HB A — TPTRP SALES AND USE TAX ACT
House Bill · Tex. Tax Code ch. 151-A
Establishes the tiered sales and use tax that replaces property taxes and other taxes abolished by the
TPTRP.
By: ______________________
H.B. No. ______
A BILL TO BE ENTITLED
AN ACT relating to the establishment, administration, collection, allocation,
distribution, and governance of the sales and use tax imposed under Article VIII, Sections 1-e, 1-m
through 1-w, and 9.01, of the Texas Constitution; making conforming changes to the Tax Code; and
implementing the Texas Property Tax Replacement Plan.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. FINDINGS, PURPOSE, AND DEFINITIONS
Sec. 151A.001. SHORT TITLE.
(a) This chapter may be cited as the TPTRP Sales and Use Tax Act.
This section implements Article VIII, Section 9.01, of the Texas Constitution.
Sec. 151A.002. FINDINGS AND PURPOSE.
(a) The legislature finds:
(1) the people of Texas adopted the Texas Property Tax Replacement Plan by
constitutional amendment approved at the election held November 2, 2027, to abolish ad valorem property
taxation and to replace it with a tiered sales and use tax system that funds every taxing entity from
broad-base consumption occurring within that entity's jurisdiction;
(2) Article VIII, Section 9.01, of the Texas Constitution establishes January 1,
2028, as the effective date of the amendment for the purpose of authorizing and requiring the
legislature to enact the general laws necessary to implement it, and establishes January 1, 2029, as the
Implementation Date on which collection of the sales and use tax under the tiered rate structure begins
and the prohibition on ad valorem taxation established by Article VIII, Section 1-e, of the Texas
Constitution takes effect;
(3) Article VIII, Section 1-n(c)(2), of the Texas Constitution directs the
legislature to establish, in the general law implementing that article, a uniform Starting Combined Rate
for each tier, effective on the Implementation Date, sufficient in the aggregate to fund the Total
Replacement Obligation of the entities within that tier, not exceeding three and one-quarter percent
(3.25%) in the aggregate, and further provides that no later legislature may establish a second uniform
rate for any tier;
(4) Article VIII, Section 1-p, of the Texas Constitution defines the Taxable
Transaction and the Agent Transaction, applies the Definition Filter excluding federal government
transactions, financial flows, intra-company transfers, Internet access service, and pure currency and
payment-medium exchanges from the tax base, and forbids the legislature from creating a class-wide
exemption, resale certificate system, or manufacturing-input exemption except as expressly authorized by
another provision of the Texas Property Tax Replacement Plan;
(5) this Act imposes the sales and use tax on the constitutional Taxable Transaction,
at the constitutional Starting Combined Rate, subject to the Texas Living Exemption Set established
under Article VIII, Section 1-r, of the Texas Constitution by the TPTRP Texas Living Exemption Set Act
and administered through this Act's permit-level residential-versus-commercial accounting article;
and
(6) beginning on the Implementation Date, this Act, together with the companion
implementing acts identified in Section 151A.003 of this code, is the exclusive law of the imposition,
administration, and distribution of Texas sales and use tax revenue.
(b) The purpose of this Act is to implement, as general law, the sales and use tax
established by Article VIII, Sections 1-e, 1-m through 1-w, and 9.01, of the Texas Constitution, and to
establish the rate structure, tax base, sourcing rules, rate governance, collection, allocation,
distribution, accounting, and administration necessary to give that constitutional framework full effect
on and after the Implementation Date.
This section implements Article VIII, Sections 1-e, 1-n, 1-p, and 1-x, of the Texas
Constitution.
Sec. 151A.003. RELATIONSHIP TO OTHER LAW.
(a) On and after the Implementation Date, this chapter supersedes Chapter 151 of
this code as the operative sales and use tax chapter, and Chapter 151 has no further force or effect.
The TPTRP Tax Abolition and Conformity Act repeals Chapter 151.
(b) This Act is to be read together with the following companion implementing acts,
each of which this Act cross-references rather than restates:
(1) the TPTRP Texas Living Exemption Set Act, governing the Texas Living Exemption
Set authorized by Article VIII, Section 1-r, of the Texas Constitution;
(2) the TPTRP Remote Seller and Foreign Entity Act, governing economic nexus and the
registration, collection, and remittance obligations of remote and foreign sellers under Article VIII,
Section 1-q, of the Texas Constitution;
(3) the TPTRP Fund System Act, governing the Stabilization Fund, Infrastructure Fund,
First Responder Fund, I&S Reserve Fund, Citizen Dividend Fund, and the surplus waterfall established
by Article VIII, Sections 1-s and 1-t, of the Texas Constitution;
(4) the TPTRP Bond Management Act, governing bonds, the Bond Service Levy, the state
guarantee, and the Citizens First Bond Sale Requirement established by Article VIII, Section 1-o, of the
Texas Constitution;
(5) the TPTRP Transition Board Act, governing Chapter 490, Government Code,
transition administration, the Assistance Eligibility Standard, and the Texas Sales and Use Tax Portal
established under Section 490.073, Government Code; and
(6) the TPTRP Tax Abolition and Conformity Act, governing the abolition of the taxes
superseded by Article VIII, Section 1-m(c), of the Texas Constitution and the conforming amendments to
other codes made necessary by that abolition.
(c) Nothing in this Act may be construed to authorize any rate, exemption, or
distribution inconsistent with Article VIII, Sections 1-e or 1-m through 1-x, of the Texas Constitution.
To the extent of any conflict between this Act and the Texas Constitution, the Texas Constitution
controls.
This section implements Article VIII, Sections 1-e, 1-m, 1-n, 1-o, 1-p, 1-q, 1-r,
1-s, 1-t, and 1-x, of the Texas Constitution.
Sec. 151A.004. DEFINITIONS.
In this chapter:
(1) "Actual Need Ratio" or "ANR" has the meaning assigned by Article VIII, Section
1-n(a)(13), of the Texas Constitution.
(2) "Agent Transaction" has the meaning assigned by Article VIII, Section 1-p(c), of
the Texas Constitution.
(3) "Allowed Budget Growth Rate" has the meaning assigned by Article VIII, Section
1-n(a)(11), of the Texas Constitution.
(4) "Allowed Budget Maximum" has the meaning assigned by Article VIII, Section
1-n(a)(10), of the Texas Constitution.
(5) "Amendment Effective Date" means January 1, 2028, the effective date of the
constitutional amendment proposed by the 90th Legislature and adopted at the November 2027 election, as
established by Article VIII, Section 9.01(a), of the Texas Constitution.
(6) "Available Base Revenue" has the meaning assigned by Article VIII, Section
1-n(a)(8), of the Texas Constitution.
(7) "Bond Service Levy" means the portion of a taxing entity's quarterly
distribution attributable to the entity's I&S rate. The Bond Service Levy is inviolable as
provided by Article VIII, Sections 1-n(l), 1-o, 1-s(i)(4), and 1-s(k)(7), of the Texas Constitution, and
by Section 151A.607 of this code.
(8) "CCR" or "Constitutional Cap Rate" has the meaning assigned by Article VIII,
Section 1-n(a)(4) and (b), of the Texas Constitution.
(9) "Chief Financial Officer" has the meaning assigned by Article VIII, Section
1-n(a)(7), of the Texas Constitution.
(10) "Comptroller" means the Comptroller of Public Accounts of the State of Texas.
(11) "Cost of Living Standard" has the meaning assigned by Article VIII, Section
1-r(a), of the Texas Constitution, as further elaborated by Article VIII, Section 1-r(b) through (h), of
the Texas Constitution. The Cost of Living Standard is administered under the TPTRP Texas Living
Exemption Set Act and Article 8 of this Act.
(12) "Division" means the TPTRP Transition Monitoring Division established under
Subchapter H, Chapter 490, Government Code, by the TPTRP Transition Board Act.
(13) "Final Year Baseline" has the meaning assigned by Article VIII, Section
1-n(a)(15), of the Texas Constitution, and is further elaborated by Section 490.001(6), Government Code,
and Section 490.015 of the TPTRP Transition Board Act.
(14) "I&S rate" or "Interest and Sinking rate" has the meaning assigned by
Article VIII, Section 1-n(a)(3) and (h), of the Texas Constitution.
(15) "Implementation Date" means January 1, 2029, as established by Article VIII,
Section 9.01(b), of the Texas Constitution.
(16) "M&O rate" or "Maintenance and Operations rate" has the meaning assigned by
Article VIII, Section 1-n(a)(2), of the Texas Constitution.
(17) "Maximum Available Rate" has the meaning assigned by Article VIII, Section
1-n(a)(14), of the Texas Constitution.
(18) "Portal" or "Texas Sales and Use Tax Portal" means the consolidated portal
established under Section 490.073, Government Code, by the TPTRP Transition Board Act, operated by the
TPTRP Transition Board during the transition period and by the Division thereafter.
(19) "Qualified Rate Change Event" has the meaning assigned by Article VIII, Section
1-n(a)(9), of the Texas Constitution.
(20) "Sourcing" means the process, established by Article VIII, Section 1-p, of the
Texas Constitution and by Article 3 of this Act, for determining the taxing entities whose jurisdictions
include a taxable transaction.
(21) "Starting Combined Rate" has the meaning assigned by Article VIII, Section
1-n(a)(5) and (c)(2), of the Texas Constitution.
(22) "Taxable Transaction" has the meaning assigned by Article VIII, Section 1-p, of
the Texas Constitution.
(23) "Taxing Entity" means the State of Texas, a county, a municipality, an
independent school district, or a special district. A taxing entity is classified in one of the five
tiers established by Article VIII, Section 1-n(b), of the Texas Constitution.
(24) "Tier" means Tier 1, Tier 2, Tier 3, Tier 4, or Tier 5, as classified by Article
VIII, Section 1-n(b), of the Texas Constitution.
(25) "Total Budget Cap" has the meaning assigned by Article VIII, Section 1-n(a)(12)
and (f), of the Texas Constitution.
(26) "Total Rate" has the meaning assigned by Article VIII, Section 1-n(a)(1), of the
Texas Constitution.
(27) "Total Replacement Obligation" or "TRO" has the meaning assigned by Article
VIII, Section 1-n(a)(6), of the Texas Constitution.
(28) "TPTRP" means the Texas Property Tax Replacement Plan established by Article
VIII, Sections 1-e, 1-m through 1-w, and 9.01, of the Texas Constitution.
(29) "TPTRP sales and use tax" means the sales and use tax imposed by this Act.
(b) Where a term used in this Act is defined by another TPTRP implementing act,
including "Assistance Eligibility Standard" (Section 490.032, Government Code), "Stabilization Fund"
(TPTRP Fund System Act), and "Texas Living Exemption Set" (TPTRP Texas Living Exemption Set Act), the
term has in this Act the meaning assigned by that other act.
(c) Any other term used in this Act that is defined by the Texas Constitution has
the meaning assigned by the constitutional definition.
This section implements Article VIII, Sections 1-n, 1-o, 1-p, 1-q, 1-r, 1-s, and 1-x,
of the Texas Constitution.
ARTICLE 2. IMPOSITION OF THE TAX; TIERED RATE STRUCTURE
Sec. 151A.101. IMPOSITION OF THE SALES AND USE TAX.
(a) A sales and use tax is imposed on each taxable transaction sourced to a location
in this state, at the total rate that is the sum of the rates then in effect under this chapter for each
taxing entity whose jurisdiction includes that location. The tax is imposed on the person who purchases
the taxable good, service, or right, and shall be collected by the seller from the purchaser and
remitted to the comptroller as provided by Article 7 of this Act.
(b) The tax imposed by this section applies to every taxable transaction, as that
term is defined by Article VIII, Section 1-p, of the Texas Constitution, that is not exempted by the
TPTRP Texas Living Exemption Set Act or by another provision of law consistent with Article VIII,
Section 1-p(h), of the Texas Constitution.
(c) The exemption for separately stated Internet access charges required by the
federal Internet Tax Freedom Act, as preserved by Article VIII, Section 1-p(e)(4), of the Texas
Constitution, is preserved under this chapter. No provision of this chapter may be construed to impose
the tax on a transaction, or portion of a transaction, that the Internet Tax Freedom Act places beyond
the taxing authority of this state.
(d) This section implements Article VIII, Sections 1-n(b) and 1-n(c), of the Texas
Constitution.
Sec. 151A.102. FIVE-TIER RATE STRUCTURE; CONSTITUTIONAL CAP RATE.
(a) The sales and use tax imposed by this chapter is levied within a five-tier
structure corresponding to the five classes of taxing entities authorized to receive revenue under
Article VIII, Sections 1-e, 1-m through 1-w, and 9.01, of the Texas Constitution. Each tier has the
Constitutional Cap Rate stated in the following table, reproduced verbatim from Article VIII, Section
1-n(b), of the Texas Constitution:
| Tier | Class of taxing entity | Constitutional Cap Rate |
|---|---|---|
| Tier 1 | The State of Texas | 2.00% |
| Tier 2 | Counties | 1.00% |
| Tier 3 | Incorporated municipalities | 1.00% |
| Tier 4 | Independent school districts | 1.50% |
| Tier 5 | Special districts | 0.50% |
| Maximum combined rate | All tiers | 6.00% |
(b) The Constitutional Cap Rate is a ceiling, not a schedule. The
Constitutional Cap Rate of a tier is the maximum total rate that may be imposed by each individual
taxing entity classified in that tier. It is not a fixed rate, a required rate, or a uniform rate.
Except for the starting rates established under Section 151A.103 of this code, the rate of each taxing
entity is determined individually by that entity under Article 4 of this Act, is not set by, tied to,
indexed to, or affected by the rate of any other taxing entity in the same tier or in any other tier,
and need not be uniform among the entities classified in a tier.
(c) No entity may exceed its tier cap. No taxing entity may impose a total
rate that exceeds the Constitutional Cap Rate for its tier, by any name or in any form, by any act of
the Legislature, by any ordinance, resolution, or administrative instrument, by voter approval, or by
any other means. No Constitutional Cap Rate may be raised except by amendment of the Texas Constitution
approved by the voters of this state.
(d) The six-percent-at-every-location ceiling. The rate applied to a
taxable transaction is the sum of the rates then in effect for each taxing entity whose jurisdiction
includes the location to which the transaction is sourced under Article 3 of this Act. That sum may not
exceed six percent (6.00%) at any location in this state, and no combination of overlapping
jurisdictions may produce a rate in excess of six percent at any location.
(e) Tier 5 is an aggregate cap. Because the jurisdictions of special
districts overlap one another, the Tier 5 Constitutional Cap Rate of one-half of one percent (0.50%) is
the maximum aggregate rate that may be imposed at any location in this state by all Tier 5 entities
whose jurisdictions include that location, combined, and not a per-entity rate. The apportionment of the
Tier 5 aggregate cap among overlapping Tier 5 entities is governed by Article 6 of this Act.
(f) The Tier 4 collections of an independent school district are subject to the
funding rules of Article VIII, Section 1-n(k), of the Texas Constitution, as implemented by Article 5 of
this Act.
(g) This section implements Article VIII, Section 1-n(b), of the Texas
Constitution.
Sec. 151A.103. STARTING COMBINED RATE.
(a) Effective on the Implementation Date, the Starting Combined Rate for each tier
is established under Article VIII, Section 1-n(c)(2), of the Texas Constitution, as follows:
| Tier | Class of taxing entity | Starting Rate |
|---|---|---|
| Tier 1 | The State of Texas | 1.00% |
| Tier 2 | Counties | 0.40% |
| Tier 3 | Incorporated municipalities | 0.60% |
| Tier 4 | Independent school districts | 1.20% |
| Tier 5 | Special districts (aggregate at any location) | 0.05% |
| Aggregate Starting Combined Rate | All tiers | 3.25% |
(b) Each starting rate established by Subsection (a):
(1) is the rate at which the applicable tier's entities begin collecting on the
Implementation Date;
(2) applies to each entity in the tier only until that entity first acts under
Section 151A.302 of this code (voluntary reduction) or Section 151A.303 of this code (voter-approved
increase), after which the entity's rate is the rate the entity has itself established; and
(3) is designed in the aggregate to fund the Total Replacement Obligation, as defined
by Article VIII, Section 1-n(a), of the Texas Constitution, of the entities within each tier at the
outset of the transition period.
(c) This section implements Article VIII, Section 1-n(c)(2), of the Texas
Constitution.
Sec. 151A.104. UNIFORM-ONLY-ONCE RULE.
(a) The Legislature has established, by Section 151A.103 of this code, the uniform
Starting Combined Rate required by Article VIII, Section 1-n(c)(2), of the Texas Constitution, and may
not establish a second uniform rate for any tier, may not reset any entity's rate to a uniform
rate, and may not impose a minimum rate on any taxing entity other than the State of Texas.
(b) The rule stated in Subsection (a) is a rule of statutory law binding on the
Legislature and on every state agency, and it applies without exception, notwithstanding any subsequent
enactment, appropriations rider, budget execution authority, or administrative order purporting to
establish a uniform rate for a tier a second time.
(c) No future amendment of this section, and no other provision of this chapter or
of general law, may authorize a second uniform rate for any tier absent an amendment of the Texas
Constitution approved by the voters of this state.
(d) This section implements Article VIII, Section 1-n(c)(2), of the Texas
Constitution.
Sec. 151A.105. NEW TAXING ENTITY; FIFTY PERCENT RULE.
(a) A taxing entity created after the Implementation Date has no Final Year
Baseline, no Total Replacement Obligation, and no eligibility for assistance under Article VIII, Section
1-u, of the Texas Constitution, or the TPTRP Transition Board Act.
(b) The initial rate of a taxing entity created after the Implementation Date is
zero. The entity may impose a rate only after approval by its voters under Article 4 of this Act.
(c) The first rate submitted to the voters of a newly created taxing entity may not
exceed fifty percent (50%) of the Constitutional Cap Rate for the tier in which the entity is classified
or, for a Tier 5 entity, fifty percent (50%) of the apportioned share available to it under Article 6 of
this Act.
(d) After the entity's first fiscal period at a voter-approved rate, the entity
may seek further increases on the same terms as any other taxing entity, subject to its Constitutional
Cap Rate.
(e) The creation of a taxing entity may not cause the combined rate at any location
to exceed six percent (6.00%).
(f) Before a newly created Tier 5 entity may impose a rate, the Division shall
reapportion the Tier 5 aggregate cap as necessary under Article 6 of this Act.
(g) This section implements Article VIII, Section 1-n(b-1), of the Texas
Constitution.
Sec. 151A.106. NO RATE MAY EXCEED CCR; SIX PERCENT COMBINED CEILING.
(a) No entity may exceed its tier cap, by any means. No taxing entity may
impose a total rate that exceeds the Constitutional Cap Rate for its tier, by any name or in any form,
by any act of the Legislature, by any ordinance, resolution, or administrative instrument, by voter
approval, or by any other means.
(b) No Constitutional Cap Rate may be raised except by constitutional
amendment. No Constitutional Cap Rate may be raised except by amendment of the Texas Constitution
approved by the voters of this state. No act of the Legislature, no order of the comptroller, and no
action of any taxing entity may have the effect of raising a Constitutional Cap Rate.
(c) The tax stack; six percent ceiling at every location. The rate applied
to a taxable transaction is the sum of the rates then in effect for each taxing entity whose
jurisdiction includes the location to which the transaction is sourced under Article 3 of this Act. That
sum — the "tax stack" applicable at the location — is calculated by adding, for the location in
question, the Tier 1 State rate, the Tier 2 county rate (if the location is within a county's
jurisdiction), the Tier 3 municipal rate (if the location is within an incorporated municipality), the
Tier 4 independent school district rate for the district in which the location lies, and the aggregate
Tier 5 rate for all special districts whose jurisdictions include the location. The tax stack so
computed may not exceed six percent (6.00%) at any location in this state, and no combination of
overlapping jurisdictions may produce a rate in excess of six percent at any location.
(d) Enforcement of the ceiling. If the sum of the rates otherwise in effect
for the taxing entities whose jurisdictions include a location would exceed six percent (6.00%), the
excess is not collectible, and the comptroller shall administer the ceiling as provided by Article 6 of
this Act (Tier 5 apportionment) and Article 4 of this Act (rate governance), so that no entity's
individually authorized rate, as certified and in effect, ever produces a tax stack in excess of six
percent at any location.
(e) This section implements Article VIII, Sections 1-n(b)(2) and 1-n(b)(3), of the
Texas Constitution.
