CHAPTER 322. SALES AND USE TAXES FOR SPECIAL PURPOSE TAXING AUTHORITIES

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TAX CODE

TITLE 3. LOCAL TAXATION

SUBTITLE C. LOCAL SALES AND USE TAXES

CHAPTER 322. SALES AND USE TAXES FOR SPECIAL PURPOSE TAXING

AUTHORITIES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 322.001. APPLICATION OF CHAPTER. (a) This chapter applies

to the imposition, assessment, collection, administration, and

enforcement of a sales and use tax imposed under Chapter 451,

452, 453, or 460, Transportation Code.

(b) The effective dates and rates of the taxes imposed by a

taxing entity are determined under the laws authorizing the

adoption of the taxes.

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

1987. Amended by Acts 1997, 75th Leg., ch. 165, Sec. 30.266, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 209, Sec. 56, eff. Oct.

1, 2003.

Sec. 322.002. DEFINITIONS. In this chapter:

(1) "Taxing entity" means a rapid transit authority, a regional

transit authority, including a subregional transportation

authority, or a municipal mass transit department created under

Chapter 451, 452, or 453, Transportation Code, or a coordinated

county transportation authority created under Chapter 460,

Transportation Code, that has adopted a sales and use tax under

the law authorizing the creation of the entity.

(2) "Entity area" means the geographical limits of a taxing

entity.

(3) "Municipal sales and use tax" means a sales and use tax

imposed by a municipality under the Municipal Sales and Use Tax

Act (Chapter 321) within an entity area.

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

1987. Amended by Acts 1997, 75th Leg., ch. 165, Sec. 30.267, eff.

Sept. 1, 1997; Acts 2003, 78th Leg., ch. 209, Sec. 57, eff. Oct.

1, 2003.

SUBCHAPTER B. ASSESSMENT AND COMPUTATION OF TAXES

Sec. 322.101. SALES TAX. There is imposed in a taxing entity a

sales tax at the rate authorized and set as provided by the law

authorizing the creation of the taxing entity and applied to the

receipts from the sale within the entity area of all taxable

items that are subject to the sales tax under Chapter 151.

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

1987.

Sec. 322.102. USE TAX. In a taxing entity, there is imposed an

excise tax on the use, storage, and other consumption within the

entity area of taxable items purchased, leased, or rented from a

retailer during the period that the sales tax is effective within

the entity area. The rate of the excise tax is the same rate as

the rate of the sales tax imposed by the taxing entity and is

applied to the sales price of the taxable item.

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

1987.

Sec. 322.103. COMPUTATION OF SALES TAXES. (a) Each retailer in

an entity area shall add the sales tax imposed under this

chapter, the sales taxes imposed under Chapter 151, and, if

applicable, any sales taxes imposed under Chapter 321 or 323 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.

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

combined applicable tax rates 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 is one-half of one cent or more, the fraction shall be

collected as one cent.

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 applicable tax rates.

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

1987.

Sec. 322.104. COMPUTATION OF USE TAX. (a) In each taxing

entity the tax imposed by Subchapter D, Chapter 151, the tax

imposed under Section 321.104(a), if applicable, and the tax

imposed under Section 322.102 are added together to form a single

combined tax rate, except in a situation described by Section

322.105(b).

(b) The formula prescribed by Section 322.103(b) applies to the

computation of the amount of the tax under this section.

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

1987.

Sec. 322.105. USE TAX: WHERE USE OCCURS. (a) In determining

the incidence of the use tax of a taxing entity, the name of the

taxing entity 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 of a

taxing entity on the use, storage, or other consumption of a

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

consumed in an area other than an entity area.

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

but not within an entity area and the item is shipped directly or

brought by the purchaser or lessee directly into an entity area,

the item is subject to the entity's use tax. The use is

considered to be consummated at the location where the item is

first used, stored, or consumed after the intrastate transit has

ceased.

customer within this state, the item is subject to the use tax of

the taxing entity 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) Repealed by Acts 2007, 80th Leg., R.S., Ch. 823, Sec. 1(1),

eff. September 1, 2007.

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

derivation in the taxing entity 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 1989, 71st Leg., ch. 2, Sec. 14.21(a), eff.

Aug. 28, 1989; Acts 1991, 72nd Leg., ch. 705, Sec. 29, eff. Sept.

