use in municipalities that have adopted the taxes authorized

by this chapter.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987.

Sec. 321.202. METHOD OF REPORTING: RETAILERS HAVING SALES BELOW

TAXABLE AMOUNT. The exclusion provided by Section 151.411

applies to a retailer under this chapter 50 percent of whose

receipts from the sales of taxable items comes from individual

transactions in which the sales price is an amount on which no

tax is produced from the combined state and local taxes.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987.

For expiration of Subsections (c-2) and (c-3), see Subsection

(c-3).

Sec. 321.203. CONSUMMATION OF SALE. (a) A sale of a taxable

item occurs within the municipality in which the sale is

consummated. A sale is consummated as provided by this section

regardless of the place where transfer of title or possession

occurs.

(b) If a retailer has only one place of business in this state,

all of the retailer's retail sales of taxable items are

consummated at that place of business except as provided by

Subsection (e).

state, each sale of each taxable item by the retailer is

consummated at the place of business of the retailer in this

state where the retailer first receives the order, provided that

the order is placed in person by the purchaser or lessee of the

taxable item at the place of business of the retailer in this

state where the retailer first receives the order.

(c-1) If the retailer has more than one place of business in

this state and Subsection (c) does not apply, the sale is

consummated at the place of business of the retailer in this

state:

(1) from which the retailer ships or delivers the item, if the

retailer ships or delivers the item to a point designated by the

purchaser or lessee; or

(2) where the purchaser or lessee takes possession of and

removes the item, if the purchaser or lessee takes possession of

and removes the item from a place of business of the retailer.

(c-2) Subsection (c) does not apply if:

(1) the taxable item is shipped or delivered from a warehouse:

(A) that is a place of business of the retailer;

(B) in relation to which the retailer has an economic

development agreement with:

(i) the municipality in which the warehouse is located that was

entered into under Chapter 380, 504, or 505, Local Government

Code, or a predecessor statute, before January 1, 2009; or

(ii) the county in which the warehouse is located that was

entered into under Chapter 381, Local Government Code, before

January 1, 2009; and

relating to the economic development agreement as required by

Subsection (c-3) by the deadline prescribed by that subsection,

or, if appropriate, the county complies with Section 323.203(c-3)

by the deadline prescribed by that section; and

(2) the place of business of the retailer at which the retailer

first receives the order in the manner described by Subsection

Subsection (c-3) or Section 323.203(c-3) as being served by the

warehouse on January 1, 2009.

(c-3) Not later than September 1, 2009, a municipality that has

entered into an economic development agreement described by

Subsection (c-2) shall send to the comptroller information

prescribed by the comptroller relating to the agreement that

identifies each warehouse subject to the agreement and each

retail outlet that, on January 1, 2009, was served by that

warehouse. The comptroller shall prescribe the manner in which

the information must be provided. The provision of information

to the comptroller under this subsection does not affect whether

information described by this subsection is confidential or

excepted from required public disclosure. This subsection and

Subsection (c-2) expire September 1, 2014.

(d) If the retailer has more than one place of business in this

state and Subsections (c) and (c-1) do not apply, the sale is

consummated at:

(1) the place of business of the retailer in this state where

the order is received; or

(2) if the order is not received at a place of business of the

retailer, the place of business from which the retailer's agent

or employee who took the order operates.

(e) A sale of a taxable item is consummated at the location in

this state to which the item is shipped or delivered or at which

possession is taken by the customer if transfer of possession of

the item occurs at, or shipment or delivery of the item

originates from, a location in this state other than a place of

business of the retailer and if:

(1) the retailer is an itinerant vendor who has no place of

business in this state;

(2) the retailer's place of business where the purchase order is

initially received or from which the retailer's agent or employee

who took the order operates is outside this state; or

(3) the purchaser places the order directly with the retailer's

supplier and the item is shipped or delivered directly to the

purchaser by the supplier.

(f) The sale of natural gas and electricity is consummated at

the point of delivery to the consumer.

(g) The sale of mobile telecommunications services is

consummated in accordance with Section 151.061.

(g-1) The sale of telecommunications services sold based on a

price that is measured by individual calls is consummated at the

location where the call originates and terminates or the location

where the call either originates or terminates and at which the

service address is also located.