Cross-references. Article 3 of this Act governs sourcing of a
taxable transaction to a location for purposes of the tax stack described by Section 151A.106. Article 4
of this Act governs the M&O sub-rate, voter approval of rate increases, budget caps, the Actual Need
Ratio, and the cross-referenced sub-rate-dedication procedures of Article 16 of the TPTRP Fund System
Act. Article 5 of this Act governs Tier 4 (independent school district) funding under Article VIII,
Section 1-n(k), of the Texas Constitution. Article 6 of this Act governs apportionment of the Tier 5
aggregate cap among overlapping special districts. Article 7 of this Act governs collection, allocation,
and distribution of the tax.
ARTICLE 3. THE TAXABLE TRANSACTION, AGENT TRANSACTION, DEFINITION FILTER, AND SOURCING
[Enacting new Subchapter E, Chapter 151-A, Tax Code]
SECTION 3.01.
Chapter 151-A, Tax Code, as added by this Act, is amended by adding Subchapter E to
read as follows:
SUBCHAPTER E. TAXABLE TRANSACTION; AGENT TRANSACTION; DEFINITION FILTER; SOURCING
Sec. 151A.201. TAXABLE TRANSACTION; RATE UNIFORMITY ACROSS TRANSACTIONS.
(a) The definition of "taxable transaction" in this chapter is the definition
established by Article VIII, Sections 1-p(a), (b), and (f), of the Texas Constitution, which this
section adopts by reference and implements by general law. A person may not construe this section to
narrow, and the comptroller may not by rule narrow, the constitutional definition of a taxable
transaction.
(b) A taxable transaction is any transfer, exchange, sale, lease, license, or other
transaction for consideration in which a person acquires the right to possess, use, consume, license,
subscribe to, or otherwise receive the benefit of a good, service, right, digital product, or other
thing of economic value, when a clear product is being purchased or a service is being rendered as part
of the exchange or sale, unless the transaction is excluded by the Definition Filter under Section
151A.203, excluded under Section 151A.204, or exempted under the TPTRP Texas Living Exemption Set Act.
Consistent with Article VIII, Section 1-p(b), of the Texas Constitution, this definition is broad by
constitutional design and applies at every point in the supply chain, including:
(1) business-to-business transactions at every stage of production, distribution, and
delivery;
(2) business-to-consumer transactions for goods, services, digital products, and any
other item of economic value;
(3) transactions in which goods or services are delivered remotely, electronically,
digitally, or through any other medium, where the buyer is located in this state or receives the
economic benefit of the transaction in this state;
(4) transactions in which a seller is located outside this state, in another state of
the United States or in a foreign country, where the buyer is located in this state or the economic
benefit of the transaction is received in this state; and
(5) transactions in which the seller knew or reasonably should have known, at the
time of contracting or delivery, that the goods or services would be used, consumed, or would primarily
benefit operations or persons located in this state.
(c) The point at which the buyer takes possession of the good, receives the service,
or otherwise obtains the right to use, consume, or enjoy the taxable good or service governs whether a
transaction is subject to the sales and use tax imposed by this chapter. A transaction in which the
buyer takes possession of the good or first receives the service in this state is a transaction subject
to the tax imposed by this chapter, regardless of where the buyer is domiciled or resides. A transaction
in which the buyer takes possession of the good or first receives the service outside this state is not
a transaction subject to the tax imposed by this chapter, regardless of where the seller is located.
Where a good or service is delivered remotely, electronically, digitally, or by common carrier,
possession is deemed taken at the location to which the good is delivered or at which the service is
first received by the buyer. This subsection implements the point-of-possession rule of Article VIII,
Section 1-p(b), of the Texas Constitution.
(d) The tax imposed by this chapter applies uniformly to every taxable transaction
without regard to the industry, profession, business classification, organizational form, or commercial
character of the seller, the purchaser, or the transaction, subject only to: the Definition Filter under
Section 151A.203; the Internet Tax Freedom Act carve-out under Section 151A.204; the prohibition on
class-wide and industry-wide exemptions under Section 151A.205; and the exemptions established by the
TPTRP Texas Living Exemption Set Act under Article VIII, Section 1-r, of the Texas Constitution. This
chapter may not impose the tax at a rate that varies based on the domicile, physical location, or
national origin of the seller.
(e) This section implements Article VIII, Sections 1-p(a), (b), (d), and (f), of the
Texas Constitution.
Sec. 151A.202. AGENT TRANSACTION.
(a) The definition of "agent transaction" in this chapter is the definition
established by Article VIII, Section 1-p(c), of the Texas Constitution, which this section adopts by
reference and implements by general law.
(b) An agent transaction occurs when a person acting as an agent on behalf of a
principal purchases a product or service on the principal's behalf and separately renders the agent's
own labor or product to the principal. An agent under this section includes an intermediary, marketplace
provider, platform, broker, or other facilitator acting on behalf of a principal in effecting a taxable
transaction.
(c) In an agent transaction:
(1) a product or service purchased by the agent on behalf of the principal is taxed
once, at the point of purchase by the agent, at the total rate applicable at the location to which that
purchase is sourced under Section 151A.206, and is passed through to the principal at the documented
reimbursement amount without the imposition of additional tax on the pass-through;
(2) the agent's own labor, product, or service rendered to the principal is a
separate taxable transaction, taxed once at the point of the agent's billing to the principal,
sourced under Section 151A.206; and
(3) no single dollar of economic value subject to this chapter is taxed more than
once.
(d) The comptroller shall require an agent to maintain documentation sufficient to
distinguish, for each agent transaction, (1) the pass-through amount described by Subsection (c)(1), on
which tax was already collected at the point of the agent's purchase, from (2) the agent's own
fee, commission, or charge for the agent's separate labor, product, or service described by
Subsection (c)(2), which is a separately taxable transaction. Failure to maintain this documentation
does not create a second taxable transaction on the pass-through amount but subjects the agent to the
recordkeeping and enforcement provisions of Article 10 of this Act.
(e) The Legislature has implemented the agent transaction rule required by Article
VIII, Section 1-p(c), of the Texas Constitution through this section and Section 151A.208. Consistent
with that section, this chapter does not reinstate, and the comptroller may not by rule create, a resale
certificate system, manufacturing-input exemption, or intercorporate services exemption as a substitute
for or supplement to the anti-pyramiding protection provided by this section.
(f) This section implements Article VIII, Section 1-p(c), of the Texas
Constitution.
Sec. 151A.203. DEFINITION FILTER.
(a) The following categories of transactions are excluded from the tax base of this
chapter under Article VIII, Section 1-p(e), of the Texas Constitution, and may not be included in the
taxable base by the comptroller or by any general law that is not a constitutional amendment:
(1) Definition 1 — Government Value-Added Transactions (Category G-1, Federal
Government Transactions). A transaction in which the federal government of the United States is the
buyer or principal is excluded. The Supremacy Clause of the United States Constitution prohibits this
state from imposing a tax that directly burdens the federal government's constitutional functions.
A transaction in which a federal contractor is the buyer for its own account, and not as an agent of the
federal government, is a taxable transaction and is not excluded by this subdivision. This subdivision
applies to the government side of a transaction only; a private party's purchase from, or sale to,
a government is not excluded by this subdivision unless another provision of this section applies.
(2) Definition 2 — Financial Flows (Category F). The following financial
flows are excluded because they do not constitute the purchase of a product or the rendition of a
service, but are instead transfers of capital, returns on capital, reimbursements of loss, or
redistribution of existing value:
(A) mortgage principal and interest payments on real estate loans;
(B) interest income credited on personal deposit accounts, savings accounts, and
certificates of deposit;
(C) dividend distributions from a corporation to its shareholders;
(D) insurance claim payouts and loss reimbursements paid in satisfaction of a
covered loss — provided that a premium paid for a policy of insurance is not a financial flow under this
subdivision; the purchase of a policy of insurance is the purchase of a product and is a taxable
transaction under Section 151A.201, and an exemption for a policy of personal insurance may be granted
only under the TPTRP Texas Living Exemption Set Act;
(E) purchases and sales of equity interests, partnership interests, membership
units, bonds, notes, and other financial instruments representing ownership or debt interests;
(F) intra-family and personal gift transfers made for non-commercial purposes,
including inheritances and personal charitable contributions;
(G) personal inter-account fund transfers representing the movement of existing
value between accounts of the same person or entity; and
(H) government grants, entitlement payments, welfare disbursements, and other
transfer payments from a governmental entity to an individual or organization where no product is
purchased and no service is rendered.
Fees, commissions, and service charges associated with a financial transaction
described by this subdivision are not excluded by this subdivision; a fee, commission, or service charge
is a taxable service under Section 151A.201.
(3) Category I-1 — Intra-Company Transfers. Internal ledger entries,
inter-divisional accounting transfers, and other internal financial movements between departments or
divisions of the same legal entity that do not involve the purchase of a product or the rendition of a
service by one legal entity to another are excluded.
(4) Category IA — Internet Access Service. Internet access service is
excluded from the tax base of this chapter as provided by Section 151A.204.
(5) Category CP — Pure Currency and Payment-Medium Exchanges. A transaction
consisting solely of the exchange of one form of money, legal tender, or digital payment medium for
another form of money, legal tender, or digital payment medium, without the purchase of a separate
product or service, is excluded. The use of currency, legal tender, cryptocurrency, stablecoin,
tokenized value, or any other payment medium to purchase a taxable product or service does not exclude
the underlying taxable transaction.
(6) Any additional transaction category expressly excluded by Article VIII, Section
1-p(e), of the Texas Constitution, or by another provision of the Texas Constitution adopted as part of
the Texas Property Tax Replacement Plan.
(b) A transaction excluded under this section is outside the tax base of this
chapter as a matter of constitutional law. Neither the comptroller nor the Legislature may reclassify an
excluded financial flow, intra-company transfer, or federal-government transaction as a taxable service
or taxable product by rule or by general law.
(c) A private-party transaction with a government is not excluded under Subsection
(a)(1) merely because a government is a party; only government-to-government or government-internal
value transfers are excluded under that subdivision.
(d) This section implements Article VIII, Sections 1-p(e) and (g), of the Texas
Constitution.
Sec. 151A.204. INTERNET TAX FREEDOM ACT CARVE-OUT.
(a) Notwithstanding the breadth of the taxable transaction definition in Section
151A.201, "Internet access service," as defined by Section 3(13) of the TPTRP Remote Seller and Foreign
Entity Act, is excluded from the tax base of this chapter under Article VIII, Section 1-p(e)(4), of the
Texas Constitution, and by the permanent prohibition on state and local taxation of Internet access
service under the federal Internet Tax Freedom Act, 47 U.S.C. Section 151 note, as in effect on January
1, 2027, or as subsequently amended.
(b) Internet access service means the service of connecting a subscriber or user to
the Internet through a broadband, wireless, dial-up, satellite, or any other access technology,
including any directly bundled telecommunications service used to provide the access connection. The
term does not include content, applications, data services, or digital products delivered over the
Internet.
(c) All other digital services remain taxable transactions under Section 151A.201,
including but not limited to cloud computing services, streaming services, downloadable and
cloud-delivered software, digital subscriptions, data processing and information services, and the
facilitation by a marketplace or platform of the sale of a tangible or digital good or service.
(d) The comptroller shall by rule define the boundaries of the exclusion under this
section consistent with the Internet Tax Freedom Act, and shall not extend the exclusion to content,
applications, or services delivered over an Internet access connection.
(e) This section implements Article VIII, Sections 1-p(e)(4) and (f), of the Texas
Constitution.
Sec. 151A.205. PROHIBITED EXEMPTIONS.
(a) Except as expressly authorized by another provision of the Texas Constitution
adopted as part of the Texas Property Tax Replacement Plan, the Legislature may not create, and the
comptroller may not recognize or administer, a class-wide, industry-wide, business-model-wide, or resale
exemption, exclusion, deduction, or special treatment from the tax base of this chapter for:
(1) business inputs, manufacturing inputs, business purchases for resale, or
business-to-business services;
(2) intercorporate or affiliated-group services;
(3) data processing, information services, cloud computing, digital automation,
call-center operations, accounting, legal support, engineering support, or other outsourced services; or
(4) any product or service based solely on the identity, industry, organizational
form, domicile, or political influence of the buyer or seller.
(b) Without limiting Subsection (a), and stating specific prohibited mechanisms:
(1) no resale certificate, resale exemption, or "sales for resale" exemption may be
granted, and no purchase of a good or service to be incorporated into another good or service is exempt
from the tax by reason of the intended resale;
(2) no manufacturing-input exemption, ingredient exemption, machinery-and-equipment
exemption, or production-input exemption may be granted;
(3) no industry-specific exemption may be granted, whether by rate reduction,
exclusion, credit, refund, or any other mechanism;
(4) no business-to-business exemption may be granted by reason of the parties'
commercial character; and
(5) no exemption defined by the industry, profession, business classification, or
organizational form of the seller or purchaser may be granted.
(c) This section does not prohibit the Texas Living Exemption Set or another
exclusion or exemption expressly authorized by a provision of the Texas Constitution adopted as part of
the Texas Property Tax Replacement Plan.
(d) The only exemptions, exclusions, or special treatments permitted under this
chapter are:
(1) those established by the TPTRP Texas Living Exemption Set Act under Article VIII,
Section 1-r, of the Texas Constitution;
(2) the Definition Filter under Section 151A.203;
(3) the Internet Tax Freedom Act carve-out under Section 151A.204; and
(4) the federal government transaction exclusion under Section 151A.203(a)(1).
(e) A rule, policy, revenue determination, or general law provision that has the
effect of creating an exemption, exclusion, credit, refund, or rate reduction prohibited by this section
is void and without effect, regardless of the label applied to it.
(f) This section implements Article VIII, Sections 1-p(g) and (h), of the Texas
Constitution.
Sec. 151A.206. SOURCING OF A TAXABLE TRANSACTION.
(a) Purpose and organizing principle. A taxable transaction is sourced to a
location in this state for purposes of determining the applicable combined rate under Article 2 of this
Act, and for purposes of distributing the local share of the tax under Article 7 of this Act, as
provided by this section. This section preserves the operative sourcing framework of former Tax Code
Sections 321.203, 321.205, 323.203, and 323.205, and 34 Texas Administrative Code Section 3.334, as
those provisions applied to the local sales and use tax under the tax system existing immediately before
the effective date of this chapter, adapted to the unified tiered rate structure imposed by this chapter
and to the point-of-possession rule of Article VIII, Section 1-p(b), of the Texas Constitution. Two
organizing categories apply:
(1) Point-of-Sale Sourcing (referred to in this section as "Category A"
sourcing) applies to a transaction in which the buyer is physically present at a seller's Texas
place of business at the time the sale is transacted, and sources the tax to that place of business,
without regard to where the good is subsequently delivered or the service is subsequently rendered.
(2) Point-of-Receipt Sourcing (referred to in this section as "Category B"
sourcing) applies to a transaction in which the buyer is not physically present at the seller's
location at the time the sale is transacted, and sources the tax to the Texas location at which the
buyer takes possession of the good, first receives the service, or first uses the good or service,
without regard to the seller's location.
(b) Category A — Point-of-Sale Sourced Transactions. A taxable transaction
described by this subsection is sourced to the seller's Texas place of business at which the sale
is transacted:
(1) Walk-in purchase with on-site receipt. A sale in which the buyer places
the order in person at a Texas place of business of the seller and takes possession of the taxable good,
or first receives the service, at that place of business.
(2) Walk-in purchase with pickup at seller's Texas location. A sale in
which the buyer places the order in person at a Texas place of business of the seller and takes
possession of the taxable good at the same or another Texas place of business of the seller, whether the
good is in stock at the time of order or is thereafter shipped or transferred by the seller to a Texas
place of business of the seller for pickup by the buyer.
(3) Walk-in purchase with off-site delivery. A sale in which the buyer
places the order in person at a Texas place of business of the seller and, under the sales contract, the
taxable good is thereafter delivered by the seller, or by a common carrier or other delivery service
acting for the seller, to a location other than a place of business of the seller, whether the delivery
location is in this state or outside this state. Delivery to a location outside this state under this
subdivision is subject to Section 151A.209 (Interstate Shipments and Exports) and remains a Category A
transaction, sourced to the Texas place of business of the seller at which the in-person purchase was
transacted, only if the transaction results in a taxable event under Article VIII, Section 1-p(b), of
the Texas Constitution; a walk-in purchase followed by out-of-state shipment by the seller on behalf of
the buyer, where the buyer does not take possession in this state, is governed by Section 151A.209.
(4) Remote order with in-person pickup at seller's Texas location. A
sale in which the buyer places the order remotely, including by internet, telephone, mail, mobile
application, or any other remote medium, and thereafter takes possession of the taxable good in person
at a Texas place of business of the seller, without further delivery by the seller.
(5) Itinerant vendor sales. A sale by an itinerant vendor is sourced to the
physical location at which the buyer takes possession of the taxable good or first receives the service
on the day of the sale. For purposes of this subdivision, a food truck, festival vendor, farmer's
market stall, mobile service provider, or similar vendor is treated as having a Texas place of business
at the location where the sale is transacted on that day.
(c) Category B — Point-of-Receipt Sourced Transactions. A taxable
transaction described by this subsection is sourced to the Texas location at which the buyer takes
possession of the taxable good, first receives the service, or first uses the good or service:
(1) Remote order with delivery to Texas address. A sale in which the buyer
places the order remotely, including by internet, telephone, mail, mobile application, or any other
remote medium, and, under the sales contract, the taxable good is delivered by the seller, by a common
carrier acting for the seller, or by another delivery service, to a location in this state other than a
Texas place of business of the seller. The sourced location is the Texas delivery address specified by
the buyer.
(2) Drop-shipped sale. A sale in which the taxable good is shipped or
delivered from a location outside this state, by the seller or by a supplier or fulfillment agent acting
for the seller, to a location in this state. The sourced location is the Texas delivery address
specified by the buyer.
(3) Marketplace facilitator transaction. A sale effected through a
marketplace facilitator, as defined by the TPTRP Remote Seller and Foreign Entity Act, in which the
taxable good is delivered to a Texas address or the taxable service is first received at a Texas
location. The sourced location is the buyer's Texas delivery address or Texas location of first
receipt of the service.
(4) Service performed at a physical location. A sale of a service performed
at a physical location in this state, including a construction, remodeling, repair, restoration,
installation, cleaning, landscaping, or similar service performed at a job site, and including a utility
service, cable service, waste collection service, or amusement service delivered at a physical location.
The sourced location is the location at which the service is performed for the benefit of the purchaser,
or, in the case of a utility, cable, or waste service, the point of delivery to the consumer.
(5) Mobile telecommunications and voice services. A sale of mobile
telecommunications service is sourced to the customer's Texas place of primary use, consistent with
the federal Mobile Telecommunications Sourcing Act (4 U.S.C. Sections 116-126) and any successor federal
law governing state sourcing of mobile telecommunications services. A sale of a landline or fixed voice
telecommunications service is sourced to the customer's Texas service address for the service line.
A sale of a call-by-call telecommunications service is sourced to the location at which the call
originates and terminates, or, if the call originates or terminates outside this state, to the customer's
Texas service address associated with the account.
(6) Lease, rental, or license of tangible property. A lease, rental, or
license of tangible property is sourced to the Texas location at which the purchaser takes possession
of, or first uses, the property. For a lease or rental with recurring periodic payments, each periodic
payment is sourced to the Texas location at which the property is located, or primarily used, during the
period to which the payment relates.
(7) Motor vehicles, boats, aircraft, and manufactured housing. A sale of a
motor vehicle, boat, aircraft, or manufactured home to which this chapter applies is sourced under the
same Category A or Category B principles that would apply to any other taxable good. A sale transacted
in person at a Texas dealer's place of business is sourced under Subsection (b) of this section. A
sale transacted remotely by a Texas or out-of-state dealer or marketplace, with delivery to a Texas
purchaser, is sourced under this subsection. Conforming amendments to Chapter 152, Tax Code (Motor
Vehicle Sales, Use, and Rental Taxes), and to Chapter 158, Tax Code (Manufactured Housing Sales and Use
Tax), are effected by the TPTRP Tax Abolition and Conformity Act, so that the sales tax component of a
titled-vehicle or manufactured-home transaction is collected under this chapter and sourced under this
section, while the county tax assessor-collector's registration and titling procedures continue to
operate as provided by other law.
(8) Digital goods and digital services. A sale of a digital good or a
digital service, including a cloud computing service, a streaming service, downloadable or
cloud-delivered software, a digital subscription, a data processing service, or an information service,
is sourced under Section 151A.207.