1, 1991.

Amended by:

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

823, Sec. 1(1), eff. September 1, 2007.

Sec. 322.106. TAX INAPPLICABLE WHEN NO STATE TAX; EXCEPTIONS.

(a) The sales tax of a taxing entity does not apply to the sale

of a taxable item unless the sales tax imposed under Subchapter

C, Chapter 151, also applies to the sale.

(b) The excise tax of a taxing entity on the use, storage, or

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

or consumption of an item unless the tax imposed by Subchapter D,

Chapter 151, also applies to the use, storage, or consumption of

the item.

in a situation described by Section 322.105(b).

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

1987. Amended by Acts 1991, 72nd Leg., ch. 705, Sec. 30, eff.

Sept. 1, 1991.

Sec. 322.108. CERTAIN PROVISIONS OF MUNICIPAL SALES AND USE TAX

APPLICABLE. (a) Except as provided by Subsection (b), the

following apply to the taxes imposed by this chapter in the same

manner as applicable to a municipality under Chapter 321:

(1) Section 321.002(a)(3);

(2) Section 321.003;

(3) Section 321.203;

(4) Section 321.205(d);

(5) Section 321.208;

(6) Section 321.209;

(7) Section 321.303;

(8) Section 321.304; and

(9) Section 321.305.

(b) The provisions of this chapter applicable to a taxing entity

created under Chapter 453, Transportation Code, prevail over any

inconsistent provision in a statute listed in Subsection (a).

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

1987. Amended by Acts 1989, 71st Leg., ch. 2, Sec. 14.20(a), eff.

Aug. 28, 1989; Acts 1997, 75th Leg., ch. 165, Sec. 30.268, eff.

Sept. 1, 1997.

Sec. 322.109. TELECOMMUNICATIONS EXEMPTION. (a) There are

exempted from the taxes imposed by a taxing entity under this

chapter the sales within the entity area of telecommunications

services unless the application of the exemption is repealed

under this section. A taxing entity may not repeal the

application of this exemption as it applies to interstate

long-distance telecommunications services, but if a taxing entity

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 taxing entity are not subject to taxes imposed

under this chapter.

(b) Except as provided by Subsection (d), the board of a taxing

entity may, by a majority vote of the board in the manner

required for the adoption of other orders, repeal the application

of the exemption provided by Subsection (a) for

telecommunications services sold within the city.

the exemption may in the same manner reinstate the exemption.

(d) The governing board of a taxing entity created under Chapter

451, Transportation Code, may not repeal the application of the

exemption provided by Subsection (a) unless the repeal is first

approved by a majority of the members of the governing body of

each municipality that created the taxing entity. A reinstatement

of the exemption must be approved in the same manner.

(e) A vote of a taxing entity board repealing the application of

or reinstating the exemption must be entered in the minutes of

the entity. The entity board chairman or secretary shall send to

the comptroller by United States certified or registered mail a

copy of each order adopted under this section. The repeal of the

application of the exemption or a reinstated exemption takes

effect within the entity on the first day of the first calendar

quarter after the expiration of the first complete calendar

quarter after the date on which the comptroller receives a copy

of the order.

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. 34; Acts 1999, 76th Leg., ch. 1008, Sec. 1, eff. June

18, 1999.

Sec. 322.110. TRANSITION EXEMPTION IN CERTAIN TAXING ENTITIES.

(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 tax imposed under this chapter by a taxing entity

created under Chapter 453, Transportation Code, if the items are

used:

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

before the date the tax takes effect in the taxing entity, 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 before

the date the tax takes effect in the taxing entity, 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 tax takes effect in the taxing

entity.

Added by Acts 1989, 71st Leg., ch. 2, Sec. 14.19(a), eff. Aug.

28, 1989. Amended by Acts 1997, 75th Leg., ch. 165, Sec. 30.269,

eff. Sept. 1, 1997.

SUBCHAPTER C. ADMINISTRATION OF TAXES

Sec. 322.201. COMPTROLLER TO COLLECT AND ADMINISTER TAXES. (a)

The comptroller shall administer, collect, and enforce the sales

and use tax of a taxing entity.

