85R8165 BEF-F     By: Uresti S.B. No. 1713       A BILL TO BE ENTITLED   AN ACT   relating to the administration and collection of the state use tax   as applied to certain persons engaged in business in this state;   requiring a permit; creating an offense.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 151.008(b), Tax Code, is amended to read   as follows:          (b)  "Seller" and "retailer" include:                (1)  a person in the business of making sales at auction   of tangible personal property owned by the person or by another;                (2)  a person who makes more than two sales of taxable   items during a 12-month period, including sales made in the   capacity of an assignee for the benefit of creditors or receiver or   trustee in bankruptcy;                (3)  a person regarded by the comptroller as a seller or   retailer under Section 151.024;                (4)  a hotel, motel, or owner or lessor of an office or   residential building or development that contracts and pays for   telecommunications services for resale to guests or tenants;                (5)  a person who engages in regular or systematic   solicitation of sales of taxable items in this state by the   distribution of catalogs, periodicals, advertising flyers, or   other advertising, by means of print, radio, or television media,   or by mail, telegraphy, telephone, computer data base, cable,   optic, microwave, or other communication system for the purpose of   effecting sales of taxable items; [and]                (6)  a person who, under an agreement with another   person, is:                      (A)  entrusted with possession of tangible   personal property with respect to which the other person has title   or another ownership interest; and                      (B)  authorized to sell, lease, or rent the   property without additional action by the person having title to or   another ownership interest in the property;                (7)  a person who is a marketplace provider as defined   by Section 151.109; and                (8)  a person who is a referrer as defined by Section   151.110.          SECTION 2.  Subchapter D, Chapter 151, Tax Code, is amended   by adding Section 151.1065 to read as follows:          Sec. 151.1065.  REFERRER'S PERMIT REQUIRED. (a) This   section applies only to a referrer as defined by Section 151.110 who   received:                (1)  at least $10,000 in fees, commissions, or other   consideration from other retailers for services described by   Section 151.110(a) performed by the referrer in this state in the   year preceding the year in which an application under this section   is due; or                (2)  at least $7,500 in fees, commissions, or other   consideration from other retailers for services described by   Section 151.110(a) performed by the referrer in this state in the   first three calendar quarters of the year in which an application   under this section is due.          (b)  A referrer may not engage in activity described by   Section 151.110(a) in this state without a permit issued as   provided by this section.          (c)  Not later than December 1 of each year, a referrer shall   apply to the comptroller for a referrer's permit.          (d)  The comptroller shall issue a referrer's permit to an   applicant not later than the 15th day after the date the comptroller   receives the application for the permit. The permit is valid for   the 12-month period beginning on January 1 of the year following the   year in which the permit is issued.          (e)  The comptroller may not charge, or require security   from, a referrer for a referrer's permit.          (f)  A referrer's permit is valid only for the referrer to   which it is issued and may not be assigned.          (g)  The comptroller shall revoke a referrer's permit if the   referrer fails to file the report or provide the notice required   under Section 151.111.          (h)  The comptroller may adopt rules necessary to implement   and administer this section.          SECTION 3.  Section 151.107, Tax Code, is amended by adding   Subsections (c-1), (c-2), (c-3), (c-4), and (c-5) to read as   follows:          (c-1)  For purposes of this subchapter and in relation to the   use tax, a retailer is a retailer engaged in business in this state   if the retailer engages in any part of a sale, lease, or rental of a   taxable item to a purchaser in this state, regardless of whether the   retailer contracts with a third party to perform all or any part of   the transaction, or whether the retailer performs all or any part of   the transaction through an entity in which the retailer holds a   substantial ownership interest or that holds a substantial   ownership interest in the retailer. For purposes of this   subsection, the sale, lease, or rental of an item includes listing   the item for sale, lease, or rent, soliciting an order for the item,   branding the item, processing or fulfilling the order for the item,   providing customer service relating to the item, and accepting or   assisting with the return or exchange of the item. The act of   shipping an item by common carrier to a purchaser in this state is   not considered engaging in the sale, lease, or rental of a taxable   item for purposes of this subsection.          (c-2)  For purposes of this subchapter and in relation to the   use tax, a retailer is a retailer engaged in business in this state   if, to facilitate the sale, lease, or rental of a taxable item to a   purchaser in this state, the retailer directly or through a third   party uses:                (1)  direct response marketing;                (2)  a referrer with a significant economic presence in   this state; or                (3)  another person who has a significant economic   presence in this state and with whom the retailer enters into an   agreement for the person to refer potential purchasers to the   retailer, regardless of whether the referral is not related to a   sale, lease, or rental of tangible personal property but   subsequently results in a sale, lease, or rental of that property.          (c-3)  An agreement described by Subsection (c-2)(3) does   not include an agreement under which a retailer purchases   advertisements from a person in this state to be delivered by   television or radio, in print, on the Internet, or through another   means, unless the agreement includes the payment of advertising   revenue to the person based wholly or partly on the sales resulting   from the advertising.          (c-4)  Subsection (c-2) does not apply to a retailer   described by that subsection if each person with whom the retailer   has entered into an agreement to refer potential purchasers to the   retailer:                (1)  does not have a significant economic presence in   this state; and                (2)  certifies to the retailer annually that the person   meets the requirement of Subdivision (1).          (c-5)  The comptroller shall prescribe the form of the   certification described by Subsection (c-4). A person who   intentionally or negligently provides false information in the   certification commits an offense punishable in the same manner as   an offense under Section 151.708.          SECTION 4.  Section 151.107(d), Tax Code, is amended by   amending Subdivision (1) and adding Subdivisions (1-a) and (1-b) to   read as follows:                (1)  "Direct response marketing" means, for the purpose   of facilitating the sale, lease, or rental of tangible personal   property of a retailer to a purchaser in this state, any of the   following activities:                      (A)  transmitting or broadcasting flyers,   newsletters, telephone calls, targeted electronic mail, text   messages, social media messages, or targeted mailings;                      (B)  collecting, analyzing, and using individual   data on purchasers or potential purchasers in this state;                      (C)  using information or software, including   cached files, cached software, or cookies or other data tracking   tools, that is stored on property in this state or that is   distributed within this state; or                      (D)  conducting any other actions that use   persons, tangible or intangible property, digital files or   information, or software in this state in an effort to enhance the   probability that a person's contacts with a purchaser in this state   will result in a sale, lease, or rental to that purchaser.                (1-a)  "Ownership" includes:                      (A)  direct ownership;                      (B)  common ownership; and                      (C)  indirect ownership through a parent entity,   subsidiary, or affiliate.                (1-b)  "Referrer" has the meaning assigned by Section   151.110.          SECTION 5.  Subchapter D, Chapter 151, Tax Code, is amended   by adding Sections 151.1075, 151.109, 151.110, and 151.111 to read   as follows:          Sec. 151.1075.  RETAILER PRESUMED TO BE ENGAGED IN BUSINESS   IN THIS STATE. (a)  For purposes of this subchapter and in relation   to the use tax, a retailer is presumed to be engaged in business in   this state if, in the previous calendar year or the current calendar   year, the retailer:                (1)  has total receipts of more than $1 million from   taxable items delivered in this state, including taxable items   delivered electronically to purchasers in this state; or                (2)  has at least 2,000 sales of taxable items   delivered in this state, including taxable items delivered   electronically to purchasers in this state.          (b)  A retailer described by Subsection (a) is required to   comply with the requirements of this chapter unless the retailer   rebuts the presumption under that subsection by proving that it   does not have substantial economic nexus with this state.          (c)  For purposes of this subchapter and in relation to the   use tax, a retailer is presumed to be engaged in business in this   state if the retailer is related, as provided by Subsection (d), to   a person engaged in business in this state who:                (1)  sells under the same or a similar business name   taxable items similar to those sold by the retailer;                (2)  maintains an office, distribution facility,   salesroom, warehouse, storage place, or other similar place of   business in this state to facilitate the delivery of taxable items   sold by the retailer to purchasers in this state;                (3)  uses in this state, with the retailer's knowledge   or consent, trademarks, service marks, or trade names that are the   same or substantially similar to those used by the retailer;                (4)  delivers, installs, assembles, or performs   maintenance or repair services in this state on tangible personal   property sold by the retailer to purchasers in this state;                (5)  facilitates the delivery of tangible personal   property to the retailer's customers in this state by allowing the   customers to pick up tangible personal property sold by the   retailer at an office, distribution facility, salesroom,   warehouse, storage place, or other similar place of business   maintained by the person in this state; or                (6)  shares management, business systems, business   practices, or employees with the retailer or engages in   intercompany transactions with the retailer related to the   activities that establish or maintain the retailer's market in this   state.          (d)  For purposes of Subsection (c), a retailer is related to   a person engaged in business in this state if the retailer and the   person:                (1)  have a relationship described by Section 267(b) or   707(b)(1), Internal Revenue Code of 1986; or                (2)  have an ownership relationship designed with a   principal purpose of avoiding the application of Subsection (c).          (e)  A retailer may rebut the presumption under Subsection   (c) for a reporting period by proving by a preponderance of evidence   that the person engaged in business in this state did not engage in   any activities on the retailer's behalf during the reporting period   sufficient to establish the retailer's substantial economic nexus   with this state.          Sec. 151.109.  MARKETPLACE PROVIDERS. (a) In this section,   "marketplace provider" means a person who:                (1)  facilitates the sale, lease, or rental of the   tangible personal property of a retailer that is not the person to a   purchaser in this state in any manner, including by the use of a   catalog or an Internet website;                (2)  directly or indirectly collects from a purchaser   in this state receipts derived from the sale, lease, or rental of   the retailer's tangible personal property to the purchaser and   transmits those receipts to the retailer, other than any amount the   person is authorized to retain as a fee for facilitating the sale,   lease, or rental; and                (3)  is engaged in business in this state by means of   any of the activities listed in Section 151.107(a), (c-1), or (c-2)   or because of an unrebutted presumption under Section 151.1075(a).          (b)  A marketplace provider's facilitation of a sale, lease,   or rental described by Subsection (a)(1) that results in a sale,   lease, or rental by the other retailer is considered the making of a   sale by the marketplace provider for purposes of Sections   151.008(a) and 151.103.  Notwithstanding Section 151.103, the   marketplace provider is not required to collect a use tax imposed   under this subchapter that is due from a purchaser if the retailer   for whom the marketplace provider facilitates the sale, lease, or   rental collects the tax from the purchaser.          (c)  For purposes of Subsection (b), a marketplace provider   may presume that a retailer registered with the comptroller under   Section 151.106 collects the use tax from a purchaser.          (d)  Subject to Subsection (e), a marketplace provider is not   subject to liability under Subchapter L for failing to collect or   remit the appropriate amount of use tax if, in determining the   amount, the marketplace provider relies exclusively on information   provided by the retailer for whom the marketplace provider   facilitates the sale, lease, or rental of the tangible personal   property on which the tax is due.          (e)  Subsection (d) does not apply if:                (1)  the marketplace provider and the retailer for whom   the marketplace provider facilitated the sale, lease, or rental of   tangible personal property have an ownership relationship designed   with a principal purpose of relieving the marketplace provider of   liability as authorized by Subsection (d); or                (2)  the marketplace provider and the other retailer   have a relationship described by Section 267(b) or 707(b)(1),   Internal Revenue Code of 1986.          (f)  Nothing in this section may be construed as affecting   the ability of a marketplace provider and another retailer to enter   into an agreement regarding the requirements of this chapter.          (g)  The comptroller may adopt rules necessary to implement   and administer this section, including rules establishing the   requirements for an entity to be considered a marketplace provider.          Sec. 151.110.  REFERRERS. (a) In this section, "referrer"   means a person who:                (1)  for the purpose of facilitating the sale, lease,   or rental of tangible personal property of a retailer that is not   the person to a purchaser in this state, agrees to list items of   tangible personal property and the prices of the items in any forum,   including in a catalogue or on an Internet website;                (2)  receives a fee, commission, or other consideration   as part of the agreement with the retailer;                (3)  transfers the purchaser to the retailer or the   retailer's Internet website by telephone, electronic link, or any   other means to complete a sale, lease, or rental of a listed item;   and                (4)  does not collect from the purchaser receipts   derived from the sale of the item to the purchaser.          (b)  For purposes of this subchapter and in relation to the   use tax, a referrer who makes a referral to another retailer that   results in a sale, lease, or rental of the other retailer's tangible   personal property to a purchaser in this state is a retailer engaged   in business in this state.          (c)  A referrer's facilitation of a sale, lease, or rental   described by Subsection (a)(1) that results in a sale, lease, or   rental by the other retailer is considered the making of a sale by   the referrer for purposes of Sections 151.008(a) and 151.103, and   the listed price of the item for sale, lease, or rent is presumed to   be the sales price for purposes of Sections 151.101 and 151.103.   Notwithstanding Section 151.103, the referrer is not required to   collect a use tax imposed under this subchapter that is due from a   purchaser if:                (1)  the retailer for whom the referrer facilitates the   sale, lease, or rental collects the tax from the purchaser; or                (2)  the referrer:                      (A)  holds a referrer's permit issued under   Section 151.1065; and                      (B)  is in compliance with Section 151.111.          (d)  For purposes of Subsection (c), a referrer may presume   that a retailer registered with the comptroller under Section   151.106 collects the use tax from a purchaser.          (e)  Subject to Subsection (f), a referrer is not subject to   liability under Subchapter L for failing to collect or remit the   appropriate amount of use tax if, in determining the amount, the   referrer relies exclusively on information provided by the retailer   for whom the referrer facilitates the sale, lease, or rental of the   tangible personal property on which the tax is due.          (f)  Subsection (e) does not apply if:                (1)  the referrer and the retailer for whom the   referrer facilitated the sale, lease, or rental of tangible   personal property have an ownership relationship designed with a   principal purpose of relieving the referrer of liability as   authorized by Subsection (e); or                (2)  the referrer and the other retailer have a   relationship described by Section 267(b) or 707(b)(1), Internal   Revenue Code of 1986.          (g)  The comptroller may adopt rules necessary to implement   and administer this section, including rules establishing the   requirements for an entity to be considered a referrer.          Sec. 151.111.  REFERRER'S ANNUAL REPORT; NOTICE TO   RETAILERS. (a) This section applies only to a referrer who is   required to hold a referrer's permit under Section 151.1065.          (b)  On January 1 of each year, a referrer shall:                (1)  file with the comptroller a report that contains,   for the preceding 12-month period:                      (A)  the name and address of each retailer with   whom the referrer entered into an agreement described by Section   151.110(a)(1); and                      (B)  to the extent practicable, for each retailer   required to be included in the report under Paragraph (A):                            (i)  the estimated total amount of sales   attributable to referrals made by the referrer to that retailer;                            (ii)  the estimated total number of   referrals made by the referrer to that retailer and the estimated   number of those referrals that resulted in a purchase by a purchaser   in this state; and                            (iii)  details about each referral made to   the retailer, including the type and price of each item that was the   subject of the referral; and                (2)  provide notice to each retailer with whom the   referrer entered into an agreement described by Section   151.110(a)(1) during the preceding 12-month period that:                      (A)  the retailer's sales in this state may be   subject to a use tax under the laws of this state; and                      (B)  the referrer is required to annually report   the information described by Subdivision (1) to this state.          (c)  The report required under Subsection (b) may not contain   personally identifiable information of any purchaser.          (d)  Notwithstanding Subsection (b), a referrer may exclude   from the report required under that subsection the name of, and any   information relating to referrals to, a retailer for whom the   referrer makes referrals if the retailer collects the use tax   imposed under this subchapter from purchasers in this state. For   purposes of this subsection, a referrer may presume that a retailer   registered with the comptroller under Section 151.106 collects the   tax.          (e)  The comptroller may adopt rules necessary to implement   and administer this section and may prescribe the form of the report   and the notice required under this section.          SECTION 6.  Section 151.403(b), Tax Code, is amended to read   as follows:          (b)  A retailer engaged in business in this state as provided   by Section 151.107, 151.1075, 151.109, or 151.110 [of this code]   shall file a tax report with respect to the use tax.          SECTION 7.  The first report and notice required under   Section 151.111, Tax Code, as added by this Act, are due January 1,   2018.          SECTION 8.  The change in law made by this Act does not   affect tax liability accruing before the effective date of this   Act. That liability continues in effect as if this Act had not been   enacted, and the former law is continued in effect for the   collection of taxes due and for civil and criminal enforcement of   the liability for those taxes.          SECTION 9.  (a)  The constitutionality and other validity   under the state or federal constitution of all or any part of the   amendments made to Chapter 151, Tax Code, by this Act may be   determined in an action for declaratory judgment in a district   court in Travis County under Chapter 37, Civil Practice and   Remedies Code, except that this section does not authorize an award   of attorney's fees against this state and Section 37.009, Civil   Practice and Remedies Code, does not apply to an action filed under   this section.          (b)  An appeal of a declaratory judgment or order, however   characterized, of a district court, including an appeal of the   judgment of an appellate court, holding or otherwise determining   that all or any part of the amendments made to Chapter 151, Tax   Code, by this Act is constitutional or unconstitutional, or   otherwise valid or invalid, under the state or federal constitution   is an accelerated appeal.          (c)  If the judgment or order is interlocutory, an   interlocutory appeal may be taken from the judgment or order and is   an accelerated appeal.          (d)  A district court in Travis County may grant or deny a   temporary or otherwise interlocutory injunction or a permanent   injunction on the grounds of the constitutionality or   unconstitutionality, or other validity or invalidity, under the   state or federal constitution of all or any part of the amendments   made to Chapter 151, Tax Code, by this Act.          (e)  There is a direct appeal to the Texas Supreme Court from   an order, however characterized, of a trial court granting or   denying a temporary or otherwise interlocutory injunction or a   permanent injunction on the grounds of the constitutionality or   unconstitutionality, or other validity or invalidity, under the   state or federal constitution of all or any part of the amendments   made to Chapter 151, Tax Code, by this Act.          (f)  The direct appeal is an accelerated appeal.          (g)  This section exercises the authority granted by Section   3-b, Article V, Texas Constitution.          (h)  The filing of a direct appeal under this section will   automatically stay any temporary or otherwise interlocutory   injunction or permanent injunction granted in accordance with this   section pending final determination by the Texas Supreme Court,   unless the supreme court makes specific findings that the applicant   seeking such injunctive relief has pleaded and proved that:                (1)  the applicant has a probable right to the relief it   seeks on final hearing; and                (2)  the applicant will suffer a probable injury that   is imminent and irreparable, and that the applicant has no other   adequate legal remedy.          (i)  An appeal under this section, including an   interlocutory, accelerated, or direct appeal, is governed, as   applicable, by the Texas Rules of Appellate Procedure, including   Rules 25.1(d)(6), 26.1(b), 28.1, 28.3, 32.1(g), 37.3(a)(1),   38.6(a) and (b), 40.1(b), and 49.4.          SECTION 10.  This Act takes effect September 1, 2017.