(g-2) Except as provided by Subsection (g-3), the sale of

telecommunications services sold on a basis other than on a

call-by-call basis is consummated at the location of the

customer's place of primary use.

(g-3) A sale of post-paid calling services is consummated at the

location of the origination point of the telecommunications

signal as first identified by the seller's telecommunications

system or by information received by the seller from the seller's

service provider if the system used to transport the signal is

not that of the seller.

(h) The sale of an amusement service is consummated in the

municipality in which the performance or other delivery of the

service takes place.

(i) If a purchaser who has given a resale certificate makes any

use of a taxable item that subjects the taxable item to the sales

tax under the provisions of Section 151.154, the use or other

consumption of the taxable item that subjected the taxable item

to the tax is consummated at the place where the taxable item is

stored or kept at the time of or just before the use or

consumption.

(j) The sale of services delivered through a cable system is

consummated at the point of delivery to the consumer.

(k) The sale of garbage or other solid waste collection or

removal service is consummated at the location at which the

garbage or other solid waste is located when its collection or

removal begins.

(l) Except as otherwise provided by this section, the sale of a

taxable service, other than a service described by Section

151.330(f), is consummated at the location at which the service

is performed or otherwise delivered.

(l) Repealed by Acts 2007, 80th Leg., R.S., Ch. 1266, Sec.

15(4), eff. September 1, 2007.

(m) If there is no place of business of the retailer because the

comptroller determines that an outlet, office, facility, or

location contracts with a retail or commercial business to

process for that business invoices or bills of lading and that

the outlet, office, facility, or location functions or exists to

avoid the tax imposed by this chapter or to rebate a portion of

the tax imposed by this chapter to the contracting business, a

sale is consummated at the place of business of the retailer from

whom the outlet, office, facility, or location purchased the

taxable item for resale to the contracting business.

(n) A sale of a service described by Section 151.0047 to

remodel, repair, or restore nonresidential real property is

consummated at the location of the job site.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1989, 71st Leg., ch. 2, Sec. 14.22(a), eff.

Aug. 28, 1989; Acts 1989, 71st Leg., ch. 810, Sec. 1, eff. Oct.

1, 1989; Acts 1991, 72nd Leg., ch. 705, Sec. 26, eff. Sept. 1,

1991; Acts 2001, 77th Leg., ch. 370, Sec. 2, eff. Aug. 1, 2002;

Acts 2003, 78th Leg., ch. 209, Sec. 55, eff. Oct. 1, 2003; Acts

2003, 78th Leg., ch. 1155, Sec. 2, 3, eff. Sept. 1, 2003; Acts

2003, 78th Leg., ch. 1310, Sec. 115, eff. July 1, 2004.

Amended by:

Acts 2005, 79th Leg., Ch.

728, Sec. 23.001(83), eff. September 1, 2005.

Acts 2007, 80th Leg., R.S., Ch.

1266, Sec. 11, eff. September 1, 2007.

Acts 2007, 80th Leg., R.S., Ch.

1266, Sec. 15(4), eff. September 1, 2007.

Acts 2009, 81st Leg., R.S., Ch.

1360, Sec. 5, eff. June 19, 2009.

Sec. 321.204. COMPUTATION OF USE TAX. (a) In each municipality

that has adopted the taxes authorized by this chapter, the taxes

imposed by Section 321.104(a) and the tax imposed by Subchapter

D, Chapter 151, are added together to form a single combined tax

rate, except:

(1) in a municipality that imposes the tax on gas and

electricity for residential use only the rate of the municipal

tax is used to determine the amount of tax on the use, storage,

or other consumption of gas and electricity for residential use;

and

(2) only the rate of the municipal tax is used in a situation

described by Section 321.205(b).

(b) The formula prescribed by Section 321.201(b) applies to the

computation of the amount of use taxes under this chapter.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987.

Sec. 321.205. USE TAX: MUNICIPALITY IN WHICH USE OCCURS. (a)

In determining the incidence of the use tax authorized by this

chapter the name of the municipality adopting the tax is

substituted in Subchapter D, Chapter 151, for "this state" where

those words are used to designate the taxing entity or delimit

the tax imposed. However, the excise tax authorized by this

chapter on the use, storage, or consumption of a taxable item

does not apply if the item is first used, stored, or consumed in

a municipality or area that has not adopted the taxes authorized

by this chapter.