(9) Other Category B transactions. A taxable transaction not described by
Subdivisions (1) through (8) of this subsection, and not described by Subsection (b) of this section, is
sourced to the Texas location at which the value of the transaction primarily accrues to the purchaser,
as certified by the seller under a good-faith standard and as subject to review by the comptroller under
Article 10 of this Act.
(d) Direct-payment permit holders. A person holding a direct-payment permit
issued under this chapter, who purchases a taxable good under the permit and thereafter uses, stores, or
consumes the good, is sourced under the following rule: the transaction is sourced to the Texas location
at which the item is first removed from the permit holder's storage for use or consumption, or, if
the item is not stored, to the Texas location at which the item is first used or consumed by the permit
holder after purchase or transportation. A temporary delay or interruption necessary and incidental to
transportation, further fabrication, processing, or assembly within this state for delivery to the
permit holder does not constitute storage, use, or consumption for purposes of this subsection. A charge
for fabrication, processing, or further assembly performed at a Texas location is a separate taxable
transaction, sourced under Subsection (c) of this section. This subsection preserves the operative rule
of former Tax Code Section 321.205(d).
(e) Use tax; destination principle. If a taxable good is purchased under a
transaction sourced outside this state, or under a transaction that is not otherwise subject to the tax
under this chapter, and the good is thereafter first stored, used, or consumed at a Texas location, the
use of the good at that Texas location is subject to the tax under this chapter as a use-tax
transaction, sourced to the Texas location at which the good is first stored, used, or consumed after
the intrastate or interstate transit has ceased. A taxable good delivered to a point in this state is
presumed to be for storage, use, or consumption at that point until the contrary is established. This
subsection preserves the operative use-tax destination principle of former Tax Code Sections 321.205(a)
through (c) and 323.205(a) through (c).
(f) Non-Texas sourced transactions. A transaction that is not sourced to a
location in this state under this section is not subject to the tax imposed by this chapter. A taxable
transaction sourced to a location in this state under this section, where the seller is a remote seller
or foreign entity, remains subject to the tax imposed by this chapter to the extent the seller has nexus
with this state under the economic nexus provisions of Article VIII, Section 1-q, of the Texas
Constitution, and the TPTRP Remote Seller and Foreign Entity Act.
(g) Sourcing distinct from nexus. Sourcing under this section governs the
applicable combined rate and the distribution of the local share of the tax; it does not by itself
determine nexus, registration, or collection obligation, which are governed by the TPTRP Remote Seller
and Foreign Entity Act.
(h) Wellhead, well-site, and place-of-business sourcing preserved. The
place-of-business sourcing rules provided by Article VIII, Section 1-p(i), of the Texas Constitution,
for a seller with a registered wellhead, well site, gathering facility, production facility, retail
location, office, manufacturing plant, or warehouse in this state, and the corresponding rule for a
facility operator that is not a party to the underlying sale, are administered under Article 7 of this
Act for purposes of local-share distribution and are not altered by this section. Where those
constitutional rules apply, they are treated as Category A sourcing for purposes of this section.
(i) Anti-avoidance. If the comptroller determines that a seller's
designated place of business, or a purported point of order receipt, order fulfillment, or possession
transfer, is arranged principally to avoid the tax imposed by this chapter, to allocate the local share
of the tax to a lower-rate jurisdiction, or to rebate a portion of the tax to a contracting business,
the comptroller may, by written determination and subject to the dispute process of Article 10 of this
Act, source the affected transactions to the Texas location the comptroller determines to be the true
point of sale or point of receipt, as applicable. This subsection preserves the operative anti-avoidance
rule of former Tax Code Section 321.203(m).
(j) Sourcing rules for occasional sales. An occasional sale that is not a
transaction subject to the tax under Section 151A.211 is not sourced under this section and is not
subject to the collection, remittance, or reporting requirements of this chapter.
(k) Constitutional basis. This section implements Article VIII, Sections
1-p(a), (b), (f), (i), and 1-q, of the Texas Constitution.
Sec. 151A.207. SOURCING OF DIGITAL AND REMOTE TRANSACTIONS.
(a) Scope. This section provides operational sourcing rules for cloud
computing services, streaming services, downloadable and cloud-delivered software, digital
subscriptions, data processing services, information services, software-as-a-service,
platform-as-a-service, infrastructure-as-a-service, and other digital goods or digital services sourced
under Section 151A.206(c)(8). This section applies whether the seller is located in this state, in
another state of the United States, or in a foreign country, and whether the purchaser is an individual,
a single-location business, or a multi-location business.
(b) Individual purchasers. For a purchaser that is an individual, the
sourced location is:
(1) the individual's Texas primary-use location, if known to the seller from the
ordinary course of business, including a service address, installation address, or address of use
associated with the account; or
(2) if a primary-use location is not known to the seller, the individual's Texas
billing address of record with the seller.
(c) Single-location business purchasers. For a business purchaser that uses
the digital good or digital service exclusively at a single Texas location, the sourced location is that
Texas location, as certified by the purchaser to the seller under Subsection (e) of this section.
(d) Multi-location business purchasers — per-seat, per-location
apportionment. For a business purchaser whose users, seats, licenses, or devices associated with a
digital good or digital service are located at more than one Texas location, at locations both inside
and outside this state, or both:
(1) the seller shall apportion the transaction among the purchaser's Texas
locations, and exclude the portion attributable to locations outside this state, using a pro rata
allocation based on the number of the purchaser's users, seats, licenses, or devices associated
with each location, as certified by the purchaser to the seller under Subsection (e) of this section;
the portion of the transaction attributable to non-Texas locations is not sourced to this state and is
not subject to the tax imposed by this chapter, without prejudice to the taxing authority of any other
state or foreign jurisdiction over that portion;
(2) Out-of-state headquartered purchasers with Texas end users. Where the
business purchaser's principal place of business, headquarters, or corporate billing address is
located outside this state, but the purchaser has users, seats, licenses, or devices located at one or
more Texas locations, the transaction remains sourced to this state under this section to the extent of
the Texas users, seats, licenses, or devices, apportioned as provided by Subdivision (1) of this
subsection. The out-of-state location of the purchaser's headquarters or billing address does not
defeat the taxability of the Texas portion of the transaction, and the seller shall collect and remit
the tax under this chapter on the Texas-apportioned portion of the transaction consistent with Article
VIII, Section 1-q, of the Texas Constitution, and the TPTRP Remote Seller and Foreign Entity Act;
(3) Fair-value fallback. If a user-count, seat-count, license-count, or
device-count method is not administrable for the transaction, the seller shall apportion the transaction
among the purchaser's Texas locations, and exclude the non-Texas portion, using a fair-value method
established by the comptroller by rule that reasonably approximates the location at which the economic
benefit of the digital good or digital service is received. A fair-value method may include allocation
by relative headcount, relative payroll, relative square footage, relative network traffic, or another
reasonable proxy;
(4) Comptroller rulemaking. The comptroller shall adopt rules establishing
the fair-value method under Subdivision (3) of this subsection, and may adopt rules further specifying
the manner in which a seller applies the per-seat, per-location apportionment method under Subdivision
(1). Rules under this subdivision shall be designed to minimize compliance burden for multi-location
purchasers while preserving accurate distribution of the local share among Texas taxing entities under
Article 7 of this Act.
(e) Purchaser certification. A business purchaser shall provide the seller,
at the time of purchase or renewal and thereafter on request, a certification of the number and location
of its users, seats, licenses, or devices sufficient to support the sourcing determination required by
this section. The certification may be provided in the form and manner the comptroller specifies by
rule, which may include an electronic certification integrated with the Texas Sales and Use Tax Portal
under Section 151A.802.
(1) A seller that sources a transaction in reasonable reliance on a purchaser's
certification is not liable for an underpayment of tax resulting from an inaccurate certification,
without prejudice to the comptroller's right to assess the underpaid tax against the purchaser as
the person receiving the benefit of the transaction.
(2) A purchaser that provides an inaccurate certification with the intent to reduce
the tax imposed on the transaction, or with reckless disregard for the accuracy of the certification, is
liable for the underpaid tax, applicable penalties, and interest, and may be subject to enforcement
action by the comptroller under Article 10 of this Act.
(3) A purchaser shall update its certification not less than annually, and promptly
upon a material change in the number or location of its users, seats, licenses, or devices.
(f) Interaction with Section 151A.206. A purchaser's Texas sourced
location under this section is a location described by Section 151A.206(c)(8) and is subject to the same
treatment for rate and local-share distribution purposes as any other sourced location under this
article. Where a digital good or digital service is bundled with a tangible good or a non-digital
service, the transaction is sourced under the rule applicable to the predominant component of the
bundle, as the comptroller may specify by rule; where components can be reasonably separated, each
component is sourced under the rule applicable to that component.
(g) Constitutional basis. This section implements Article VIII, Sections
1-p(b), (f), and 1-q, of the Texas Constitution.
Sec. 151A.208. AGENT PASS-THROUGH; NO PYRAMIDING FROM AGENT TRANSACTIONS.
(a) In an agent transaction under Section 151A.202, the tax imposed by this chapter
is imposed once on the value received by the ultimate purchaser. The agent's collection,
remittance, or facilitation role does not itself create an additional taxable transaction on the
underlying good or service.
(b) Where the agent is a marketplace, platform, or other intermediary effecting a
taxable transaction between a third-party seller and the ultimate purchaser, the tax is imposed on the
ultimate purchaser at the total combined rate applicable at the location to which the transaction is
sourced under Section 151A.206, and is collected by the agent for remittance to the comptroller as
provided by Article 7 of this Act.
(c) The agent's own compensation, commission, or fee for facilitating the
transaction is not a component of, and is not separately added to, the taxable amount of the underlying
transaction. Where the agent separately renders its own labor, product, or service to the principal,
that separate rendition is a distinct taxable transaction under Section 151A.202(c)(2), taxed once,
sourced under Section 151A.206, without regard to the tax already imposed on the underlying pass-through
transaction under Section 151A.202(c)(1).
(d) This section preserves the constitutional principle, stated in Article VIII,
Section 1-p(c), of the Texas Constitution, that the tax follows the underlying economic value to the
ultimate purchaser and that no single dollar of value subject to this chapter is taxed more than once.
The comptroller may not adopt a rule, and the Legislature may not enact a general law, that imposes tax
on both the agent's pass-through of a principal's purchase and the same underlying value when
received by the principal.
(e) This section implements Article VIII, Section 1-p(c), of the Texas
Constitution.
SECTION 3.02.
Cross-references. This article is administered together with:
(1) Article 2 of this Act (Imposition of the Tax; Rate Structure), which establishes
the rate applied to a transaction sourced under Section 151A.206;
(2) Article 7 of this Act (Collection, Allocation, and Distribution), which governs
remittance and distribution of tax collected under this article, including the local-share distribution
rules for wellhead, well-site, and other place-of-business sourcing under Article VIII, Section 1-p(i);
(3) Article 8 of this Act (Permit-Level Residential-Versus-Commercial Accounting),
under which the exemptions established by the TPTRP Texas Living Exemption Set Act are administered at
the permit level;
(4) the TPTRP Remote Seller and Foreign Entity Act, which governs economic nexus,
registration, and market access for a seller sourcing a transaction to this state under Section
151A.206, and which defines "Internet access service" for purposes of Section 151A.204; and
(5) the TPTRP Texas Living Exemption Set Act, which establishes the only exemptions
to the tax base beyond the Definition Filter, the Internet Tax Freedom Act carve-out, and the federal
government transaction exclusion, as provided by Section 151A.205(d).
Sec. 151A.209. INTERSTATE SHIPMENTS AND EXPORTS.
(a) Purpose. This section implements the point-of-possession rule of
Article VIII, Section 1-p(b), of the Texas Constitution as applied to shipments and deliveries outside
this state, and prescribes the documentation a Texas seller must maintain to establish that a
transaction is not subject to the tax imposed by this chapter because the buyer takes possession outside
this state.
(b) Shipments outside this state by the seller. A sale of a taxable good
that, under the sales contract, is shipped or delivered to a point outside this state is not a
transaction subject to the tax imposed by this chapter if the shipment or delivery is made by the seller
through:
(1) the seller's own facilities to a location outside this state;
(2) delivery by the seller to a licensed and certificated common or contract carrier
for shipment to a consignee at a point outside this state; or
(3) delivery by the seller to a forwarding agent for shipment to a location in
another state, territory, or possession of the United States, or to a foreign country.
(c) Documentation. The seller shall maintain documentary proof of shipment
or delivery outside this state sufficient to establish that the buyer took possession of the good
outside this state, including any of the following:
(1) a bill of lading issued by a licensed and certificated carrier identifying the
seller as consignor and a delivery point outside this state;
(2) a shipping invoice or freight bill identifying the good, the delivery
destination, and the delivery date;
(3) a postal, package-carrier, or freight-forwarder receipt evidencing dispatch and
delivery outside this state; or
(4) a customs broker export certification for a foreign destination, in the form and
manner the comptroller specifies by rule.
Documentation must be retained for not less than four years and produced on request
of the comptroller. The comptroller may by rule specify additional forms of documentation that satisfy
this subsection.
(d) Pickup or receipt in this state. A taxable good picked up, received, or
otherwise taken into possession by the buyer at a location in this state is a transaction subject to the
tax imposed by this chapter, sourced under Section 151A.206(a)(1) or the applicable subdivision of
Section 151A.206(a), regardless of the buyer's domicile, residence, citizenship, or subsequent
transportation of the good to a location outside this state. No refund of tax collected under this
subsection is required by this chapter, and none is authorized, when a buyer who takes possession of a
good in this state thereafter transports, ships, or exports the good outside this state. This subsection
applies to buyers who are residents of this state, residents of another state of the United States,
residents of a United States territory or possession, and residents or citizens of a foreign country,
without distinction.
(e) Services performed across state lines. A service performed for use
outside this state is not a transaction subject to the tax imposed by this chapter. A service performed
for use both within and outside this state is a transaction subject to the tax imposed by this chapter
only to the extent the service is used within this state, apportioned under Section 151A.207 and rules
the comptroller adopts. A service performed outside this state for use within this state, and first
received by the buyer at a location in this state, is a transaction subject to the tax imposed by this
chapter, sourced under Section 151A.206(a)(3) or (a)(4).
(f) Common carrier purchases for out-of-state use. The sale of tangible
personal property to a common carrier is not a transaction subject to the tax imposed by this chapter if
the property is shipped to a point outside this state under a bill of lading using the purchasing
carrier's own facilities and is actually transported to and used at that out-of-state destination
in the conduct of the carrier's business as a common carrier.
(g) Import-Export Clause preservation. Nothing in this chapter authorizes
the imposition of the tax on a transaction protected from state taxation by the Import-Export Clause of
the United States Constitution, Article I, Section 10, Clause 2, or by any other applicable federal law.
A transaction in which a good retains its character as an import or export at the time of the taxable
event, within the meaning of that Clause and applicable federal law, is not a transaction subject to the
tax imposed by this chapter.
(h) No refund for domicile-based or post-purchase-export claims. Except as
required by federal law, this chapter does not authorize a refund of tax lawfully collected under
Subsection (d) or Subsection (e) on the basis of the buyer's out-of-state or foreign domicile,
residence, or citizenship, or on the basis that the buyer transported, shipped, or exported the good or
service outside this state after taking possession of it in this state. A federal-law-required refund,
including without limitation a refund required by a treaty of the United States affecting foreign
diplomatic personnel, is administered in the form and manner the comptroller specifies by rule.
(i) No effect on Article VIII, Section 1-q, obligations. Nothing in this
section limits the economic-nexus, registration, or collection obligations of a remote seller or a
foreign entity under Article VIII, Section 1-q, of the Texas Constitution, or under the TPTRP Remote
Seller and Foreign Entity Act. Where a remote seller or a foreign entity makes a sale to a buyer who
takes possession of the good or first receives the service at a location in this state, the sale remains
subject to the tax imposed by this chapter and to the collection obligation established by that Section
and that Act, without regard to the seller's domicile.
(j) Application to Article VIII, Section 1-p(b), inbound categories.
Subdivisions (b)(3), (b)(4), and (b)(5) of Article VIII, Section 1-p, of the Texas Constitution, and the
corresponding subdivisions of Section 151A.201(b) of this chapter, continue to govern the taxability of
transactions in which a Texas buyer receives the good or service, or the economic benefit of the
transaction, in this state. This section does not narrow, limit, or modify those inbound-transaction
categories.
This section implements Article VIII, Sections 1-p(a), (b), (f), and (i), of the
Texas Constitution, and preserves the point-of-possession architecture of former Tax Code Section
151.330 as applied to the sales and use tax imposed by this chapter.
Sec. 151A.210. MOTOR VEHICLE, BOAT, AIRCRAFT, AND MANUFACTURED HOME SALES — CONFORMING SOURCING.
(a) Purpose. This section confirms that the sourcing rules of Section
151A.206 apply to a sale of a motor vehicle, boat, aircraft, or manufactured home to the same extent,
and under the same Category A or Category B principles, as they apply to any other sale of a taxable
good under this chapter. This section is intended to end the pre-TPTRP disparity under which motor
vehicle, boat, aircraft, and manufactured home sales were subject to separate sales-tax regimes under
Chapter 152, Tax Code (Motor Vehicle Sales, Use, and Rental Taxes), Chapter 160, Tax Code (Taxes on
Sales and Use of Boats and Boat Motors), Chapter 161, Tax Code (Manufactured Housing Sales and Use Tax),
or similar chapters, at rates and under sourcing rules different from the general sales and use tax
under former Chapter 151.
(b) Uniform application of Section 151A.206. A sale of a motor vehicle,
boat, aircraft, or manufactured home to which this chapter applies is:
(1) sourced under Section 151A.206(b) (Category A — Point-of-Sale Sourcing) if the
sale is transacted in person at a Texas dealer's place of business, whether the buyer takes
possession at the dealer's location, at another Texas place of business of the dealer, or under a
Section 151A.206(b)(3) off-site delivery;
(2) sourced under Section 151A.206(c) (Category B — Point-of-Receipt Sourcing) if the
sale is transacted remotely and, under the sales contract, the vehicle, boat, aircraft, or manufactured
home is delivered to a Texas purchaser, whether by the seller, by a common carrier acting for the
seller, or by a marketplace facilitator; and
(3) subject to the point-of-possession rule of Article VIII, Section 1-p(b), of the
Texas Constitution, and to Section 151A.209 of this chapter, where the buyer takes possession outside
this state.
(c) Titling, registration, and administration. Nothing in this section, and
nothing in this chapter, affects:
(1) the titling and registration functions of the county tax assessor-collector under
Chapter 501, Transportation Code, and other applicable law for a motor vehicle;
(2) the certificate of title functions of the Texas Parks and Wildlife Department
under Chapter 31, Parks and Wildlife Code, for a boat and outboard motor;
(3) the registration and airworthiness functions of the Federal Aviation
Administration and the Texas Department of Transportation, Aviation Division, for an aircraft; or
(4) the manufactured housing certification, installation, and consumer-protection
functions of the Texas Department of Housing and Community Affairs under Chapter 1201, Occupations Code,
for a manufactured home.
The sales tax component of the transaction is imposed, collected, sourced, and
remitted under this chapter; the titling, registration, and administrative functions continue to operate
under their respective governing statutes.
(d) Conforming amendments and repealers. Chapter 152, Tax Code, Chapter
160, Tax Code, Chapter 161, Tax Code, and any conforming provision of the Transportation Code, the Parks
and Wildlife Code, the Occupations Code, or the Local Government Code, are conformed to this chapter by
the TPTRP Tax Abolition and Conformity Act, which:
(1) repeals the separate sales-tax rate structures of those chapters and directs that
the sales tax component of a motor vehicle, boat, aircraft, or manufactured home sale is imposed at the
applicable combined rate under Article 2 of this Act, as sourced under Section 151A.206;
(2) preserves the Standard Presumptive Value ("SPV") mechanism of former Section
152.0412, Tax Code, and any comparable mechanism for boats or manufactured homes, as an administrative
tool for determining the taxable amount of a private-party or non-dealer transaction that is not exempt
under Section 151A.211 (Occasional Sales); and
(3) preserves the seller-financed sales, dealer-only, and title-transfer
administrative rules of Chapter 152 to the extent they are compatible with the imposition of the tax
under this chapter and with the sourcing rules of Section 151A.206.
(e) Constitutional basis. This section implements Article VIII, Sections
1-p and 1-q, of the Texas Constitution.
