CHAPTER 142. SIMPLIFIED SALES AND USE TAX ADMINISTRATION ACT
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.
(c) The comptroller may enter into the agreement on behalf of
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.
(c) The agreement must establish uniform standards for:
(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.
(c) A law of this state, or the application of the law, may not
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.
(c) A person that provides a certified automated system is
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.