(b) If a sale of a taxable item is consummated in this state but

not within a municipality that has adopted the taxes authorized

by this chapter and the item is shipped directly, or brought by

the purchaser or lessee directly, into a municipality that has

adopted the taxes authorized by this chapter, the item is subject

to the municipality's use tax. The use is considered to be

consummated at the location where the item is first stored, used,

or consumed after the intrastate transit has ceased.

customer within this state and the use of the item is consummated

within a municipality that has adopted the tax authorized by this

chapter, the item is subject to the municipality's use tax and

not its sales tax. A use is considered to be consummated at the

first point in this state where the item is stored, used, or

consumed after the interstate transit has ceased. A taxable item

delivered to a point in this state is presumed to be for storage,

use, or consumption at that point until the contrary is

established.

(d) The holder of a direct payment permit issued under Chapter

151 who becomes liable for the use tax under this chapter by

reason of the storage, use, or consumption of a taxable item

purchased in this state under a direct payment exemption

certificate shall allocate the tax to the municipality in which

the item was first removed from the permit holder's storage, or

if not stored, the place at which the item was first used or

consumed by the permit holder after transportation. In this

subsection an item is not considered to have been stored, used,

or consumed because of a temporary delay or interruption

necessary and incidental to its transportation or further

fabrication, processing, or assembling within this state for

delivery to the permit holder. A charge for fabrication,

processing, or further assembly in a municipality that has

adopted the tax under this chapter shall be subject to the

municipal use tax.

(e) With respect to a taxable service, "use" means the

derivation in the municipality of direct or indirect benefit from

the service.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1991, 72nd Leg., ch. 705, Sec. 27, eff.

Sept. 1, 1991.

Sec. 321.206. INCIDENCE OF ADDITIONAL MUNICIPAL SALES AND USE

TAX. For the purpose of determining the proper sales tax under

this chapter and the proper excise tax on the use, storage, or

other consumption of taxable items under Section 321.101(b):

(1) if a taxable item is used, stored, or otherwise consumed in

a municipality that has adopted the additional municipal sales

and use tax, the statutes listed in Section 322.108(a) apply; and

(2) if the sales tax applies in a municipality that has not

adopted the municipal sales and use tax, the excise tax on the

use, storage, or other consumption of the taxable item does not

apply.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1989, 71st Leg., ch. 2, Sec. 14.15(a), eff.

Aug. 28, 1989.

Sec. 321.207. LOCAL TAX INAPPLICABLE WHEN NO STATE TAX;

EXCEPTIONS. (a) The sales tax authorized by this chapter does

not apply to the sale of a taxable item unless the sales tax

imposed by Subchapter C, Chapter 151, also applies to the sale.

(b) The excise tax authorized by this chapter on the use,

storage, or consumption of a taxable item does not apply to the

use, storage, or consumption of a taxable item unless the tax

imposed by Subchapter D, Chapter 151, also applies to the use,

storage, or consumption.

by this chapter on the sale, production, distribution, lease, or

rental of, and the use, storage, or consumption of gas and

electricity for residential use.

(d) Subsection (b) does not apply to the application of the tax

in a situation described by Section 321.205(b).

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1991, 72nd Leg., ch. 705, Sec. 28, eff.

Sept. 1, 1991.

Sec. 321.208. STATE EXEMPTIONS APPLICABLE. The exemptions

provided by Subchapter H, Chapter 151, apply to the taxes

authorized by this chapter, except as provided by Section

151.317(b).

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987.

Sec. 321.209. TRANSITION EXEMPTION: GENERAL PURPOSE SALES AND

USE TAX. (a) For a period of three years only after the

effective date of the tax authorized by Section 321.101(a) in a

municipality, the receipts from the sale of, and the use,

storage, and consumption of, taxable items are exempt from the

tax imposed by the municipality under Section 321.101(a) if the

notice required by Subsection (b) is given and if:

(1) the items are used for the performance of a written contract

entered into before the effective date of the tax imposed under

Section 321.101(a) in the municipality if the contract may be

affected and the contract may not be modified because of the tax;

(2) the items are used under the obligation of a bid submitted

before the effective date of the tax imposed under Section

321.101(a) in the municipality if the contract may be affected

and the bid may not be withdrawn or modified because of the tax.