Sec. 151A.211. OCCASIONAL SALES; ENGAGED IN BUSINESS; ANTI-AVOIDANCE.
(a) Purpose. This section preserves the occasional-sale exemption of former
Tax Code Section 151.304, adapted to the tax imposed by this chapter, so that a private-party sale,
garage sale, estate sale, or other non-business transaction between individuals is not a taxable
transaction under this chapter, while ensuring that a person whose sales activity crosses the threshold
of engagement in business is required to obtain a permit under Article 7 of this Act, collect and remit
the tax under this chapter, and is subject to audit and back-tax assessment for prior periods of
business-scale activity.
(b) Definitions. In this section:
(1) "Occasional sale" means a sale of a taxable good or service by a person who:
(A) is not engaged in the business of selling taxable goods or services of the
kind sold in the transaction, as determined under Subsection (d) of this section; and
(B) does not hold, and is not required to hold, a permit issued under Article 7 of
this Act.
(2) "Engaged in business" has the meaning provided by Subsection (d) of this
section.
(3) "Gross sales" means the total gross receipts from all sales of taxable goods and
services made by a person in this state during a calendar year, without deduction for cost of goods
sold, returns, allowances, or expenses.
(c) Occasional sale exemption. An occasional sale is not a transaction
subject to the tax imposed by this chapter, is not sourced under Section 151A.206, and is not subject to
the collection, remittance, permitting, or reporting requirements of this chapter. Without limitation,
and subject to Subsection (d) of this section, the following sales are ordinarily occasional sales:
(1) a garage sale, yard sale, estate sale, or similar sale of used household goods by
an individual or a household;
(2) a private-party sale by an individual of a used consumer good, including a used
motor vehicle, boat, aircraft, or manufactured home, to another individual, where the sale is not made
in the course of a trade or business;
(3) a one-time or infrequent sale by an individual of a personally owned collectible,
hobby-produced good, or similar item, where the sale is not made in the course of a trade or business;
and
(4) an inheritance-related sale of the personal property of a decedent by an
executor, administrator, or heir, where the sale is not made in the course of a trade or business.
(d) Engaged-in-business threshold; multi-factor test. A person is engaged
in the business of selling taxable goods or services, and is not entitled to the occasional-sale
exemption under this section, if:
(1) Automatic safe harbor — below threshold. The person's gross sales
in this state during the current calendar year, and in each of the two preceding calendar years, do not
exceed $5,000, in which case the person is conclusively presumed not to be engaged in business under
this section, without regard to the factors in Subdivision (2), unless the comptroller establishes by
clear and convincing evidence that the person's activity constitutes a deliberate structuring of
transactions to remain below the safe-harbor threshold while conducting a de facto business.
(2) Multi-factor test — above threshold. If the person's gross sales in
this state exceed \$5,000 in the current calendar year or exceeded $5,000 in either of the two preceding
calendar years, the person is engaged in business if a preponderance of the following factors, weighed
together, indicates business activity rather than occasional activity:
(A) the regularity and frequency of the person's sales, including whether
sales occur on a recurring basis, at scheduled intervals, or at a marketplace or platform on an ongoing
basis;
(B) the person's intent to profit from the sales activity, as evidenced by
pricing above cost of acquisition or production, marketing or advertising expenditures, or business-like
recordkeeping;
(C) the person's holding out to the public as a seller, including through a
business name, storefront, website, social media profile identifying the person as a seller, marketplace
seller listing, or business licensing;
(D) the volume of the person's sales relative to the median volume of
comparable occasional sellers, as the comptroller may specify by rule;
(E) the person's engagement of employees, independent contractors, or agents
to assist with the sales activity;
(F) the person's holding of business licenses, trade names, permits, or
registrations related to the sales activity in any jurisdiction; and
(G) other factors the comptroller specifies by rule that reasonably distinguish
business activity from occasional activity.
(3) Aggregation of related persons. The comptroller may aggregate the sales
of related persons, including spouses, minor children, single-member business entities, and closely held
entities under common control, for purposes of the safe-harbor threshold under Subdivision (1) and the
multi-factor test under Subdivision (2), if the comptroller determines that the sales activity is
conducted in coordination among the related persons.
(e) Reclassification and enforcement. If the comptroller determines,
following an audit or investigation conducted under Article 10 of this Act, that a person claiming the
occasional-sale exemption is in fact engaged in business under Subsection (d) of this section:
(1) the comptroller shall notify the person of the reclassification and of the date,
as determined by the comptroller from the evidence, on which the person's activity crossed the
engaged-in-business threshold;
(2) the person shall obtain a permit under Article 7 of this Act effective as of the
reclassification date, and shall register through the Texas Sales and Use Tax Portal under Section
151A.802;
(3) the comptroller may assess tax under this chapter on the person's sales made
from the reclassification date forward, together with applicable penalties and interest, as provided by
Article 10 of this Act, subject to the ordinary statute of limitations for assessment of the tax and
subject to the dispute process of Article 10;
(4) the comptroller may not assess tax on sales made before the reclassification date
if the person acted in good faith, maintained reasonable records, and did not deliberately structure
transactions to evade the tax; and
(5) if the comptroller determines by clear and convincing evidence that the person
deliberately structured transactions to evade the tax or misrepresented the character of the activity to
remain within the occasional-sale exemption, the comptroller may assess tax, penalties, and interest on
all business-scale sales made during the applicable statute-of-limitations period, without regard to the
reclassification date, and may refer the matter for civil or criminal enforcement as provided by other
law.
(f) Preservation of prior-law precedent. In administering this section, the
comptroller may consider, as persuasive but non-binding authority:
(1) rules, opinions, and administrative guidance issued under former Tax Code Section
151.304 and 34 Texas Administrative Code Section 3.286;
(2) decisions of the State Office of Administrative Hearings and the Texas courts
interpreting "engaged in business" and "occasional sale" under former Tax Code Chapter 151 and Chapter
152; and
(3) analogous federal authority regarding the distinction between a hobby and a trade
or business under Section 183, Internal Revenue Code, to the extent consistent with the purposes of this
section.
(g) No effect on other exemptions. Nothing in this section limits any other
exemption or exclusion from the tax under this chapter, including the exemptions established by the
TPTRP Texas Living Exemption Set Act and the exclusions established by the Definition Filter under
Section 151A.203.
(h) Constitutional basis. This section implements Article VIII, Section
1-p, of the Texas Constitution, including the Definition Filter, and Article VIII, Section 9.01(e), of
the Texas Constitution.
SECTION 3.03.
Constitutional basis. This article implements Article VIII, Section 1-p, of the Texas
Constitution, in its entirety, including Subsections (a) through (i) of that section. No provision of
this article creates an exemption, exclusion, or special rate treatment not authorized by Article VIII,
Section 1-p, or another provision of the Texas Constitution adopted as part of the Texas Property Tax
Replacement Plan.
ARTICLE 4. RATE GOVERNANCE — SUB-RATES, VOTER APPROVAL, BUDGET CAPS, AND ACTUAL NEED RATIO
[Enacts Sections 151A.301 through 151A.313, Tax Code, as part of new Subchapter
D, Chapter 151-A, Tax Code.]
Sec. 151A.301. M&O RATE AND I&S RATE; TOTAL RATE.
(a) The total rate of every taxing entity consists of the entity's Maintenance
and Operations rate and the entity's Interest and Sinking rate, as those terms are defined by
Article VIII, Section 1-n(a), of the Texas Constitution. The sum of the two components may not exceed
the entity's Constitutional Cap Rate.
(b) The Maintenance and Operations rate ("M&O rate") of a taxing entity is set
by the governing body of the entity, within the limits established by this article. The M&O rate is
reduced under Section 151A.302 of this code, increased only under Section 151A.303 of this code, and is
otherwise governed by this article.
(c) The Interest and Sinking rate ("I&S rate") of a taxing entity — the entity's
Bond Service Levy — is not set by the governing body. The I&S rate is certified annually by the
comptroller under Article 7 of this Act (Sec. 151A.604) as implementing Article VIII, Section 1-n(h), of
the Texas Constitution, and is not subject to the M&O rate rules of this article. The I&S rate,
and every distribution attributable to it, is subject to the Bond Service Levy inviolability rule at
Section 151A.607 of this code, and no provision of this article may be construed to authorize the
withholding, suspension, offset, delay, or diminishment of the Bond Service Levy for any reason.
(d) This section implements Article VIII, Section 1-n(c)(1), of the Texas
Constitution.
Sec. 151A.302. REDUCTION OF M&O RATE BY GOVERNING BODY.
(a) The governing body of a taxing entity may reduce the entity's M&O rate
at any time by action of the governing body and without a voter election.
(b) A reduction under this section is effective only if the resulting rate is
sufficient to generate projected revenues equal to or greater than the entity's adopted annual
Maintenance and Operations budget plus a five percent minimum operating buffer, as:
(1) certified by the entity's chief financial officer; and
(2) verified by the comptroller.
(c) A governing body may not reduce its M&O rate below the certified floor
described by Subsection (b) of this section without first reducing its adopted Maintenance and
Operations budget to a level the lower rate can support, as verified by the comptroller.
(d) A reduction of the M&O rate under this section, once effective, may not be
reversed by action of the governing body alone. Restoration of a prior or higher rate requires voter
approval as provided by Section 151A.303 of this code.
(e) A reduction of the M&O rate under this section is a voluntary reduction and,
together with a voter-approved increase under Section 151A.303 of this code, is a Qualified Rate Change
Event as defined by Article VIII, Section 1-n(a)(9), of the Texas Constitution. An automatic rate change
resulting from bond retirement, from Interest and Sinking over-collection, or from a mandatory Actual
Need Ratio reduction under Section 151A.311 of this code is not a Qualified Rate Change Event and does
not reset any baseline established by this article.
(f) A reduction under this section does not affect the I&S rate or any
distribution of the Bond Service Levy, which continues without interruption under Section 151A.607 of
this code.
(g) This section and Section 151A.303 of this code implement the asymmetric
rate-control design stated by Section 151A.312 of this code and by Article VIII, Section 1-n(j), of the
Texas Constitution: a rate may be lowered by the governing body, but may be raised only by the voters.
This section implements Article VIII, Section 1-n(c)(4), (5), (6), and (7), of the Texas Constitution.
Sec. 151A.303. INCREASE OF M&O RATE; VOTER APPROVAL REQUIRED.
(a) No taxing entity, including the State of Texas, may increase its M&O rate
above its current rate for any reason without prior approval by a majority of the qualified voters of
the affected jurisdiction voting at a lawfully conducted election held on a uniform election date, as
provided by Section 151A.304 of this code.
(b) No increase approved under this section may bring the entity's total rate
above the Constitutional Cap Rate for its tier.
(c) If a rate increase election fails, the governing body shall immediately initiate
a Mandatory Expenditure Reduction Plan as required by Section 151A.306 of this code, and the
consequences stated by Section 151A.305 of this code attach.
(d) This section applies to the Legislature of the State of Texas with respect to
the Tier 1 M&O rate in the same manner as it applies to every other governing body subject to this
article. No branch or agency of state government may increase the effective Tier 1 tax burden on Texas
citizens by any mechanism other than a successful statewide voter election. The Legislature may not
raise the Tier 1 rate by appropriations rider, fee reclassification, administrative reinterpretation, or
any other mechanism that does not constitute a successful statewide voter election under this section.
(e) An increase approved under this section does not authorize any change to the I&S
rate. The I&S rate is governed exclusively by Section 151A.604 of this code and Article VIII,
Section 1-n(h), of the Texas Constitution.
(f) This section implements Article VIII, Section 1-n(d)(1), (3), and (5), of the
Texas Constitution.
Sec. 151A.304. RATE INCREASE ELECTION PROCEDURES.
(a) An election to increase a taxing entity's M&O rate under Section
151A.303 of this code shall be held on a uniform election date and shall state on the ballot:
(1) the specific new M&O rate sought;
(2) the projected annual revenue at that rate, based on the comptroller's most
recent certified final tax base for the jurisdiction; and
(3) the specific purpose or budgetary need the additional revenue is intended to
fund.
(b) No increase submitted under this section may propose, and no increase approved
under this section may result in, a total rate in excess of the entity's Constitutional Cap Rate.
(c) A taxing entity may submit a proposed rate increase to its voters at each
uniform election date, subject to Section 151A.305 of this code.
(d) This section implements Article VIII, Section 1-n(d)(2) and (3), of the Texas
Constitution.
Sec. 151A.305. REJECTION OF RATE INCREASE; BINDING EFFECT; TWO-YEAR MORATORIUM.
(a) The rejection by the voters of a proposed rate increase is a determination by
the taxpayers of the jurisdiction that the entity shall operate within the revenue its existing rate
produces.
(b) On rejection, the governing body shall adopt and execute a Mandatory Expenditure
Reduction Plan under Section 151A.306 of this code.
(c) On rejection, the entity is ineligible for assistance of any kind from the TPTRP
Transition Fund, the TPTRP Transition Board, the TPTRP Transition Monitoring Division, or the economic
stabilization fund, until the entity's voters approve an increase. This subsection implements the
Assistance Eligibility Standard referenced at Section 490.032, Government Code.
(d) No officer, agency, board, or fund of this state may supply, offset, advance, or
otherwise make good the revenue the voters declined to authorize. This subsection does not affect the
entity's Bond Service Levy, which is serviced and distributed without regard to the entity's
assistance eligibility under Section 151A.607 of this code.
(e) A taxing entity may submit a proposed rate increase to its voters at each
uniform election date. If the voters reject a proposed rate increase at two elections, the entity may
not submit another proposed rate increase until the second anniversary of the date the results of the
second election were canvassed.
(f) The limitation of Subsection (e) of this section does not suspend, delay, or
excuse:
(1) any Mandatory Expenditure Reduction Plan obligation under Section 151A.306 of
this code;
(2) any mandatory rate reduction under Section 151A.311 of this code; or
(3) any other duty imposed by this article.
(g) This section implements Article VIII, Section 1-n(d)(6) and (7), of the Texas
Constitution.
Sec. 151A.306. MANDATORY EXPENDITURE REDUCTION PLAN.
(a) When an election to increase the M&O rate of a taxing entity fails, the
governing body shall adopt and file with the comptroller a Mandatory Expenditure Reduction Plan ("the
Plan") not later than the 90th day after the date the election results are certified.
(b) The Plan shall:
(1) identify all budgeted expenditures exceeding the entity's projected revenue
ceiling at the current M&O rate, inclusive of the five percent minimum operating buffer; and
(2) specify the reductions by department or function required to bring total
Maintenance and Operations expenditures within that ceiling within one fiscal year of the Plan's
adoption.
(c) The Plan may not:
(1) propose a subsequent voter election as a substitute for a required reduction;
(2) defer a required reduction beyond the current fiscal year, except on written
justification approved by the comptroller; or
(3) apply bond debt service funds, any fund established under the TPTRP Fund System
Act implementing Article VIII, Section 1-s, of the Texas Constitution, or any waterfall distribution
under the provisions implementing Article VIII, Section 1-t, of the Texas Constitution, to Maintenance
and Operations expenses.
(d) The Plan shall be adopted by recorded vote of the governing body and published
on the entity's official website not later than the date it is filed with the comptroller.
(e) The comptroller shall:
(1) verify the sufficiency of each filed Plan;
(2) publish all filed Plans on the Local Government Transparency module of the Texas
Sales and Use Tax Portal established under Section 490.073, Government Code, not later than the 10th day
after receipt;
(3) monitor implementation compliance quarterly; and
(4) on a finding of noncompliance, withhold the Maintenance and Operations portion of
the entity's quarterly distribution under Article 7 of this Act.
(f) The comptroller may never withhold, suspend, offset, delay, or escrow the Bond
Service Levy portion of a distribution under Subsection (e)(4) of this section or for any other reason
arising under this section. The Bond Service Levy continues to flow to the entity's I&S Reserve
Fund without interruption, as provided by Section 151A.607 of this code.
(g) The expenditure reduction sequence established by the provisions implementing
Article VIII, Section 1-s(j), of the Texas Constitution governs the order in which reductions under this
section are made, including the constitutional floor below which first responder services, court and
justice services, and essential utility services may never be reduced.
(h) This section implements Article VIII, Section 1-n(e)(1) through (6), of the
Texas Constitution.
Sec. 151A.307. TOTAL BUDGET CAP.
(a) Every taxing entity shall adopt its annual Maintenance and Operations budget in
accordance with the budgeting sequence established by this Act.
(b) No taxing entity may adopt an annual Maintenance and Operations budget that
exceeds the entity's Total Budget Cap. The Total Budget Cap is the lesser of:
(1) the entity's Available Base Revenue, as defined by Article VIII, Section
1-n(a)(8), of the Texas Constitution; and
(2) the entity's Allowed Budget Maximum, as defined by Article VIII, Section
1-n(a)(10), of the Texas Constitution.
(c) No budget adopted in excess of the Total Budget Cap takes effect, and no such
budget may be filed.
(d) This section does not limit, condition, or affect the I&S rate, the Bond
Service Levy, or any bond debt service payment, which are governed exclusively by Section 151A.604 and
Section 151A.607 of this code. Bond debt service is not part of the Maintenance and Operations budget
subject to the Total Budget Cap.
(e) This section implements Article VIII, Section 1-n(f)(1), of the Texas
Constitution.
Sec. 151A.308. CUMULATIVE BUDGET GROWTH CAP.
(a) The Maintenance and Operations budget of a taxing entity may not grow, measured
from the entity's most recent Qualified Rate Change Event, by a percentage exceeding the entity's
Cumulative Budget Growth Cap.
(b) The Cumulative Budget Growth Cap of an entity is one-half of the cumulative
growth in the entity's Maintenance and Operations revenue, measured over the same period — that is,
from the entity's most recent Qualified Rate Change Event to the current fiscal period. This is the
Allowed Budget Growth Rate defined by Article VIII, Section 1-n(a)(11), of the Texas Constitution.
(c) When a governing body voluntarily reduces its rate under Section 151A.302 of
this code, the budget base at the new Qualified Rate Change Event is the lesser of:
(1) the entity's actual adopted Maintenance and Operations budget in the year of
the reduction; or
(2) the Allowed Budget Maximum that would have applied under the prior cumulative
period.
(d) A voluntary rate reduction may not be used to reset the baseline described by
Subsection (c) of this section to a budget in excess of the amount the Cumulative Budget Growth Cap
would otherwise have permitted.
(e) When voters approve a rate increase under Section 151A.303 of this code, the
budget base resets to the entity's actual adopted Maintenance and Operations budget in the year of
the increase.
(f) This section implements Article VIII, Section 1-n(f)(2) and (3), of the Texas
Constitution.
Sec. 151A.309. ANNUAL BUDGET CERTIFICATION BY THE COMPTROLLER.
(a) The comptroller shall verify each taxing entity's Total Budget Cap
calculation under Section 151A.307 of this code annually and shall certify to the entity either:
(1) that the entity's proposed budget is within the cap; or
(2) the amount by which the proposed budget exceeds the cap.
(b) The comptroller shall publish all budget certifications issued under this
section on the Local Government Transparency module of the Texas Sales and Use Tax Portal established
under Section 490.073, Government Code.
(c) Any Texas citizen has standing to bring a civil action to enjoin the expenditure
of funds under a budget adopted in violation of Section 151A.307 or Section 151A.308 of this code. A
citizen who prevails in an action under this subsection shall be awarded reasonable attorney's fees
and costs.
(d) An action under Subsection (c) of this section may not enjoin, delay, or
otherwise affect the payment or distribution of the Bond Service Levy, which is inviolable under Section
151A.607 of this code regardless of any budget violation by the entity.
(e) This section implements Article VIII, Section 1-n(f)(4) and (5), of the Texas
Constitution.
Sec. 151A.310. ACTUAL NEED RATIO.
(a) At the close of each fiscal year, the chief financial officer of every taxing
entity shall calculate and certify to the comptroller the entity's Actual Need Ratio, as defined by
Article VIII, Section 1-n(a)(13), of the Texas Constitution — the quotient of the entity's actual
total cash collections from the tax imposed by this chapter during the fiscal year, combining amounts
attributable to both the Maintenance and Operations sub-rate and the Interest and Sinking sub-rate,
divided by the sum of the entity's adopted Maintenance and Operations expenditures, its Interest
and Sinking bond debt service, and the five percent minimum operating buffer, for the same fiscal year.
(a-1) For purposes of this section, "actual total cash collections" means all
revenue received by the entity attributable to the tax imposed by this chapter during the fiscal year,
including amounts attributable to both the Maintenance and Operations sub-rate and the Interest and
Sinking sub-rate, but excluding investment earnings, interfund transfers, and reserve contributions.
