In 2022, a Texas District Court held in Coppell v. Hegar and Round Rock v. Hegar that Texas failed to follow its own requirements in enacting Texas Tax Rule 3.334. In short, the court required the comptroller to re-amend or re-adopt the rule using proper Texas procedures.
The Texas Comptroller then fulfilled the procedural requirements laid down by the court by re-amending and re-adopting Rule 3.334. The newly amended rule modified the definition of “place of business” as it applies to local sales and use tax sourcing and would have required that sales personnel be present at a location for it to be considered a “place of business” for sales tax purposes. If the location only housed a computer server, IP address, domain name, website or software application it would not qualify.
Finally, on 12/3/2025 a Texas District Court invalidated the amended version of Rule 3.334 siding with the cities in this years-long battle over the local sourcing of sales tax on Texas intrastate online orders. The court determined that key sections of the amended rule contravened state statutes by adding a definition at the agency level that is not part of the existing statutory scheme for determining where a sale is deemed to be consummated.