(b) The taxpayer must give the comptroller notice of the

contract or bid on which an exemption is to be claimed within 60

days after the effective date of the tax imposed under Section

321.101(a) in the municipality.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1989, 71st Leg., ch. 2, Sec. 14.14(d), eff.

Aug. 28, 1989.

Sec. 321.2091. TRANSITION EXEMPTION: ADDITIONAL MUNICIPAL SALES

AND USE TAX. (a) The receipts from the sale, use, or rental of

and the storage, use, or consumption of taxable items in this

state are exempt from the adoption or increase of the additional

municipal sales and use tax if the items are used:

(1) for the performance of a written contract entered into

before the date the adoption or increase of the additional tax

takes effect in the municipality, if the contract is not subject

to change or modification by reason of the tax; or

(2) pursuant to an obligation of a bid or bids submitted prior

to the date the adoption or increase of the additional tax takes

effect in the municipality, if the bid or bids may not be

withdrawn, modified, or changed by reason of the tax.

(b) The exemptions provided by this section have no effect after

three years from the date the adoption or increase of the

additional tax takes effect in the municipality.

Added by Acts 1989, 71st Leg., ch. 2, Sec. 14.14(c), eff. Aug.

28, 1989. Amended by Acts 1991, 72nd Leg., ch. 184, Sec. 5, eff.

May 24, 1991.

Sec. 321.210. TELECOMMUNICATIONS EXEMPTION. (a) There are

exempted from the taxes imposed under this chapter the sales

within the municipality of telecommunications services unless the

application of the exemption is repealed under this section. A

municipality may not repeal the application of this exemption as

it applies to interstate long-distance telecommunications

services, but if a municipality has repealed the exemption before

the effective date of Part 4, Article 1, H.B. No. 61, Acts of the

70th Legislature, 2nd Called Session, 1987, interstate

long-distance telecommunications services in that municipality

are not subject to taxes imposed under this chapter.

(b) The governing body of a municipality by ordinance adopted by

a majority vote of the governing body in the manner required for

the adoption of other ordinances may repeal the application of

the exemption provided by Subsection (a) for telecommunications

services sold within the municipality.

exemption may in the same manner reinstate the exemption.

(d) A vote of the governing body of a municipality repealing the

application of or reinstating the exemption must be entered in

the minutes of the municipality. The municipal secretary shall

send to the comptroller by United States certified or registered

mail a copy of each ordinance adopted under this section. The

repeal of the application of the exemption or a reinstated

exemption takes effect within the municipality as provided by

Section 321.102(a) after receipt of a copy of the ordinance.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987. Amended by Acts 1987, 70th Leg., 2nd C.S., ch. 5, art. 1,

pt. 4, Sec. 33.

SUBCHAPTER D. ADMINISTRATION OF TAXES

Sec. 321.301. COMPTROLLER TO COLLECT AND ADMINISTER TAXES. The

comptroller shall administer, collect, and enforce any tax

imposed by a municipality under this chapter. The taxes imposed

under this chapter and the tax imposed under Chapter 151 shall be

collected together, if both taxes are imposed.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987.

Sec. 321.302. COMPTROLLER'S REPORTING DUTIES. (a) The

comptroller shall make quarterly reports to a municipality that

has adopted the taxes authorized by this chapter if the

municipality requests the reports. A report must include the

name, address, and account number of each person in the

municipality that has remitted to the comptroller a tax payment

during the quarter covered by the report.

(b) If a municipality requests an additional report, the

comptroller shall make an additional quarterly report to the

municipality including the name, address, and account number, if

any, of, and the amount of tax due from, each person doing

business in the municipality who has failed to pay the tax under

this chapter to the municipality or under Chapter 151. The

additional report must also include statements:

(1) showing whether or not there has been a partial tax payment

by the delinquent taxpayer;

(2) showing whether or not the taxpayer is delinquent in the

payment of sales and use taxes to the state; and

(3) describing the steps taken by the comptroller to collect the

delinquent taxes.

the municipality is not included in a comptroller's report, the

municipality shall report to the comptroller the name and address

of the person. Within 90 days after receiving the report from a

municipality, the comptroller shall send to the municipality:

(1) an explanation as to why the person is not obligated for the

municipal tax;

(2) a statement that the person is obligated for the municipal

tax and the tax is delinquent; or

(3) a certification that the person is obligated for the

municipal tax and that the full amount of the tax due has been

credited to the municipality's account.