Over-collection on either the M&O sub-rate or the I&S sub-rate contributes to the ratio and,
together with over-collection on the other sub-rate, can trigger the mandatory rate reduction ballot
required by Section 151A.311 of this code. The Actual Need Ratio measures whether the entity's
combined tax rate under this chapter is generating revenue in excess of its actual budget need; the
ballot remedy required by Section 151A.311, when the ratio triggers, is applied only to the M&O
sub-rate, because the I&S sub-rate is separately governed by the TPTRP Bond Management Act and
Section 151A.607 of this code.
(b) The calculation required by Subsection (a) of this section may not be adjusted
for investment earnings, reserve contributions, or interfund transfers. Surplus is measured on actual
cash collections against actual cash obligations only.
(c) This section implements Article VIII, Section 1-n(g)(1), of the Texas
Constitution.
Sec. 151A.311. MANDATORY RATE REDUCTION BALLOT.
(a) When an entity's Actual Need Ratio, as certified under Section 151A.310 of
this code, equals or exceeds one and one-tenth (1.10) for two consecutive fiscal years, and the entity's
Stabilization Fund has been funded to its required Six-Month Minimum Balance under the TPTRP Fund System
Act implementing Article VIII, Section 1-s, of the Texas Constitution, the governing body shall place on
the ballot at the next scheduled election a proposition to reduce the Maintenance and Operations
sub-rate to a level that, when combined with the entity's then-current Interest and Sinking
sub-rate and applied to the entity's projected tax base for the next full fiscal year, is projected
to produce an Actual Need Ratio of not more than one and zero-hundredths (1.00). The Interest and
Sinking sub-rate is not modified by a proposition under this section and continues to be governed by
Section 151A.607 of this code and the TPTRP Bond Management Act. The projected tax base under this
subsection is the greater of (i) the entity's actual tax base for the most recently completed
fiscal year, or (ii) the average of the entity's actual tax base for the two most recently
completed fiscal years, as certified by the comptroller.
(b) The governing body may not substitute, delay, or decline to place the
proposition required by Subsection (a) of this section on the ballot.
(c) If the proposition is approved, the governing body shall execute a budget
reduction in accordance with Section 151A.306 of this code.
(d) If the proposition is rejected, the current rate holds and the two-year
measurement period described by Subsection (a) of this section resets.
(d-1) If the proposition described by Subsection (a) of this section is rejected by
the voters in two consecutive elections in which the proposition has been placed on the ballot, the
mandatory ballot requirement of Subsection (a) is suspended for the entity until the entity's next
Qualified Rate Change Event, as defined by Section 151A.302(e) of this code. During the suspension, the
entity shall continue to certify the Actual Need Ratio under Section 151A.310 of this code and to
distribute surplus under Section 151A.607 of this code and the TPTRP Fund System Act, but is not
required to place a new proposition under this section on the ballot until the suspension ends. A
Qualified Rate Change Event ends the suspension and re-arms the mandatory ballot mechanism; the two-year
measurement period restarts on the effective date of the Qualified Rate Change Event.
(e) If an entity's Stabilization Fund falls below its Six-Month Minimum
Balance, the requirement of Subsection (a) of this section is suspended until the minimum balance is
restored.
(f) A reduction required or approved under this section is not a Qualified Rate
Change Event under Section 151A.302(e) of this code and does not reset the entity's Cumulative
Budget Growth Cap baseline under Section 151A.308 of this code.
(g) This section does not modify the Interest and Sinking sub-rate or the Bond
Service Levy, which continue to be paid and distributed without interruption under Section 151A.607 of
this code and the TPTRP Bond Management Act. The I&S sub-rate contributes to the numerator of the
Actual Need Ratio under Section 151A.310(a) of this code (as part of the entity's total cash
collections) and the I&S debt service contributes to the denominator (as part of the entity's
total obligations), but any ballot remedy required by this section is applied only to the M&O
sub-rate.
(h) This section implements Article VIII, Section 1-n(g)(2) through (5), of the
Texas Constitution.
Sec. 151A.312. ASYMMETRIC RATE-CONTROL DESIGN.
(a) Any increase in a taxing entity's total M&O rate above its currently
applicable rate requires approval by a majority of the qualified voters of the entity's
jurisdiction at a regular or special election held on a uniform election date, as provided by Section
151A.303 and Section 151A.304 of this code.
(b) Any reduction in a taxing entity's total rate, including a reduction
resulting from an automatic I&S rate decrease on bond retirement or over-collection under Section
151A.605 of this code, takes effect without a voter election — upon certification by the comptroller, in
the case of an automatic I&S reduction, or upon vote of the governing body, in the case of an M&O
reduction under Section 151A.302 of this code — as applicable under this article.
(c) A governing body may not increase the rate above any level previously approved
by voters without a new voter approval election under Section 151A.303 of this code.
(d) The I&S sub-rate is governed exclusively by Section 151A.604 of this code
and is not subject to the M&O increase/decrease rules of this section.
(e) No provision of this Act may be construed to weaken, condition, delay, or create
an exception to the voter-approval requirement for a rate increase stated by this section and by Section
151A.303 of this code. No provision of this Act may be construed to require voter approval for a rate
reduction permitted by this section and by Section 151A.302 of this code.
(f) This section implements Article VIII, Section 1-n(j), of the Texas
Constitution.
Sec. 151A.313. NEW DEBT — VOTER APPROVAL REQUIRED.
(a) No taxing entity subject to this Act — including the State of Texas — may issue
or incur any form of indebtedness, obligation, bond, note, certificate of obligation, lease-purchase
agreement, or any other instrument that creates a future payment obligation payable from public revenue,
of any kind and by any name, without prior approval by a majority of the qualified voters within the
affected jurisdiction at a duly called and lawfully conducted election.
(b) Subsection (a) of this section applies to the State of Texas in the same manner
as it applies to every county, municipality, school district, and special district. The Legislature may
not create any state obligation payable from public revenue without a statewide voter election.
(c) For a taxing entity other than the State of Texas, the voter approval election
required by Subsection (a) of this section shall be held within the geographic boundaries of that entity's
jurisdiction.
(d) Before any new bond election may be held, the comptroller shall certify, as
provided by Section 151A.606 of this code, that the I&S rate necessary to service the proposed
bonds, when added to the entity's current total rate (M&O plus existing I&S), does not
exceed the Constitutional Cap Rate for the entity's tier. No bond election may be called, and no
bonds may be issued, for which the required I&S rate would cause the entity's total rate to
exceed its Constitutional Cap Rate. Under no circumstance may the total rate of any entity exceed its
Constitutional Cap Rate.
(e) Each new bond issuance approved under this section is subject to the Citizens
First Bond Sale Requirement established by Article VIII, Section 1-o(d), of the Texas Constitution, and
implemented by the TPTRP Bond Management Act.
(f) No emergency, disaster declaration, executive order, or act of the Legislature
may waive or suspend the voter approval requirement of this section.
(g) Debt approved under this section is serviced by the I&S rate certified under
Section 151A.604 of this code, and every payment on that debt is a Bond Service Levy protected without
exception by Section 151A.607 of this code.
(h) This section implements Article VIII, Section 1-n(i)(1) through (5), of the
Texas Constitution.
Sec. 151A.314. PARITY OF INDEPENDENT SCHOOL DISTRICTS.
Every provision of this article applies to an independent school district to the same
extent as to every other taxing entity, including the Total Budget Cap under Section 151A.307 of this
code, the Cumulative Budget Growth Cap under Section 151A.308 of this code, the Actual Need Ratio and
mandatory rate reduction ballot under Section 151A.310 and Section 151A.311 of this code, the Mandatory
Expenditure Reduction Plan under Section 151A.306 of this code, and the new-debt voter approval
requirement under Section 151A.313 of this code. No provision of this article may be applied to an
independent school district by reference to enrollment, average daily attendance, property valuation,
taxable property wealth, or any measure of comparative capacity. This section implements Article VIII,
Section 1-n(k)(5), of the Texas Constitution.
Cross-references
- Article 5 of this Act (Tier 4 school district funding) — Section 151A.314 of this code applies the rules of this article to independent school districts under the parity rule of Article VIII, Section 1-n(k)(5), of the Texas Constitution.
- Article 7 of this Act — Section 151A.604 of this code (I&S rate certification) and Section 151A.607 of this code (Bond Service Levy inviolability), which every withholding, suspension, or budget-enforcement provision of this article expressly preserves.
- TPTRP Fund System Act — Stabilization Fund and Six-Month Minimum Balance referenced by Section 151A.311 of this code.
- TPTRP Bond Management Act — Citizens First Bond Sale Requirement referenced by Section 151A.313 of this code.
- Section 490.032, Government Code (Assistance Eligibility Standard) — referenced by Section 151A.305 of this code.
- Section 490.073, Government Code (Texas Sales and Use Tax Portal; Local Government Transparency module) — referenced by Sections 151A.306, 151A.309, and 151A.310 of this code.
This article implements Article VIII, Sections 1-n(c)(3) through (7), 1-n(d),
1-n(e), 1-n(f), 1-n(g), 1-n(i), and 1-n(j), of the Texas Constitution.
ARTICLE 5. TIER 4 SCHOOL DISTRICT FUNDING
Sec. 151A.401. TIER 4 FUNDING; EACH DISTRICT FUNDS ITSELF.
(a) Each district funds itself from its own rate. An independent school
district is a taxing entity classified in Tier 4 and is funded from the collections generated by its own
Tier 4 rate on taxable transactions sourced to locations within the district under Article 3 of this
Act, together with its funds established under the TPTRP Fund System Act (implementing Article VIII,
Section 1-s, of the Texas Constitution) and its distributions under the surplus waterfall and Citizen
Dividend provisions of the TPTRP Fund System Act (implementing Article VIII, Section 1-t, of the Texas
Constitution).
(b) The board of trustees sets the district's own M&O rate. An
independent school district sets its own Maintenance and Operations rate in the same manner as every
other taxing entity under this chapter:
(1) the board of trustees may reduce the rate by recorded vote, as provided by
Article 4 of this Act;
(2) the rate may be increased only by approval of the district's voters at an
election conducted as provided by Article 4 of this Act; and
(3) the district's total rate may in no event exceed the Tier 4 Constitutional
Cap Rate of one and one-half percent (1.50%) established by Section 151A.102 of this code.
(c) This section implements Article VIII, Section 1-n(k)(1), of the Texas
Constitution.
Sec. 151A.402. NO ALLOCATION FORMULA; NO ENROLLMENT-BASED DISTRIBUTION.
(a) No allocation formula. Revenue is not allocated or distributed to
independent school districts by the State under any formula.
(b) No distribution may be based on or weighted by enumerated factors. No
distribution to an independent school district under this chapter may be based on or weighted by:
(1) student enrollment;
(2) average daily attendance;
(3) property valuation;
(4) taxable property wealth;
(5) district wealth per student; or
(6) any measure of comparative capacity.
(c) No per-student floor or ceiling. No per-student funding floor or
ceiling may be imposed on a district's own collections.
(d) Distribution mechanics are the same as for a county or municipality.
The comptroller distributes to each independent school district the collections sourced to that
district, in the same manner as for a county or a municipality under Article 7 of this Act. No provision
of this chapter, no rule of the comptroller, and no administrative practice may introduce, directly or
indirectly, any of the factors listed in Subsection (b) of this section into that distribution, whether
denominated an allocation, an adjustment, a weighting, a hold-harmless amount, a floor, a ceiling, a
supplement, or by any other name.
(e) Construction. This section is a rule of statutory law binding on the
Legislature, the comptroller, and every state agency and officer, and applies without exception,
notwithstanding any subsequent enactment, appropriations rider, budget execution authority, or
administrative order to the contrary. No future amendment of this chapter, and no other provision of
general law, may reintroduce a formula, weighting, or per-student floor or ceiling of the kind
prohibited by this section absent an amendment of the Texas Constitution approved by the voters of this
state.
(f) This section implements Article VIII, Section 1-n(k)(2), of the Texas
Constitution.
Sec. 151A.403. FOUNDATION SCHOOL PROGRAM SUPERSEDED.
(a) Foundation School Program superseded. The Foundation School Program
state transfer established by Chapter 48, Education Code, is superseded by this article and has no
further force or effect on and after the Implementation Date.
(b) Repeal. Chapter 48, Education Code, is repealed by the TPTRP Tax
Abolition and Conformity Act, effective on the Implementation Date, as the general law implementing
Article VIII, Section 1-n(k)(3), of the Texas Constitution.
(c) Funding source after supersession. Beginning on the Implementation
Date, the maintenance and operations of an independent school district, and the debt service on its
bonds, are funded from the district's own Tier 4 collections and from the sources described by
Section 151A.401 of this code, and not from a state entitlement measured by enrollment, attendance, or
district wealth.
(d) This section implements Article VIII, Section 1-n(k)(3), of the Texas
Constitution.
Sec. 151A.404. ELIMINATION OF RECAPTURE.
(a) Recapture superseded. The excess local revenue recapture provisions of
Chapters 48 and 49, Education Code, are superseded by this article and have no further force or effect
on and after the Implementation Date.
(b) Repeal. Chapters 48 and 49, Education Code, are repealed, to the extent
they establish recapture, equalization, or redistribution obligations, by the TPTRP Tax Abolition and
Conformity Act, effective on the Implementation Date, as the general law implementing Article VIII,
Section 1-n(k)(4), of the Texas Constitution.
(c) No remittance obligation; no successor. No independent school district
may be required to remit any portion of its collections, its fund balances, or its distributions to:
(1) the State;
(2) any other district; or
(3) any recapture, equalization, or redistribution fund.
(d) No successor mechanism, by any name. The Legislature may not enact a
successor to the provisions described by Subsection (a) of this section by any name or in any form.
(e) This section implements Article VIII, Section 1-n(k)(4), of the Texas
Constitution.
Sec. 151A.405. PARITY WITH ALL OTHER TAXING ENTITIES.
(a) General parity rule. An independent school district is subject to every
provision of Article VIII, Sections 1-e, 1-m through 1-w, and 9.01, of the Texas Constitution, and to
every corresponding provision of this chapter, to the same extent as every other taxing entity, except
where the Texas Constitution expressly makes an independent-school-district-specific rule.
(b) Itemized parity list. Without limiting Subsection (a) of this section,
an independent school district is subject to:
(1) the Total Budget Cap and the Cumulative Budget Growth Cap under Article VIII,
Section 1-n(f), of the Texas Constitution, as implemented by Article 4 of this Act;
(2) the Actual Need Ratio and the mandatory rate reduction ballot under Article VIII,
Section 1-n(g), of the Texas Constitution, as implemented by Article 4 of this Act;
(3) the Mandatory Expenditure Reduction Plan under Article VIII, Section 1-n(e), of
the Texas Constitution, as implemented by Article 4 of this Act;
(4) the mandatory public disclosure required by Article VIII, Section 1-n(l), of the
Texas Constitution, as implemented by Articles 4 and 10 of this Act;
(5) the Interest and Sinking rate and the new-debt voter approval required by Article
VIII, Sections 1-n(h) and 1-n(i), of the Texas Constitution, as implemented by Articles 4 and 7 of this
Act;
(6) the bond guarantee, the Citizens First Bond Sale Requirement, and the I&S
Reserve Fund established by Article VIII, Section 1-o, of the Texas Constitution, as implemented by the
TPTRP Bond Management Act;
(7) the Stabilization Fund, Infrastructure Fund, First Responder Fund, and Citizen
Dividend Fund required by Article VIII, Section 1-s, of the Texas Constitution, as implemented by the
TPTRP Fund System Act; and
(8) the surplus waterfall and Citizen Dividend required by Article VIII, Section 1-t,
of the Texas Constitution, as implemented by the TPTRP Fund System Act.
(c) No diminishment of parity. No provision of this chapter, and no rule,
order, or administrative practice of the comptroller or of any state agency, may apply a provision
listed in Subsection (b) of this section to an independent school district on terms less favorable, more
restrictive, or otherwise different than the terms on which that provision applies to a county,
municipality, or special district, except where Article VIII, Section 1-n(k), of the Texas Constitution,
or another provision of Article VIII, Sections 1-e, 1-m through 1-w, and 9.01, expressly establishes an
independent-school-district-specific rule (including the disclosure trigger described by Article VIII,
Section 1-n(l)(10), of the Texas Constitution, implemented by Article 10 of this Act).
(d) This section implements Article VIII, Section 1-n(k)(5), of the Texas
Constitution.
Sec. 151A.406. BOND DEBT SERVICE.
(a) District remains primary obligor. An independent school district
remains the primary obligor on its own outstanding bonds.
(b) Governing law. A district's Interest and Sinking rate, I&S
Reserve Fund, and access to the shortfall backstop cascade are governed by:
(1) Article VIII, Sections 1-n(h) and 1-n(j), of the Texas Constitution, as
implemented by Article 4 of this Act and Article 7 of this Act; and
(2) Article VIII, Section 1-o, of the Texas Constitution, as implemented by the TPTRP
Bond Management Act.
(c) Permanent School Fund–guaranteed bonds. Bonds guaranteed by the
permanent school fund are additionally subject to Article VII, Section 5(h), of the Texas Constitution.
(d) Bond Service Levy inviolability. The Interest and Sinking, or Bond
Service Levy, portion of a distribution to an independent school district under this chapter may never
be withheld, suspended, or escrowed for any reason, in accordance with Article VIII, Section 1-n(l), of
the Texas Constitution (closing paragraph), Article VIII, Section 1-o, of the Texas Constitution, and
Article 7 of this Act.
(e) This section implements Article VIII, Section 1-n(k)(6), of the Texas
Constitution.
Sec. 151A.407. TRANSITION AND POST-TRANSITION ASSISTANCE FOR INDEPENDENT SCHOOL DISTRICTS.
(a) Eligibility standard. An independent school district is eligible for
assistance from the TPTRP Transition Fund during the transition period, and from the economic
stabilization fund through the TPTRP Transition Monitoring Division after the TPTRP Transition Board
terminates, only if the district satisfies the Assistance Eligibility Standard of Article VIII, Section
1-u(b-1), of the Texas Constitution, as implemented by Section 490.032, Government Code — that is, only
if both of the following are true:
(1) the district's voters have approved a rate at the Tier 4 Constitutional Cap
Rate; and
(2) the district's collections at that rate remain insufficient to produce its
Final Year Baseline, as defined by Article VIII, Section 1-n(a)(15), of the Texas Constitution.
(b) Rejection of a rate increase is disqualifying. A district whose voters
have rejected a proposed rate increase shall reduce its budget under the Mandatory Expenditure Reduction
Plan required by Article VIII, Section 1-n(e), of the Texas Constitution, as implemented by Article 4 of
this Act, and is ineligible for assistance as provided by Article VIII, Section 1-n(d)(6), of the Texas
Constitution.
(c) No financial exigency solely from the transition. Subject to the
standard stated in Subsection (a) of this section, an independent school district may not be placed in
financial exigency solely as a result of the transition effected by this chapter.
(d) No deprivation of the general diffusion of knowledge. No district's
students may be deprived of the general diffusion of knowledge required by Article VII, Section 1, of
the Texas Constitution, by reason of the commercial character of the district's territory.
(e) No formula or enrollment factor in administering assistance. Nothing in
this section authorizes the TPTRP Transition Board, the TPTRP Transition Monitoring Division, the
comptroller, or any other officer or agency to determine, condition, or calculate assistance to a
district under this section by reference to student enrollment, average daily attendance, property
valuation, taxable property wealth, district wealth per student, or any measure of comparative capacity.
Sections 151A.402 and 151A.405 of this code apply to the administration of assistance under this
section.
(f) This section implements Article VIII, Section 1-n(k)(7), of the Texas
Constitution.
Sec. 151A.408. EXISTING GOVERNANCE AND ACCOUNTABILITY LAW PRESERVED.
(a) No diminishment. Nothing in this chapter diminishes, suspends, or
repeals any provision of the Texas Constitution or of general law governing the governance, financial
accountability, academic accountability, auditing, reporting, sanction, conservatorship, management, or
dissolution of an independent school district.
(b) Existing remedies preserved. A district that fails to meet its fiscal
or academic obligations remains subject to every remedy available under existing law, including every
remedy available under the Education Code governing school district governance, financial
accountability, academic accountability, auditing, reporting, sanction, conservatorship, management, or
dissolution that is not superseded by Section 151A.403 or Section 151A.404 of this code.
