Planned October Sourcing Change in Texas Enjoined by Local Court

Erik Wallin
September 7, 2021

Texas Tax Rule 3.334 was recently modified to clarify the definition of a “place of business” as it applies to local sales and use tax sourcing. It now clearly specifies that sales personnel must be present for a location to be considered a “place of business” and that a “place of business” does not include a computer server, IP address, domain name, website or software application. These provisions were originally slated to go into effect on May 31, 2020 but were deferred until October 1, 2021. See Sales and Use Tax.

Most recently and as a result of litigation filed by the City of Round Rock against the Texas Comptroller, a temporary hold (injunction) has been placed on this change. See City of Round Rock, Texas v. Hegar (Cause No. D-1-GN-21-3203). Since further hearings on this matter are set for the week of June 13, 2022, we expect this temporary injunction to stay in place for quite a while.

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Author

Erik Wallin

Erik Wallin is a Senior Tax Counsel on the Tax Research Team at Sovos Compliance. Erik has been with Sovos Compliance since 2011, and his main areas of focus are on U.S. Transaction Tax Law which includes special expertise in the taxation of technology and the taxation mechanisms that apply throughout the Colorado home rule jurisdictions. Erik is a member of the Massachusetts Bar, has a B.A. from York College of Pennsylvania, a J.D. from New England School of Law, and an LL.M. in Taxation from Boston University.
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