(b) The sales and use taxes imposed under this chapter, the

taxes imposed under Chapters 321 and 323, and the taxes imposed

under Chapter 151 shall be collected together to the extent that

each is imposed in an entity area.

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

1987.

Sec. 322.202. COMPTROLLER'S REPORTING DUTIES. (a) The

comptroller shall report to a taxing entity on the entity's sales

and use taxes by making substantially the same reports that are

required to be made by the comptroller to a municipality under

Sections 321.302(a), (b), and (c).

(b) The comptroller shall send to a taxing entity by United

States certified or registered mail a notice of each person who

is delinquent in the payment of the entity's sales and use taxes

and shall send to the attorney general a copy of the notice. 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. 322.2022. TAX INFORMATION. (a) Except as otherwise

provided by this section, the comptroller on request shall

provide to a taxing entity:

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

under this chapter during the preceding or current calendar year

by each person doing business in the area included in the 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.

(b) The comptroller on request shall provide to a taxing entity

information relating to the amount of tax paid to the entity

under this chapter during the preceding or current calendar year

by each person doing business in an area included in the entity,

as defined by the entity, that is part of:

(1) an interlocal agreement;

(2) a revenue sharing agreement;

(3) any other agreement similar to those listed in Subdivisions

(1) and (2); or

(4) any area defined by the 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 taxing entity unless the

comptroller receives permission from each of the persons allowing

the comptroller to provide the information to the entity as

requested.

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

be made in writing by the governing body of the taxing entity

each year.

(f) Information received by a taxing 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 entity under this chapter, or for

the purpose described by Subsection (g).

(g) Information received by a taxing entity under Subsection (b)

may be used by the 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 taxing 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 taxing 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 entity under this section.

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

1360, Sec. 7, eff. September 1, 2009.

Sec. 322.203. COMPTROLLER'S RULES. The comptroller may adopt

reasonable rules and prescribe forms that are consistent with

this chapter for the administration, collection, and enforcement

of this chapter and for the reporting of the taxes imposed under

this chapter.

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

1987.

Sec. 322.204. DELINQUENT TAXES: LIMITATIONS. The limitations

for the bringing of a suit for the collection of a sales and use

tax imposed by a taxing entity or a penalty due on the tax after

the tax and penalty are delinquent or after a determination

against a taxpayer are the same as the limitations provided by

Chapter 151.

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

1987.

Sec. 322.205. SEIZURE AND SALE OF PROPERTY. (a) If the

comptroller lawfully seizes property for the payment of the taxes

imposed under Chapter 151 and the property owner is delinquent in

the payment of taxes under this chapter, the comptroller shall

sell sufficient property to pay the delinquent taxes and

penalties under this chapter, Chapter 151, and Chapter 321.

(b) The proceeds of the sale of seized property shall first be

applied to the payment of amounts due the state, then to the

payments of amounts due a municipality under Chapter 321, and the

remainder, if any, to the payment of amounts due to the taxing

entity to which the taxes are due.

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

1987.

Sec. 322.206. SUITS FOR TAX COLLECTION. (a) A taxing entity

acting through its attorney may join as a plaintiff in any suit

brought by the attorney general to seek a judgment for delinquent

taxes and penalties due to the taxing entity under this chapter.

(b) A taxing entity may bring suit for the collection of taxes

owed to the taxing entity under this chapter if:

(1) the taxes are certified by the comptroller in the notice

required by Section 322.202(b);

(2) a written notice of the tax delinquency and the entity's

intention to bring suit is given by certified mail to the

taxpayer, the attorney general, and the comptroller at least 60

days before the suit is filed; and

(3) neither the comptroller nor the attorney general disapproves

of the suit.

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

1987.

Sec. 322.207. DISAPPROVAL OF SUIT. (a) The comptroller or the

attorney general may disapprove of the institution of a suit by a

taxing entity under Section 322.206(b) if:

(1) negotiations between the state and the taxpayer are being

conducted for the purpose of the collection of delinquent taxes

owed to the state and the taxing entity seeking to bring suit;

(2) the taxpayer owes substantial taxes to the state and there

is a reasonable possibility that the taxpayer may be unable to

pay the total amount owed;

(3) the state will bring suit against the taxpayer for all taxes

due under Chapter 151 and this chapter; or

(4) the suit involves a critical legal question relating to the

interpretation of state law or a provision of the Texas or United

States constitution in which the state has an overriding

interest.