(d) The comptroller shall send by United States certified or

registered mail to the municipal tax collector a notice of each

person who is delinquent in the payment to the municipality of

the taxes authorized by this chapter and shall send a copy of the

notice to the attorney general. A notice sent under this

subsection is a certification of the amount of tax owed and is

prima facie evidence of a determination of that amount and of its

delinquency.

Added by Acts 1987, 70th Leg., ch. 191, Sec. 1, eff. Sept. 1,

1987.

Sec. 321.3022. TAX INFORMATION. (a) In this section, "other

local governmental entity" has the meaning assigned by Section

321.107.

(a-1) Except as otherwise provided by this section, the

comptroller on request shall provide to a municipality or other

local governmental entity that has adopted a tax under this

chapter:

(1) information relating to the amount of tax paid to the

municipality or other local governmental entity under this

chapter during the preceding or current calendar year by each

person doing business in the municipality or other local

governmental entity who annually remits to the comptroller state

and local sales tax payments of more than $25,000; and

(2) any other information as provided by this section.

(a-2) The comptroller on request shall provide to a municipality

or other local governmental entity that has adopted a tax under

this chapter and that does not impose an ad valorem tax

information relating to the amount of tax paid to the

municipality or other local governmental entity under this

chapter during the preceding or current calendar year by each

person doing business in the municipality or other local

governmental entity who annually remits to the comptroller state

and local sales tax payments of more than $500.

(b) The comptroller on request shall provide to a municipality

or other local governmental entity that has adopted a tax under

this chapter information relating to the amount of tax paid to

the municipality or other local governmental entity under this

chapter during the preceding or current calendar year by each

person doing business in an area, as defined by the municipality

or other local governmental entity, that is part of:

(1) an interlocal agreement;

(2) a tax abatement agreement;

(3) a reinvestment zone;

(4) a tax increment financing district;

(5) a revenue sharing agreement;

(6) an enterprise zone;

(7) a neighborhood empowerment zone;

(8) a crime control and prevention district;

(9) a fire control, prevention, and emergency medical services

district;

(10) any other agreement, zone, or district similar to those

listed in Subdivisions (1)-(9); or

(11) any area defined by the municipality or other local

governmental entity for the purpose of economic forecasting.

Subsection (b) as an aggregate total for all persons doing

business in the defined area without disclosing individual tax

payments.

(d) If the request for information under Subsection (b) involves

not more than three persons doing business in the defined area

who remit taxes under this chapter, the comptroller shall refuse

to provide the information to the municipality or other local

governmental entity unless the comptroller receives permission

from each of the persons allowing the comptroller to provide the

information to the municipality or other local governmental

entity as requested.

(e) A separate request for information under this section must

be made in writing by the municipality's mayor or chief

administrative officer or by the governing body of the other

local governmental entity each year.

(f) Information received by a municipality or other local

governmental entity under this section is confidential, is not

open to public inspection, and may be used only for the purpose

of economic forecasting, for internal auditing of a tax paid to

the municipality or other local governmental entity under this

chapter, or for the purpose described in Subsection (g).

(g) Information received by a municipality or other local

governmental entity under Subsection (b) may be used by the

municipality or other local governmental entity to assist in

determining revenue sharing under a revenue sharing agreement or

other similar agreement.

(h) The comptroller may set and collect from a municipality or

other local governmental entity reasonable fees to cover the

expense of compiling and providing information under this

section.

(i) Notwithstanding Chapter 551, Government Code, the governing

body of a municipality or other local governmental entity is not

required to confer with one or more employees or a third party in

an open meeting to receive information or question the employees

or third party regarding the information received by the

municipality or other local governmental entity under this

section.

Added by Acts 1995, 74th Leg., ch. 1000, Sec. 70, eff. Oct. 1,

1995. Amended by Acts 1999, 76th Leg., ch. 291, Sec. 1, eff. May

29, 1999; Acts 2001, 77th Leg., ch. 840, Sec. 1, eff. June 14,

2001; Acts 2003, 78th Leg.,

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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