(c) Scope of supersession limited. The supersession and repeal effected by
Sections 151A.403 and 151A.404 of this code are limited to the Foundation School Program state transfer
under Chapter 48, Education Code, and the excess local revenue recapture provisions of Chapters 48 and
49, Education Code, respectively, and do not extend to any other provision of the Education Code
governing the governance, financial accountability, academic accountability, auditing, reporting,
sanction, conservatorship, management, or dissolution of an independent school district.
(d) This section implements Article VIII, Section 1-n(k)(8), of the Texas
Constitution.
Sec. 151A.410. TIER 4 DISTRIBUTION; RECAPTURE SUPERSEDED; ISD BOND CONTINUATION.
(a) On and after the Implementation Date, each school district's
public-education funding is determined exclusively by the Tier 4 distribution established by this
Article. No distribution may be reduced, withheld, or recaptured on the basis of former taxable property
wealth or any formula based on property values.
(b) The excess local revenue recapture provisions formerly codified in Section
48.257 and Chapter 49, Education Code, are superseded by the Tier 4 mechanism and are of no further
force or effect on and after the Implementation Date.
(c) The Comptroller shall distribute Tier 4 collections based exclusively on the
sales and use tax collected on taxable transactions sourced to the district. The Comptroller may not use
enrollment, attendance, property valuation, taxable value, district wealth, weighted student allotments,
or any other factor unrelated to the sales and use tax collected on transactions sourced to the
district.
(d) A district with outstanding bonds remains the primary obligor. Its I&S
sub-rate, Bond Service Levy, bond registry, I&S Reserve Fund, and access to the backstop cascade are
governed by Article 7 and the TPTRP Bond Management Act. This section preserves and adapts the
continuing substance of former Section 48.2575, Education Code.
(e) This section implements Article VIII, Sections 1-n and 1-o, of the Texas
Constitution.
Cross-references. Article 2 of this Act establishes the Tier 4
Constitutional Cap Rate (1.50%) and the Tier 4 starting rate (1.20%) referenced by Section 151A.401 of
this code. Article 3 of this Act governs sourcing of taxable transactions to locations within a
district. Article 4 of this Act governs rate reduction and increase procedure, the Total Budget Cap, the
Cumulative Budget Growth Cap, the Actual Need Ratio, and the Mandatory Expenditure Reduction Plan
referenced by Sections 151A.401, 151A.402, 151A.405, and 151A.407 of this code. Article 7 of this Act
governs collection, allocation, distribution, and Bond Service Levy inviolability referenced by Sections
151A.402 and 151A.406 of this code. Article 10 of this Act implements the $10,000-per-enrolled-student
disclosure trigger of Article VIII, Section 1-n(l)(10), of the Texas Constitution, which is a disclosure
requirement only and is not a distribution formula, floor, or ceiling within the meaning of Section
151A.402 of this code. Article 11 of this Act governs dedications and contains no
independent-school-district-specific dedication carve-out, consistent with Section 151A.405 of this
code. The TPTRP Fund System Act implements the Stabilization Fund, Infrastructure Fund, First Responder
Fund, Citizen Dividend Fund, surplus waterfall, Citizen Dividend, and the Article 16 sub-rate-dedication
procedures referenced by Sections 151A.401 and 151A.405 of this code, for each independent school
district on the same terms as for every other taxing entity. The TPTRP Bond Management Act implements
bond mechanics, the Citizens First Bond Sale Requirement, the I&S Reserve Fund, and the permanent
school fund guarantee referenced by Section 151A.406 of this code. Section 490.032, Government Code, as
enacted by the TPTRP Transition Board Act, implements the Assistance Eligibility Standard referenced by
Section 151A.407 of this code. The TPTRP Tax Abolition and Conformity Act effects the repeal of Chapter
48, Education Code, and the recapture provisions of Chapters 48 and 49, Education Code, referenced by
Sections 151A.403 and 151A.404 of this code.
ARTICLE 6. TIER 5 AGGREGATE CAP APPORTIONMENT
Sec. 151A.501. TIER 5 AGGREGATE CAP; NO LOCATION EXCEEDS ONE-HALF PERCENT.
(a) Because the jurisdictions of special districts overlap one another, the Tier 5
Constitutional Cap Rate of one-half of one percent (0.50%) established by Section 151A.102 of this code
is an aggregate cap and not a per-entity rate. The combined Tier 5 rate applicable at any Texas location
— that is, the sum of the rates of every Tier 5 entity whose jurisdiction includes that location — may
not exceed one-half of one percent (0.50%).
(b) No Tier 5 entity may impose a rate except as apportioned to that entity under
this Article. A Tier 5 entity's individually apportioned rate, combined with the individually
apportioned rate of every other Tier 5 entity whose jurisdiction includes the same location, may never
exceed the aggregate cap stated in Subsection (a).
(c) The aggregate cap established by this section is subject to, and is a component
of, the six-percent-combined ceiling at every location in this state established by Section 151A.106 of
this code. Enforcement of the Tier 5 aggregate cap does not relieve the comptroller of the duty to
enforce the six-percent ceiling, and enforcement of the six-percent ceiling does not relieve the Board
or the Division of the duty to enforce the Tier 5 aggregate cap.
(d) This section implements Article VIII, Section 1-n(b)(4)(A), of the Texas
Constitution.
Sec. 151A.502. APPORTIONMENT BY THE TRANSITION BOARD AND DIVISION.
(a) Transition-period apportionment. During the transition period, and
until the Board terminates under Section 490.091, Government Code, the TPTRP Transition Board apportions
the Tier 5 aggregate cap among overlapping Tier 5 entities by administrative order, based on the
apportionment factors established by Section 151A.503 of this code.
(b) Permanent apportionment. After the Board terminates, the TPTRP
Transition Monitoring Division established under Subchapter H, Chapter 490, Government Code, performs
the apportionment function described by Subsection (a) on a permanent basis, applying the same
apportionment factors.
(c) Apportionment is distinct from rerouting. The apportionment function
established by this Article is a mechanism separate and distinct from the Board's special district
rerouting authority under Section 490.051, Government Code. Rerouting under Section 490.051 reassigns an
absorbed special district from one tier to another and shifts collected revenue between entities;
apportionment under this Article allocates rate authority within Tier 5, among Tier 5 entities whose
jurisdictions overlap at a location, and does not reassign any entity's tier. The Board and the
Division shall coordinate the exercise of both functions so that a rerouting order and an apportionment
order affecting the same entity are administered consistently, but neither function substitutes for the
other, and an order issued under one does not satisfy the requirements of the other.
(d) Order effective upon certification. An apportionment order is effective
upon certification to the comptroller by the Board or, after Board termination, by the Division. No
additional legislative action is required. Not later than the 30th day after receiving an apportionment
order, the comptroller shall update the affected entities' apportioned shares and reflect the
updated figures in the next quarterly distribution.
(e) A reduced apportioned share retains a path to increase. A Tier 5 entity
whose apportioned share is reduced under this Article retains the right to seek a rate increase within
its apportioned share under Article 4 of this Act (voter approval), and may not obtain an increase that
would cause the combined Tier 5 rate at any location to exceed one-half of one percent (0.50%).
(f) This section implements Article VIII, Sections 1-n(b)(4)(B) and 1-n(b)(4)(C), of
the Texas Constitution.
Sec. 151A.503. APPORTIONMENT FACTORS.
(a) When two or more Tier 5 entities' jurisdictions overlap at a Texas
location, the Board or the Division, as applicable under Section 151A.502 of this code, shall apportion
the one-half of one percent (0.50%) aggregate cap among the overlapping entities based on the following
factors, applied in the order stated:
(1) First priority — certified annual bond debt service. Each entity's
certified annual bond debt service obligations attributable to that jurisdiction receive first-priority
apportionment, sufficient to fund the entity's Bond Service Levy in full. The Bond Service Levy
priority established by this subdivision is subject to the inviolability rule of Section 151A.607 of
this Act, and no apportionment made under this Article may reduce a Tier 5 entity's apportioned
share below the amount necessary to fund its certified annual bond debt service.
(2) Total Replacement Obligation weighting. After satisfying Subdivision
(1), each entity's Total Replacement Obligation for its final year of ad valorem taxation, as
defined by Article VIII, Section 1-n(a), of the Texas Constitution, is weighted proportionally among the
overlapping entities.
(3) Actual Need Ratio weighting. Each entity's demonstrated Actual Need
Ratio, as defined by Article VIII, Section 1-n(a), of the Texas Constitution, in the most recent three
fiscal periods is weighted so that an entity with a lower Actual Need Ratio — indicating unmet need
relative to its obligations — is protected from reduction in its apportioned share, and an entity with a
higher Actual Need Ratio — indicating collections in excess of need — receives priority reduction in its
apportioned share.
(4) Comptroller-rule flexibility. Any other factor the Board or the Division
establishes by rule, consistent with the Texas Constitution, including whether an overlapping Tier 5
entity is a candidate for absorption, consolidation, or dissolution under Section 151A.506 of this code.
(b) The factors established by this section are statutory and do not modify, narrow,
or expand the constitutional apportionment authority of Article VIII, Section 1-n(b)(4)(B) and (C). The
Board or the Division may adopt rules of general application implementing the factors of Subsection (a),
provided that a rule adopted under Subsection (a)(4) may not be applied in a manner inconsistent with
the priority order established by Subsections (a)(1) through (a)(3).
(c) This section implements Article VIII, Sections 1-n(b)(4)(B) and 1-n(b)(4)(C), of
the Texas Constitution.
Sec. 151A.504. RE-APPORTIONMENT ON ENTITY EVENTS.
(a) The Board or the Division, as applicable under Section 151A.502 of this code,
shall re-apportion the Tier 5 aggregate cap at each location affected by any of the following events:
(1) the creation of a new Tier 5 entity under Article VIII, Section 1-n(b-1), of the
Texas Constitution;
(2) the consolidation of two or more Tier 5 entities;
(3) the absorption of a Tier 5 entity into another taxing entity;
(4) the dissolution of a Tier 5 entity; or
(5) a material change in a Tier 5 entity's jurisdiction.
(b) No rate without re-apportionment. Before a newly created Tier 5 entity
may impose any rate, the Division (or, if the entity is created during the transition period, the Board)
must complete a re-apportionment establishing that entity's apportioned share. A newly created Tier
5 entity's first voter-submitted rate is further limited by Section 151A.105 of this code
(fifty-percent rule for new entities).
(c) A re-apportionment under this section shall apply the factors established by
Section 151A.503 of this code and shall not cause the combined Tier 5 rate at any location to exceed
one-half of one percent (0.50%), or the combined rate at any location to exceed six percent (6.00%)
under Section 151A.106 of this code.
(d) This section implements Article VIII, Sections 1-n(b-1) and 1-n(b)(4)(B) and
(C), of the Texas Constitution.
Sec. 151A.505. DUE-PROCESS AND CHALLENGE PROCEDURES.
(a) An apportionment or re-apportionment determination made under this Article is
subject exclusively to the Certification Dispute Process established by Section 490.015(c), Government
Code (TPTRP Transition Board Act) — Board-facilitated arbitration, followed, if unresolved, by judicial
review in a district court of Travis County. Judicial review is unavailable until arbitration under Step
One of that process is complete.
(b) No Tier 5 entity may challenge an apportionment or re-apportionment
determination by any process other than the Certification Dispute Process described by Subsection (a).
No writ, injunction, or declaratory judgment may issue in a court of this state to stay, suspend, or set
aside an apportionment or re-apportionment determination except through that process.
(c) A contest, arbitration, or judicial review under this section does not stay the
apportionment or re-apportionment determination, the Implementation Date, or any other provision of this
Act.
(d) This section implements Article VIII, Section 1-n(b)(4), of the Texas
Constitution, by adopting the dispute process applicable to comptroller certifications generally.
Sec. 151A.506. SUFFICIENCY REVIEW; ABSORPTION OR DISSOLUTION.
(a) A Tier 5 entity whose service obligations are fully funded from its own
operating revenues, user charges, or other lawful sources — without need for its apportioned share of
the Tier 5 aggregate cap — shall have its apportioned rate reduced accordingly under Section 151A.504 of
this code, and is a candidate for absorption or dissolution as provided by Article VIII, Section 1-u, of
the Texas Constitution, and by the TPTRP Transition Board Act.
(b) Frequency of review. The Board or the Division, as applicable, shall
conduct a sufficiency review under this section:
(1) not less than once per fiscal year during the Board's active term; and
(2) not less than once every three fiscal years after the Board terminates.
(c) Referral on finding of sufficiency. A finding that a Tier 5 entity is
self-funded within the meaning of Subsection (a) triggers referral to the comptroller for a
recommendation to the Legislature on absorption, consolidation, or dissolution of the entity,
coordinated with the voter-discretionary dissolution and absorption process under Section 490.052,
Government Code, and the ISD consolidation process under Section 490.053, Government Code, as
applicable.
(d) A sufficiency finding under this section does not itself dissolve, consolidate,
or absorb a Tier 5 entity. No dissolution, consolidation, or absorption may be executed without voter
approval from the affected entity's voters as required by applicable Texas law, consistent with
Section 490.052(b), Government Code.
(e) This section implements Article VIII, Section 1-n(b)(5), of the Texas
Constitution.
Cross-references. Article 2 of this Act (Section 151A.102)
establishes the Tier 5 Constitutional Cap Rate as an aggregate cap and cross-references this Article;
Section 151A.106 of this Act establishes the six-percent-combined ceiling at every location, of which
the Tier 5 aggregate cap is a component. Article 4 of this Act governs voter approval of a Tier 5 entity's
rate within its apportioned share. Section 151A.105 of this Act governs the fifty-percent rule
applicable to a newly created Tier 5 entity's first voter-submitted rate. Section 151A.607 of this
Act establishes the inviolability of the Bond Service Levy referenced by Section 151A.503(a)(1) of this
code. The TPTRP Transition Board Act, Government Code Chapter 490, establishes the Board (Subchapter C),
the Division (Subchapter H), the special district rerouting authority (Section 490.051), the
voter-discretionary dissolution and absorption process (Section 490.052), the ISD consolidation process
(Section 490.053), and the Certification Dispute Process (Section 490.015(c)) adopted by Section
151A.505 of this code.
No rate authority outside apportionment. No provision of this
Article, and no other provision of this Act, may be construed to authorize a Tier 5 entity to impose a
rate except as apportioned under this Article, and no apportionment, re-apportionment, or other action
under this Article may permit the combined Tier 5 rate at any location to exceed one-half of one percent
(0.50%).
ARTICLE 7. COLLECTION, ALLOCATION, AND DISTRIBUTION; INTEREST AND SINKING RATE; BOND SERVICE LEVY INVIOLABILITY
Sec. 151A.601. COLLECTION THROUGH THE EXISTING STATE PERMIT SYSTEM.
(a) The sales and use tax imposed by this chapter shall be collected by sellers and
remitted to the comptroller through the existing state sales and use tax permit, collection, and
remittance system. No taxing entity may establish a separate collection system, and no additional
collection agency may be created.
(b) A seller holding a permit issued under Section 151A.611 of this code shall
collect the tax imposed by this chapter on every taxable transaction as if it were a single, unified
state tax, notwithstanding that the collected amount is composed of the rates of multiple taxing
entities under Section 151A.602 of this code. A seller is not required to obtain a separate permit, file
a separate return, or remit separately to any individual taxing entity.
(c) Nothing in this section restricts the comptroller's authority to prescribe
return forms, remittance schedules, and electronic filing requirements applicable to the unified
collection system, provided that the prescribed forms and schedules do not require a seller to allocate
tax among taxing entities; allocation is performed by the comptroller under Section 151A.602 of this
code from sourcing data reported by the seller under Article 3 of this Act.
(d) This section implements Article VIII, Section 1-n(m)(1), of the Texas
Constitution.
Sec. 151A.602. ALLOCATION AMONG TIERS AND ENTITIES BY THE COMPTROLLER.
(a) The comptroller shall allocate each remittance received under Section 151A.601
of this code among the tiers and among the individual taxing entities within each tier according to the
rate in effect for each taxing entity whose jurisdiction includes the location to which the underlying
transaction is sourced.
(b) The allocation engine operated by the comptroller shall, for each taxable
transaction reported under a seller's remittance:
(1) identify the location to which the transaction is sourced under Article 3 of this
Act;
(2) determine the tax stack applicable at that sourced location, which is the sum of
the rates then in effect for each taxing entity whose jurisdiction includes that location — the Tier 1
State rate, the Tier 2 county rate (if applicable), the Tier 3 municipal rate (if applicable), the Tier
4 independent school district rate for the district in which the location lies, and the aggregate Tier 5
rate for all special districts whose jurisdictions include the location, as provided by Section 151A.106
of this code; and
(3) allocate the remitted tax attributable to that transaction among the taxing
entities identified under Subdivision (2) of this subsection in proportion to each entity's
individual rate share of the tax stack applicable at the sourced location.
(c) The comptroller shall maintain the boundary and rate data necessary to perform
the allocation required by this section current as of the effective date of each rate change certified
or reported to the comptroller under Article 4 of this Act, and shall apply a rate change to allocations
only for transactions occurring on or after the effective date of that change.
(d) This section implements Article VIII, Section 1-n(m)(2) and (m)(3), of the Texas
Constitution.
Sec. 151A.603. QUARTERLY DISTRIBUTION; CALENDAR; RECONCILIATION.
(a) The comptroller shall distribute to each taxing entity the entity's
allocation determined under Section 151A.602 of this code not less frequently than quarterly.
(b) Distribution calendar. For collections attributable to a calendar
quarter, the comptroller shall distribute the resulting allocation to each taxing entity not later than
the 45th day after the close of that calendar quarter. The comptroller may make more frequent interim or
estimated distributions within a quarter, but the cumulative amount distributed for a quarter, net of
the reconciliation described by Subsection (c) of this subsection, shall be finally distributed not
later than the 45th-day deadline stated in this subsection.
(c) Reconciliation. Because remittances for transactions occurring near the
close of a calendar quarter may be received or processed after the quarter's close, the comptroller
shall reconcile each entity's distribution for a quarter against actual remittances attributable to
that quarter as follows:
(1) an entity's distribution for a quarter is based on remittances received and
processed by the comptroller as of the 30th day after the close of the quarter;
(2) any remittance attributable to that quarter but received or processed after the
30th day following the quarter's close is included in the entity's distribution for the next
succeeding quarter, together with an identification, in the report required by Subsection (e) of this
subsection, of the quarter to which the late-processed remittance is attributable; and
(3) an adjustment for a seller's amended return, audit result, or comptroller
correction affecting a prior quarter's allocation is applied to the distribution for the quarter in
which the amendment, audit result, or correction is finalized, and does not reopen or delay a
distribution already made for a prior quarter.
(d) Bond Service Levy excepted from timing adjustment where inconsistent with
inviolability. No reconciliation, adjustment, or correction under Subsection (c) of this subsection
may reduce, delay, or offset the Bond Service Levy component of a distribution below the amount required
by Section 151A.607 of this code; any negative adjustment attributable to the I&S rate is applied
prospectively to future I&S rate certifications under Section 151A.604 of this code and not by
withholding or offsetting a distribution already made or currently due.
(e) The comptroller shall publish, concurrently with each quarterly distribution, a
report for each taxing entity itemizing the transactions, tiers, and sourcing locations underlying the
entity's distribution, in sufficient detail for the entity to reconcile the distribution against
its own records, and shall make the report available on the Local Government Transparency module of the
Texas Sales and Use Tax Portal established under Section 490.073, Government Code.
(f) This section implements Article VIII, Section 1-n(m)(2), of the Texas
Constitution.
Sec. 151A.604. INTEREST AND SINKING RATE — COMPTROLLER-CERTIFIED, ENTITY-SERVICED, AUTOMATIC.
(a) Within each taxing entity's total rate, a portion is designated as the
Interest and Sinking rate ("I&S rate"), dedicated to the payment of certified annual bond debt
service on all voter-approved general obligation bonds issued by that entity. Each taxing entity is
responsible for servicing its own bond debt obligations from its own sales and use tax collections, in
the manner provided by this section.
(b) First-priority use of collections. Each taxing entity shall, as the
first-priority use of its collected sales and use tax revenues each fiscal period, apply collections
sufficient to satisfy its certified annual bond debt service — principal and interest — when due
according to the bond's original payment schedule. Bond debt service payments by each entity are
senior to all Maintenance and Operations expenditures, waterfall distributions under Article VIII,
Section 1-t, of the Texas Constitution, and reserve contributions.
