The bill amends the Texas Tax Code to clarify the location at which certain sales are considered consummated for local sales and use tax purposes. It defines "place of business of the retailer" to exclude digital entities such as computer servers and websites, and specifies that a warehouse or manufacturing plant is only considered a place of business if it receives at least three orders in a calendar year. Additionally, it introduces new definitions, including "active economic development agreement," "small business," and "principal business location," which will help determine tax obligations based on the retailer's physical presence and operational structure.

Key provisions include that sales by small businesses are consummated at their principal business location, while sales by larger retailers are consummated at the location where the order is received. The bill also allows retailers with active economic development agreements to elect to collect and report sales tax based on their single place of business within a municipality, with this option expiring on December 31, 2030. The bill repeals several existing sections of the Tax Code that are rendered obsolete by these changes and clarifies that the new law will not affect tax liabilities that accrued before its effective date of January 1, 2026.

Statutes affected:
Introduced: Tax Code 321.002, Tax Code 321.203, Tax Code 323.203 (Tax Code 323, Tax Code 321)
House Committee Report: Tax Code 321.002, Tax Code 321.203, Tax Code 323.203 (Tax Code 323, Tax Code 321)