(b) A notice of disapproval to a taxing entity must be in

writing and give the reason for the determination by the

comptroller or attorney general.

(d) Not earlier than one year after the date of a disapproval of

the institution of a taxing entity collection suit, the taxing

entity may again proceed as provided by Section 322.206(b) even

though the liability of the taxpayer includes taxes for which the

entity has previously given notice and the comptroller or

attorney general has disapproved of the suit.

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

1987.

Sec. 322.208. JUDGMENTS IN SUIT. (a) A judgment in a suit

under Section 322.206(b) for or against a taxpayer does not

affect a claim against the taxpayer by a municipality or the

state unless the state is party to the suit.

(b) A taxing entity shall abstract a copy of each final judgment

for taxes imposed under this chapter in a case in which the state

is not a party and shall send to the comptroller a copy of the

judgment and the abstract.

to it in each judgment received by it and is responsible for the

renewal of the judgment before its expiration.

(d) The taxing entity shall notify the comptroller by certified

mail of the amount of any taxes collected on the judgment.

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

1987.

SUBCHAPTER D. REVENUE DEPOSIT, DISTRIBUTION, AND USE

Sec. 322.301. COLLECTIONS HELD BY COMPTROLLER. The comptroller

shall deposit, hold, account for, and transmit sales and use

taxes collected under this chapter for each taxing entity in the

same manner as required under Section 321.501 for each

municipality.

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

1987.

Sec. 322.302. DISTRIBUTION OF TRUST FUNDS. At least quarterly

during each state fiscal year and as often as feasible, the

comptroller shall send to the person at each taxing entity who

performs the function of entity treasurer, payable to the taxing

entity, the entity's share of the taxes collected by the

comptroller under this chapter.

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

1987. Amended by Acts 1989, 71st Leg., ch. 16, Sec. 5, eff. Aug.

31, 1989; Acts 1997, 75th Leg., ch. 165, Sec. 30.270, eff. Sept.

1, 1997; Acts 1999, 76th Leg., ch. 1467, Sec. 2.68, eff. Oct. 1,

1999.

Sec. 322.303. STATE'S SHARE. Before sending any money to a

taxing entity under this subchapter, the comptroller shall deduct

two percent of the amount of the taxes collected within the

entity area during the period for which a distribution is made as

the state's charge for its services under this chapter and shall

credit the money deducted to the general revenue fund.

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

1987.

Sec. 322.304. AMOUNTS RETAINED IN TRUST ACCOUNT. (a) The

comptroller may retain in the suspense account of a taxing entity

a portion of the entity's share of the tax collected for the

entity under this chapter, not to exceed five percent of the

amount remitted to the entity. If the entity has abolished the

tax, the amount that may be retained may not exceed five percent

of the final remittance to the entity at the time of the

termination of the collection of the tax.

(b) From the amounts retained in an entity's suspense account,

the comptroller may make refunds for overpayments to the account

and to redeem dishonored checks and drafts deposited to the

credit of the account.

of the abolition of an entity's tax under this chapter other than

a department under Chapter 453, Transportation Code, the

comptroller shall send to the entity the remainder of the money

in the entity's account and shall close the account.

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

1987. Amended by Acts 1997, 75th Leg., ch. 165, Sec. 30.271, eff.

Sept. 1, 1997.

Sec. 322.305. INTEREST ON TRUST ACCOUNTS. Interest earned on

all deposits made with the comptroller under this chapter,

including interest earned on retained accounts, shall be credited

to the general revenue fund.

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

1987. Amended by Acts 1997, 75th Leg., ch. 1423, Sec. 19.125,

eff. Sept. 1, 1997.

Sec. 322.306. RETENTION OF CERTAIN SPECIAL PURPOSE DISTRICT

SALES TAXES. A taxing entity that holds a sales and use tax

permit issued by the comptroller and that imposes a sales and use

tax may retain the portion of the tax that the taxing entity

collects and that constitutes the entity's own tax. The taxing

entity shall remit to the comptroller all other applicable local

sales and use taxes and the state sales and use tax.

Added by Acts 2001, 77th Leg., ch. 1263, Sec. 76, eff. Oct. 1,

2001.

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