(c) Annual certification of the I&S rate. The comptroller shall
annually certify, for each taxing entity, the I&S rate necessary to fund the entity's certified
annual debt service requirement plus a buffer of not less than 5 percent and not more than 10 percent of
annual debt service, based on the comptroller's assessment of collection volatility in the entity's
jurisdiction. The I&S rate is established by this certification; it is not set by action of the
governing body of the taxing entity, and no governing body vote, resolution, or ordinance may substitute
for or override the comptroller's certification.
(d) Entity reporting. Each taxing entity shall report to the comptroller,
on a schedule established by the comptroller under Article 10 of this Act, the entity's bond debt
service payment status, bond registry information, and I&S Reserve Fund balance. The comptroller
shall publish all reports required by this subsection on the Local Government Transparency module of the
Texas Sales and Use Tax Portal.
(e) Automatic decrease on bond retirement. The I&S rate of a taxing
entity shall automatically decrease, without any action by the entity's governing body, when bonds
are retired, defeased, or otherwise paid in full, with the reduction taking effect in the fiscal year
following the comptroller's annual recalculation under Subsection (c) of this subsection. No
governing body vote, resolution, or ordinance is required for this reduction to take effect, and none
may delay or condition it.
(f) Automatic decrease on I&S Reserve Fund over-accumulation. The I&S
rate of a taxing entity shall automatically decrease, without any action by the entity's governing
body, when the entity's I&S Reserve Fund balance exceeds two times the entity's certified
annual bond debt service. On that occurrence, the comptroller shall recalculate and reduce the entity's
I&S rate for the following fiscal year by the amount necessary to prevent future over-accumulation
above that maximum. No governing body vote is required, and none may delay or condition the reduction.
(g) No increase without new voter-approved bonds. The I&S rate of a
taxing entity may never be increased above the level necessary to fund its certified annual bond debt
service plus the applicable buffer under Subsection (c) of this subsection, without a new voter-approved
bond election authorizing additional bonds under Section 151A.606 of this code. No governing body may
increase the I&S rate by ordinance, resolution, or administrative action.
(h) This section implements Article VIII, Section 1-n(h)(1) through (h)(4) and
(h)(6), of the Texas Constitution.
Sec. 151A.605. AUTOMATIC I&S RATE STEP-DOWN ON SUSTAINED OVER-COLLECTION.
(a) The I&S rate of a taxing entity shall automatically decrease, without any
action by the entity's governing body, when the entity's actual I&S collections exceed its
certified annual bond debt service by more than 10 percent in each of two consecutive fiscal periods.
(b) On the second such consecutive fiscal period, the comptroller shall recalculate
and reduce the entity's I&S rate for the following fiscal year to the rate projected to produce
certified annual bond debt service plus the 5 percent minimum buffer established by Section 151A.604(c)
of this code.
(c) Purpose of the two-consecutive-period requirement. The
two-consecutive-period requirement exists so that a single fiscal period of unusually strong collections
does not produce a rate reduction that must be reversed in the next period. A single qualifying period,
standing alone, triggers no rate change and no reporting consequence other than the disclosure required
by Subsection (d) of this subsection.
(d) Purpose — return of growth benefit to the taxpayer. The purpose of this
section is to return the benefit of economic growth to the taxpayer: as the transaction base in a taxing
entity's jurisdiction grows, the portion of the entity's total rate dedicated to debt service
declines automatically toward the minimum buffer rather than accumulating in the entity's I&S
Reserve Fund. No governing body vote, resolution, or ordinance is required for a reduction under this
section, and none may delay or condition it.
(e) Disclosure. For each of the two most recent fiscal periods, a taxing
entity shall disclose, as part of the reporting required by Article 10 of this Act, its actual I&S
collections compared with its certified annual bond debt service, stated as a percentage, together with
a statement of whether the step-down required by this section has been triggered or is one fiscal period
from being triggered.
(f) Cross-reference. The step-down mechanism established by this section is
coordinated with the corresponding provision of the TPTRP Bond Management Act at Section 404.00535 of
that Act, which governs the interaction of the step-down with an entity's bond registry and I&S
Reserve Fund administration. Where a conflict arises between this section and the TPTRP Bond Management
Act as to the mechanics of registry adjustment following a step-down, this section controls as to the
rate itself and the Bond Management Act controls as to registry and reserve fund administration.
(g) Final-bond retirement. On the retirement of a taxing entity's
final outstanding bond, so that the entity has no scheduled bond debt service for any subsequent fiscal
period, the entity's Interest and Sinking sub-rate shall automatically decrease to zero effective
the first day of the next fiscal period, without any action by the entity's governing body. Any
residual balance in the entity's I&S Reserve Fund at the close of the fiscal period in which
the final bond is retired shall be transferred to the entity's Infrastructure Fund established by
the TPTRP Fund System Act, consistent with the design principle that bond proceeds and bond reserves
exist to fund infrastructure and, on retirement of the underlying debt, residual amounts remain
available for the same infrastructure purpose without the entity being required to issue new debt. The
mechanics of the residual transfer, including certification, timing, and coordination with the entity's
bond registry and Infrastructure Fund capitalization, are governed by the TPTRP Bond Management Act and
the TPTRP Fund System Act. The I&S sub-rate remains zero for so long as the entity has no scheduled
bond debt service; on issuance of a new bond following retirement, the entity may re-establish an I&S
sub-rate only under Section 151A.606 of this code.
(h) This section implements Article VIII, Section 1-n(h)(5-A), of the Texas
Constitution.
Sec. 151A.606. NEW BOND ISSUANCE; I&S RATE PRE-CERTIFICATION.
(a) Before any election to authorize new bonds may be held for a taxing entity, the
comptroller shall certify that the I&S rate necessary to service the proposed bonds, when added to
the entity's current total rate (its M&O rate plus its existing I&S rate), does not exceed
the Constitutional Cap Rate for the entity's tier.
(b) No bond election may be called, and no bonds may be issued, for which the I&S
rate required to service the proposed bonds would cause the entity's total rate to exceed its
Constitutional Cap Rate. Under no circumstance may the total rate of any taxing entity exceed its
Constitutional Cap Rate, whether by pre-existing rate, by the I&S rate required for newly authorized
bonds, or by any combination of the two.
(c) The comptroller's pre-certification under this section shall state:
(1) the entity's current total rate and its M&O and I&S components;
(2) the projected I&S rate necessary to service the proposed bonds, based on the
proposed principal amount, term, and estimated interest rate;
(3) the sum of the amounts in Subdivisions (1) and (2) of this subsection; and
(4) whether that sum is within the entity's Constitutional Cap Rate and, if not,
the amount by which it would exceed the cap.
(d) A bond election may not be called on a proposition for which the comptroller has
certified under Subsection (c)(4) of this subsection that the required I&S rate would exceed the
entity's Constitutional Cap Rate. An entity seeking to issue bonds in excess of the amount its
Constitutional Cap Rate can support shall reduce the principal amount, extend the term, or otherwise
restructure the proposed bonds and resubmit for pre-certification.
(e) Each new bond issuance approved following pre-certification under this section
remains subject to the Citizens First Bond Sale Requirement established by Article VIII, Section 1-o(d),
of the Texas Constitution and implemented by Article 6 of the TPTRP Bond Management Act.
(f) This section implements Article VIII, Section 1-n(i)(3), of the Texas
Constitution.
Sec. 151A.607. BOND SERVICE LEVY INVIOLABILITY.
(a) Notwithstanding any other provision of this Act or of general law, the I&S
component of a taxing entity's quarterly distribution — the entity's Bond Service Levy — shall
not be withheld, suspended, offset, delayed, or otherwise diminished for any reason, including but not
limited to a determination of Fiscal Distress under the TPTRP Fund System Act, a late or deficient
report, an enforcement action, or a finding of noncompliance with any other requirement of this Act.
(b) The prohibition of Subsection (a) of this section applies without exception to
every provision of this chapter and to every other statute administered by the comptroller, the TPTRP
Transition Board, the TPTRP Transition Monitoring Division, or any other state officer or agency,
including:
(1) the Maintenance and Operations distribution suspension authorized for
noncompliance with the Mandatory Expenditure Reduction Plan requirement under Article 4 of this Act,
which reaches only the M&O component of a distribution and never the Bond Service Levy;
(2) the mandatory public disclosure enforcement provision under Article 10 of this
Act, which reaches only the M&O component of a distribution and never the Bond Service Levy;
(3) any Fiscal Distress determination, remediation plan, or fiscal oversight action
under the TPTRP Fund System Act; and
(4) any dispute, audit, enforcement action, or finding of noncompliance under this
Act or under any companion Act of the Texas Property Tax Replacement Plan.
(c) The comptroller shall distribute the Bond Service Levy component of every taxing
entity's quarterly distribution on the schedule required by Section 151A.603 of this code
regardless of the status of any other component of that entity's distribution, any pending dispute,
any pending audit, or any pending enforcement action.
(d) This section implements Article VIII, Section 1-n(l) (closing paragraph),
Section 1-s(i)(4), Section 1-s(k)(7), and Section 1-o, of the Texas Constitution.
Sec. 151A.608. INSUFFICIENT COLLECTIONS; BACKSTOP CASCADE INTERVENTION.
(a) When a taxing entity's collections in any fiscal period are insufficient to
fund the entity's scheduled bond debt service after application of all I&S collections and I&S
Reserve Fund balances available to the entity, the comptroller shall have authority to intervene and
ensure that payment is made from the backstop cascade established by Article VIII, Section 1-o, of the
Texas Constitution and implemented by Article 4 of the TPTRP Bond Management Act.
(b) The comptroller's intervention authority under this section is mandatory,
not discretionary, once the insufficiency described by Subsection (a) of this subsection is identified:
the comptroller shall act so that no bondholder suffers default or delay due to any taxing entity's
administrative failure.
(c) The sequence, funding sources, and administration of the backstop cascade are
governed by the TPTRP Bond Management Act and are not restated here. Nothing in this section authorizes
the comptroller to withhold, suspend, offset, or delay any Bond Service Levy distribution as a means of
intervention; intervention under this section supplements a deficient distribution from the backstop
cascade and does not substitute for, condition, or diminish the distribution itself.
(d) The comptroller shall report every intervention under this section to the
Legislature and shall publish notice of the intervention on the Local Government Transparency module of
the Texas Sales and Use Tax Portal not later than the 30th day after the intervention.
(e) This section implements Article VIII, Section 1-n(h)(7), of the Texas
Constitution.
Sec. 151A.609. COMPTROLLER ADMINISTRATIVE COST RECOVERY.
(a) The comptroller may retain from collections made under this chapter only the
actual, audited cost of administering the collection, allocation, and distribution function required by
this Article.
(b) The amount retained under this section shall be:
(1) appropriated by the Legislature for that purpose in the biennial appropriations
act or other applicable appropriations measure;
(2) supported by an annual independent audit of the actual cost of administration,
conducted in accordance with generally accepted government auditing standards; and
(3) published annually, in itemized form, on the Local Government Transparency module
of the Texas Sales and Use Tax Portal, together with the audit required by Subdivision (2) of this
subsection.
(c) The comptroller may not retain, reserve, or withhold any amount in excess of the
audited actual cost certified under Subsection (b) of this section, may not retain an estimated,
budgeted, or projected cost in place of audited actual cost, and may not carry forward an unspent
retention from one fiscal period to fund unrelated comptroller operations. Any amount retained in excess
of audited actual cost for a fiscal period shall be returned to the tiers and entities from which it was
retained, in proportion to each entity's contribution to the amount over-retained, not later than
the close of the following fiscal period.
(d) This section implements Article VIII, Section 1-n(m)(4), of the Texas
Constitution.
Sec. 151A.610. FISCAL PERIODS; STATE BIENNIUM.
(a) For every taxing entity other than the State of Texas, a fiscal period under
this Article is the entity's fiscal year.
(b) The State's biennium. For the State of Texas, whose budget is
enacted biennially:
(1) the Total Budget Cap and the Cumulative Budget Growth Cap under Article 4 of this
Act apply to each biennial appropriation, measured against the corresponding two-year period; and
(2) the Actual Need Ratio, the surplus waterfall under Article VIII, Section 1-t, of
the Texas Constitution, and the disclosure required by Article VIII, Section 1-n(l), of the Texas
Constitution, are computed and performed annually for each state fiscal year within the biennium.
(c) Federal funds received by the State of Texas and appropriated for the purpose
for which they were received are not part of the State's Maintenance and Operations budget for
purposes of the Total Budget Cap and are not part of the State's distributable surplus pool.
(d) This section implements Article VIII, Section 1-n(m)(5), of the Texas
Constitution.
Sec. 151A.611. PERMIT REGISTRATION; APPLICATION; ISSUANCE.
(a) A person may not engage in business as a seller of taxable goods or services
subject to this chapter in this state without a valid sales-tax permit issued by the Comptroller.
(b) Every person desiring to engage in business as a seller shall file with the
Comptroller an application for a permit, in the form and containing the information the Comptroller
prescribes by rule. The application must include:
(1) the applicant's name and address;
(2) the applicant's federal employer identification number, or, for a sole
proprietor, social security number, subject to the confidentiality protections of Section 111.006 and
Chapter 552, Government Code;
(3) each Texas location at which the applicant proposes to engage in business, or a
certification that the applicant will engage in business at no fixed Texas location;
(4) a certification of the Texas Living Exemption Set categories in which the
applicant sells or proposes to sell taxable goods or services, as required by Section 151A.702 of this
Article;
(5) the applicant's classification as a business purchaser or as an individual,
and if a business, the applicable business structure; and
(6) other information reasonably necessary for the administration of the tax imposed
by this chapter.
(c) The Comptroller shall issue a sales-tax permit to each applicant who submits a
complete application and who is not disqualified under Subsection (e) of this section. The permit shall
bear a unique permit identification number that keys the permit-holder's account to the Texas Sales
and Use Tax Portal under Section 151A.802B of this Article.
(d) A permit issued under this section is valid from the date of issuance and
remains in effect until suspended, revoked, or surrendered under this chapter.
(e) The Comptroller may deny an application for a permit if the applicant:
(1) has an outstanding unpaid tax liability under this chapter or under any prior-law
sales tax preserved by the TPTRP Tax Abolition and Conformity Act;
(2) has, within the two preceding years, had a sales-tax permit revoked under Section
151A.612 of this Article;
(3) has been convicted of a criminal offense under this chapter, or under the
preserved criminal provisions of former Chapter 151, Tax Code, within the five preceding years; or
(4) fails to submit the information required by Subsection (b) of this section within
a reasonable time after the Comptroller's request.
(f) The Comptroller shall integrate the permit registration process into the Texas
Sales and Use Tax Portal established by Section 490.073, Government Code, and shall accept applications,
issue permits, and communicate with permit-holders electronically through the portal.
(g) This section preserves and adapts the operative permit-registration rules of
former Sections 151.201, 151.202, and 151.203, Tax Code, as those sections applied to the tax imposed by
former Chapter 151, Tax Code, immediately before the effective date of this chapter, modified to reflect
the tiered rate structure and the Texas Sales and Use Tax Portal established by the TPTRP.
(h) This section implements Article VIII, Sections 1-o and 1-r, of the Texas
Constitution.
Sec. 151A.615. TAXING ENTITY BOND REGISTRY AND BOND SERVICE LEVY.
(a) Each taxing entity that has outstanding bond obligations subject to an Interest
and Sinking sub-rate under this chapter shall maintain a bond registry recording each series of
outstanding bonds, the debt service schedule for each series, the I&S Reserve Fund balance
associated with each series, and any credit enhancement, guarantee, or refunding related to each series.
(b) The bond registry required by Subsection (a) of this section shall be integrated
with the Texas Sales and Use Tax Portal and made publicly available in a format prescribed by the
Comptroller by rule.
(c) The Bond Service Levy is the portion of the tax imposed by this chapter that is
attributable to the entity's I&S sub-rate, and is inviolable as provided by Section 151A.607 of
this Article.
(d) The mechanics of bond issuance, refunding, credit enhancement, and reserve fund
administration are governed by the TPTRP Bond Management Act; this section provides the tax-collection
interface for those mechanics.
(e) This section preserves the operative bond registry framework of former Sections
321.601 through 321.603, Tax Code, as enacted by the TPTRP Bond Management Act before its integration
into this chapter, and adapts that framework to the unified sales and use tax under this Act.
(f) This section implements Article VIII, Sections 1-o, 1-p, and 1-r, of the Texas
Constitution.
Sec. 151A.616. TIER 1 RATE — POST-IMPLEMENTATION.
(a) On and after the Implementation Date, the state sales and use tax rate is the
Tier 1 rate established for the State of Texas under Article VIII, Section 1-n, Texas Constitution, as
certified by the Comptroller.
(b) This section preserves and adapts the operative rule formerly stated in Section
151.051(b-1), Tax Code. The former Section 151.051(b) applies only to transactions occurring before the
Implementation Date.
Sec. 151A.617. REMOTE SELLER ECONOMIC NEXUS; REGISTRATION AND REMITTANCE.
(a) A person is engaged in business in this state if, during the preceding 12
calendar months, the person made taxable transactions with Texas customers totaling $100,000 or more in
gross receipts or made 200 or more separate taxable transactions with Texas customers, regardless of
physical presence, organization, or domicile.
(b) A remote seller meeting the threshold in Subsection (a) shall obtain and
maintain a permit under Section 151A.611, collect the tax imposed by this chapter, and remit the tax
through the Texas Sales and Use Tax Portal. The Comptroller may establish lower thresholds by rule but
may not establish a threshold higher than either threshold stated in Subsection (a).
(c) This section implements Article VIII, Section 1-q, of the Texas Constitution.
The Secretary of State registration prerequisite and other standalone market-access rules applicable to
remote and foreign entities are governed by the TPTRP Remote Seller and Foreign Entity Act.
Sec. 151A.618. MARKETPLACE FACILITATOR COLLECTION.
(a) A marketplace facilitator that facilitates a taxable transaction through a
digital platform or electronic marketplace is responsible for collecting and remitting the tax imposed
by this chapter on that transaction, whether the underlying seller is located in this state, another
state, or a foreign country.
(b) A marketplace facilitator is relieved of liability for failure to collect and
remit tax on a transaction only on demonstrating that the failure resulted solely from materially
incorrect information provided by the third-party seller and that the facilitator made a reasonable,
good-faith effort to verify the information.
(c) The Comptroller shall adopt rules for marketplace-facilitator administration
consistent with this chapter. The TPTRP Remote Seller and Foreign Entity Act supplies the companion
standalone remote-seller and foreign-entity framework.
Sec. 151A.619. REMOTE-SELLER REPORTING; SINGLE LOCAL RATE CONFORMITY.
(a) A remote seller shall report taxable transactions through the Portal using the
address-based tax-stack lookup and sourcing procedures of Articles 3 and 9 of this Act.
(b) The former single-local-use-tax-rate mechanism of Section 151.0595, Tax Code, is
superseded on the Implementation Date by the unified tax-stack and sourcing procedures of this chapter.
The Comptroller shall provide remote sellers transition guidance before the Implementation Date.
(c) This section preserves the administrative purpose of former Section 151.0595,
Tax Code, without retaining a local sales-tax mechanism repealed by the TPTRP Tax Abolition and
Conformity Act.
Sec. 151A.620. TAXABLE SERVICES; SUCCESSOR TO FORMER SECTION 151.0101.
(a) A service rendered for consideration to a Texas customer is a taxable
transaction under this chapter unless the transaction is excluded by Article VIII, Section 1-p(e), of
the Texas Constitution or is exempt under the Texas Living Exemption Set as administered under Article 8
of this Act.
(b) Taxable services include professional, technical, information-technology,
digital, human-resources, business-process, real-property, construction, repair, maintenance, streaming,
subscription, cloud-computing, data-processing, and other services, whether provided in person,
remotely, electronically, digitally, or through another medium, and whether provided to an individual or
a business.
(c) Internet access service remains excluded as required by Article VIII, Section
1-p(e)(4), of the Texas Constitution. The exclusion of a transfer of real property from the Definition
Filter does not exclude services relating to real property.
(d) A service supplied by a remote seller, foreign entity, or marketplace
facilitator is taxable to the extent sourced to this state under Article 3 of this Act. This section
succeeds and replaces the operative subject matter of former Section 151.0101, Tax Code, on the
Implementation Date.
Cross-references. Article 3 of this Act governs the sourcing
determination that identifies which taxing entities' jurisdictions include a transaction for
purposes of the allocation required by Section 151A.602 of this code. Article 4 of this Act governs the
Mandatory Expenditure Reduction Plan, the Total Budget Cap, the Cumulative Budget Growth Cap, and the
Actual Need Ratio, each of which may reach only the M&O component of a distribution and never the
Bond Service Levy, consistent with Section 151A.607 of this code. The TPTRP Bond Management Act governs
the backstop cascade (Article 4 of that Act), the Citizens First Bond Sale Requirement (Article 6 of
that Act), the mechanics of the Section 151A.605 step-down (Section 404.00535 of that Act), and the
disclosure required by Article VIII, Section 1-n(l)(9-A), of the Texas Constitution (Section 151A.615 of
this code). The TPTRP Fund System Act governs Fiscal Distress determinations, Article 15 dedicated-fund
earmarks, Article 16 sub-rate dedications, and fund distributions, subject in every case to the Bond
Service Levy carve-out at Section 4.004(a) and Section 8.003 of that Act. The TPTRP Transition Board Act
governs the certification and dispute process referenced by Section 490.015 of that Act and the Local
Government Transparency module publication requirements referenced throughout this Article.
ARTICLE 8. PERMIT-LEVEL RESIDENTIAL-VERSUS-COMMERCIAL ACCOUNTING
Sec. 151A.701. PURPOSE; RELATIONSHIP TO TLES ACT.
(a) The Texas Living Exemption Set established by the TPTRP Texas Living Exemption
Set Act exempts from this tax only those household living purchases that satisfy the Cost of Living
Standard of Article VIII, Section 1-r, of the Texas Constitution. Commercial, industrial, agricultural,
government, and other non-household purchases of goods and services in the same Texas Living Exemption
Set categories remain taxable transactions under this Act.
(b) This Article establishes the operative mechanism by which the comptroller
administers this dual treatment at the transaction level through the state sales tax permit system.
Section 5A of the TPTRP Texas Living Exemption Set Act imposes the substantive standard that the
exemptions established by that Act apply only to household cost-of-living purchases; this Article
contains the administrative mechanism required to carry that standard into effect. Nothing in this
Article expands, narrows, or otherwise alters the substantive standard fixed by Article VIII, Section
1-r, of the Texas Constitution, or by Section 5A of the TPTRP Texas Living Exemption Set Act.
(c) No provision of this Article may be construed to authorize a resale certificate,
a class-wide exemption for business inputs, manufacturing inputs, or intercorporate services, or an
exemption or special treatment based on the identity of the seller, the industry to which a transaction
belongs, or the commercial purpose asserted by the buyer, all of which are prohibited by Article VIII,
Sections 1-p(h) and 1-r(b) and (d), of the Texas Constitution.
(d) This section implements Article VIII, Section 1-r, of the Texas Constitution.
Sec. 151A.702. PERMIT CATEGORIES; SELLER CERTIFICATION.
(a) The comptroller shall design sales-tax-permit categories that identify, for each
permit-holder, the goods and services the permit-holder sells across the categories of the Texas Living
Exemption Set established by the TPTRP Texas Living Exemption Set Act, as those categories are
constituted, amended, added, or removed from time to time by the legislature.
(b) The comptroller shall require each permit-holder, at initial application and at
each renewal, to certify, under oath and subject to the penalties of perjury, the permit-holder's
residential-versus-commercial customer share for each Texas Living Exemption Set category in which the
permit-holder operates. The certification required by this subsection is in addition to, and does not
replace, the certification of TLES-exempt transaction classes required of every permit holder under
Section 5 of the TPTRP Texas Living Exemption Set Act.
(c) The comptroller shall publish a schedule of standard permit categories, updated
at least annually, on the Texas Sales and Use Tax Portal established under Section 490.073, Government
Code.
(d) The comptroller shall coordinate the permit categories and certifications
required by this section with the registration required of remote sellers and foreign entities under the
TPTRP Remote Seller and Foreign Entity Act, so that a single permit-holder's TLES certifications,
residential-versus-commercial certifications, and nexus registration are administered as a unified
record on the Texas Sales and Use Tax Portal.
(e) A permit-holder's certification under this section binds the permit-holder
for purposes of Section 151A.706 (audit and enforcement) and Section 151A.707 (misclassification
penalties) of this code until superseded by a new certification filed at the next renewal or by an
amended certification filed under Subsection (f).
(f) A permit-holder whose residential-versus-commercial customer share changes
materially during a permit period shall file an amended certification with the comptroller not later
than the 30th day after the date the permit-holder knew or should have known of the material change. A
permit-holder that fails to timely amend a certification under this subsection remains liable for tax on
transactions misclassified in reliance on the superseded certification, without regard to the
permit-holder's intent, subject to the graduated penalty schedule of Section 151A.707 of this code.
(g) This section implements Article VIII, Section 1-r, of the Texas Constitution,
and Section 5A(b)(1) and (2) of the TPTRP Texas Living Exemption Set Act.
Sec. 151A.703. ACCOUNTING METHODS.
(a) For each Texas Living Exemption Set category, the comptroller shall prescribe,
by rule, the accounting method under which permit-holders operating in that category identify and remit
tax on the commercial share of their sales. The comptroller shall select, for each category, the method
appropriate to the nature of the goods or services and the practicalities of buyer identification, from
among the following:
(1) Per-transaction certification. Applicable where the buyer's
residential-versus-commercial character is verifiable at the transaction, including without limitation
vehicle-fuel purchases made with a commercial fleet card, medical-services purchases made against a
health-insurance identifier, and utility services keyed to a residential-versus-commercial account
classification. Under this method, the permit-holder determines, and remits tax according to, the
classification of each individual transaction.
(2) Aggregate share. Applicable where per-transaction certification
is impractical. Under this method, the permit-holder certifies, under Section 151A.702 of this code, an
aggregate residential-versus-commercial share for each Texas Living Exemption Set category in which the
permit-holder operates, computed under a comptroller-approved methodology — which shall typically be a
rolling average of the permit-holder's prior-period sales composition — and remits tax on the
certified commercial share of the permit-holder's sales in that category.
(3) Hybrid. Applicable where a permit-holder has both
directly-identifiable-commercial transactions and blended transactions that cannot be individually
classified. Under this method, the permit-holder applies per-transaction certification to
identifiable-commercial transactions and applies the aggregate-share method to the remainder.
(4) Category-specific method. The comptroller may prescribe a method
specific to a Texas Living Exemption Set category where the methods described by Subdivisions (1)
through (3) of this subsection are inadequate to the nature of the goods or services in that category. A
category-specific method prescribed under this subdivision must be adopted as a formal rule under
Chapter 2001, Government Code, and the comptroller shall include in the rulemaking record a finding that
the method is consistent with the Cost of Living Standard of Article VIII, Section 1-r, of the Texas
Constitution.
(b) A rule adopted under this section may not authorize a resale certificate, and
may not classify a transaction as residential based on the identity, industry, or asserted commercial
purpose of the seller rather than the character of the ultimate purchaser and the purchaser's
purpose as provided by Section 151A.704 of this code.
(c) The comptroller shall publish the accounting method prescribed for each Texas
Living Exemption Set category, and any amendment to a prescribed method, on the Texas Sales and Use Tax
Portal.
(d) This section implements Article VIII, Section 1-r, of the Texas Constitution,
and Section 5A(b)(3) of the TPTRP Texas Living Exemption Set Act.
Sec. 151A.704. RESIDENTIAL VERSUS COMMERCIAL CLASSIFICATION.
(a) A transaction is a residential transaction — and eligible for exemption under
the TPTRP Texas Living Exemption Set Act if it falls within a Texas Living Exemption Set category — only
if the ultimate purchaser is a household purchasing for a Cost of Living purpose within the meaning of
Article VIII, Section 1-r(a), of the Texas Constitution.
(b) A transaction is a commercial transaction — and remains taxable under this Act
notwithstanding that it falls within a Texas Living Exemption Set category — if the ultimate purchaser
is:
(1) a business, corporation, partnership, limited liability entity, sole
proprietorship acting in a commercial capacity, government entity, nonprofit organization acting in an
operational capacity, or any other non-household purchaser;
(2) a household purchasing for a commercial, business, or income-producing purpose,
notwithstanding that the household is the nominal purchaser;
(3) a household purchasing quantities materially exceeding the household's
household-consumption use, as further specified by comptroller rule; or
(4) a household making a purchase that, under the Cost of Living Standard of Article
VIII, Section 1-r(a), of the Texas Constitution, does not directly and primarily affect the cost of
living of the individual Texas citizens and their immediate families.
(c) The classification standard of this section is the exclusive standard for
distinguishing residential from commercial transactions for purposes of this Article and the TPTRP Texas
Living Exemption Set Act. No rule, permit category, accounting method, or administrative practice
adopted under this Article may substitute a different standard, and no such rule, category, method, or
practice may narrow or expand the Cost of Living Standard of Article VIII, Section 1-r(a), of the Texas
Constitution.
(d) The classification standard of this section applies uniformly to every Texas
Living Exemption Set category and may not be modified on a category-by-category basis to create an
industry-specific, product-specific, or seller-specific standard of classification. A comptroller rule
adopted under Section 151A.703 of this code may address the accounting method by which classification is
administered in a category, but may not alter the substantive classification standard stated in this
section.
(e) This section implements Article VIII, Sections 1-r(a) and 1-r(b), of the Texas
Constitution.
Sec. 151A.705. PRIMARY RESIDENCE CERTIFICATE COORDINATION — CROSS-REFERENCE.
(a) The Primary Residence Certificate framework governing classification of a
purchase-of-a-primary-residence transaction under the Texas Living Exemption Set, and its coordination
with closing agents, title companies, and county recorders through the Texas Sales and Use Tax Portal,
is established and administered by the TPTRP Texas Living Exemption Set Act. A permit-holder that sells
real property and administers primary-residence exemptions does so under that Act, not this article.
(b) A Primary Residence Certificate filed under the TPTRP Texas Living Exemption Set
Act satisfies, for the transaction to which it relates, the certification otherwise required by Section
151A.702 of this code, and no separate residential-versus-commercial certification is required for that
transaction.
(c) This section implements Article VIII, Section 1-r, of the Texas Constitution.
Sec. 151A.706. AUDIT AND ENFORCEMENT.
(a) The comptroller shall establish risk-based audit protocols for permit-holders
operating across residential and commercial customer classes, prioritizing audit resources according to
the volume of the permit-holder's sales, the accounting method applicable to the permit-holder's
Texas Living Exemption Set category or categories, and any history of misclassification by the
permit-holder.
(b) The comptroller shall perform a routine audit of each permit-holder operating in
a high-classification-risk Texas Living Exemption Set category, as designated by comptroller rule, not
less than once every three fiscal years.
(c) The comptroller shall verify aggregate-share certifications filed under Section
151A.703(a)(2) of this code against sales composition data reported through the permit system, and shall
verify per-transaction and hybrid-method reporting for consistency with the buyer-identification data
available under Section 151A.703(a)(1) and (3) of this code.
(d) The comptroller shall publish audit findings under this section, in aggregated,
non-identifying form, on the Texas Sales and Use Tax Portal, not less than annually.
(e) The audit authority granted by this section is in addition to, and does not
limit, the comptroller's general audit authority over permit holders under Section 5(c)(1) of the
TPTRP Texas Living Exemption Set Act and under Article VIII, Section 1-r(f), of the Texas Constitution.
(f) This section implements Article VIII, Sections 1-r(e) and 1-r(f), of the Texas
Constitution.
Sec. 151A.707. MISCLASSIFICATION PENALTIES.
(a) A permit-holder who misclassifies a transaction as residential when the
transaction is a commercial transaction under Section 151A.704 of this code is liable for the graduated
penalties established by this section, in addition to the tax due and interest as otherwise provided by
this chapter.
(b) Negligent misclassification. A permit-holder who misclassifies
a transaction through negligence, without recklessness or intent, is liable for the tax due, plus
interest, plus a penalty equal to ten percent (10%) of the tax due.
(c) Reckless misclassification. A permit-holder who misclassifies a
transaction with conscious disregard of a substantial and unjustifiable risk that the classification is
incorrect is liable for the tax due, plus interest, plus a penalty equal to fifty percent (50%) of the
tax due.
(d) Fraudulent misclassification. A permit-holder who knowingly or
intentionally misclassifies a transaction, or who knowingly certifies a false
residential-versus-commercial share under Section 151A.702 of this code, is liable for the tax due, plus
interest, plus a penalty equal to one hundred percent (100%) of the tax due, and the comptroller shall
refer the matter to the attorney general for criminal prosecution under the fraud provisions of Chapter
151 of this code preserved by conforming amendment under Article 12 of this Act.
(e) Systematic misclassification. Where the comptroller finds that
a permit-holder has demonstrated a pattern of misclassification across multiple reporting periods,
multiple Texas Living Exemption Set categories, or both, the comptroller shall revoke the permit-holder's
sales tax permit. A permit-holder whose permit is revoked under this subsection is disqualified from
selling in this state until a new permit is issued to the permit-holder under a comptroller-supervised
compliance plan.
(f) The penalties established by this section are cumulative of, and not exclusive
of, the citizen enforcement remedies preserved by Subsection (g) of this section and the criminal and
civil enforcement authority of the district attorneys and the attorney general under Section 5(c)(2) of
the TPTRP Texas Living Exemption Set Act and Article VIII, Section 1-r(f), of the Texas Constitution.
(g) The citizen enforcement standing established by Section 5(c)(3) and (4) of the
TPTRP Texas Living Exemption Set Act and by Article VIII, Sections 1-r(g) and 1-w, of the Texas
Constitution, is preserved without limitation as to misclassification addressed under this section. A
citizen who prevails in an action arising from a misclassification addressed by this section is entitled
to the remedies provided by Article VIII, Section 1-r(g), of the Texas Constitution and Section 5(c)(3)
and (4) of the TPTRP Texas Living Exemption Set Act, including the full amount of any tax wrongfully
collected or wrongfully exempted, interest, penalties, and reasonable attorney's fees and costs.
(h) This section implements Article VIII, Sections 1-r(f) and 1-r(g), of the Texas
Constitution.
Sec. 151A.708. APPEAL PROCEDURES.
(a) A permit-holder may appeal a comptroller determination under this Article —
including a permit category designation, a certification requirement, an accounting method
determination, an audit finding, or a penalty assessed under Section 151A.707 of this code — through the
Certification Dispute Process established by Section 490.015(c), Government Code.
(b) The Certification Dispute Process provides for arbitration in the first
instance, followed by judicial review in the district courts of Travis County, as established by the
TPTRP Transition Board Act. No provision of this Article creates a separate or alternative dispute
process, and this Article does not modify the procedures, deadlines, or standard of review established
by Section 490.015(c), Government Code.
(c) An appeal under this section does not stay the comptroller's audit or
enforcement authority under Section 151A.706 of this code except as the Certification Dispute Process
itself provides, and does not stay or excuse a permit-holder's continuing obligation to collect and
remit tax on transactions not in dispute.
(d) This section implements Article VIII, Section 1-r, of the Texas Constitution, by
reference to the dispute process established under Section 490.015(c), Government Code.
Sec. 151A.709. COMMERCIAL-SHARE DEDICATION FUNDING.
(a) The commercial share of sales in any Texas Living Exemption Set category that
touches a constitutional dedication under Article VIII, Section 7-a (motor fuels), or Section 2.02(e)
(other abolished-tax dedications), of the Texas Constitution — including without limitation the
commercial share of motor fuel sales, commercial and industrial utility service, non-household medical
services, commercial and industrial insurance, and every other Texas Living Exemption Set-touching NAICS
category — remains a taxable transaction under this Act.
(b) The tax collected on the commercial share of each category described by
Subsection (a) of this section is dedicated to the same fund, agency, or purpose as the abolished tax
that formerly funded that dedication, in the proportion and manner provided by Article 11 of this Act
and Article VIII, Sections 7-a and 2.02(e), of the Texas Constitution.
(c) Nothing in the TPTRP Texas Living Exemption Set Act, or in this Article,
reduces, defers, or reallocates a dedication described by Subsection (a) of this section. Because the
Texas Living Exemption Set exempts only household cost-of-living purchases and leaves the commercial
share of every category fully taxable, no dedication funded in whole or in part by a category within the
Texas Living Exemption Set is diminished by the existence of the exemption.
(d) This section implements Article VIII, Sections 1-r, 7-a, and 2.02(e), of the
Texas Constitution. See Article 11 of this Act for the mechanics of dedication allocation.
Cross-references. Article 3 of this Act governs the definition of a
taxable transaction and sourcing. Article 11 of this Act governs the allocation of tax revenue to
constitutional dedications, including the dedications preserved by Section 151A.709 of this code. The
TPTRP Texas Living Exemption Set Act establishes the categories of the Texas Living Exemption Set, the
Cost of Living Standard, the Primary Residence Certificate, and citizen enforcement standing, and
Section 5A of that Act states the substantive standard implemented by this Article. The TPTRP Remote
Seller and Foreign Entity Act governs Business Organizations Code registration coordinated with permit
certification under Section 151A.702 of this code. Section 490.015(c), Government Code (TPTRP Transition
Board Act), establishes the Certification Dispute Process to which appeals under Section 151A.708 of
this code are assigned.
ARTICLE 9. THE TEXAS SALES AND USE TAX PORTAL
Sec. 151A.801. DESIGNATION OF THE TEXAS SALES AND USE TAX PORTAL.
(a) The public transparency platform established under Section 490.073, Government
Code, by the TPTRP Transition Board Act is designated as the Texas Sales and Use Tax
Portal — the single consolidated public-facing platform for the Texas Property Tax
Replacement Plan.
(b) All public-facing systems, publications, feeds, disclosures, registers, and
portals established by this Act, by the TPTRP Fund System Act, by the TPTRP Bond Management Act, by the
TPTRP Remote Seller and Foreign Entity Act, by the TPTRP Texas Living Exemption Set Act, by the TPTRP
Transition Board Act, or by any other TPTRP implementing act shall operate as named modules of the Texas
Sales and Use Tax Portal, as provided by Section 151A.802 of this code.
(c) No agency, board, division, taxing entity, or officer of this state may
establish a separate portal, platform, website, dashboard, or system for a function within the scope of
the Texas Sales and Use Tax Portal. Every TPTRP transparency, disclosure, reporting, or publication
obligation imposed by this Act or by another TPTRP implementing act is satisfied by publication on the
Texas Sales and Use Tax Portal, and not otherwise.
(d) This section implements Article VIII, Sections 1-n(l), 1-u, and 1-v, of the
Texas Constitution.
Sec. 151A.802. PORTAL MODULES.
(a) The Texas Sales and Use Tax Portal consists of the following named modules, each
established or maintained under its home Act as identified below:
(1) Transparency and Reporting module — the core platform
established under Section 490.073, Government Code, by the TPTRP Transition Board Act, displaying the
disclosures required by Section 490.073(b)-(c), Government Code;
(2) Citizens First Bond module — established under the TPTRP Bond
Management Act;
(3) Foreign Entity module — established under the TPTRP Remote
Seller and Foreign Entity Act;
(4) Local Government Transparency module — established under the
TPTRP Bond Management Act and the TPTRP Fund System Act;
(5) Cascade Status module — established under the TPTRP Fund System
Act;
(6) Section 1-n(l) Disclosure Feed module — established under
Article 10 of this Act, consolidating the disclosure items required by Article VIII, Section 1-n(l), of
the Texas Constitution from this Act and from each other TPTRP implementing act;
(7) Section 1-v Performance Publication module — established under
Section 490.105, Government Code, by the TPTRP Transition Board Act, publishing the annual performance
report measuring the Texas Property Tax Replacement Plan against the seven performance criteria of
Article VIII, Section 1-v, of the Texas Constitution;
(8) Permit and Certification module — established under Article 8 of
this Act (permit-level residential-versus-commercial accounting) and Article 10 of this Act
(certifications), displaying permit classifications, certification filings, and certification history;
(9) Dedication Allocation module — established under Article 11 of
this Act, displaying the dedication and allocation of tax revenue to the constitutional purposes
described by Article VIII, Sections 2.01, 2.02, and 7-a, of the Texas Constitution;
(10) Rate Certification module — established under Article 10 of
this Act, publishing each taxing entity's total rate, M&O sub-rate, I&S sub-rate, and rate
history; and
(11) any additional module the comptroller establishes by rule to implement a TPTRP
transparency, disclosure, reporting, or publication function not otherwise assigned to a module under
Subdivisions (1)-(10), subject to approval by the Board during the transition period and by the Division
after the Board's termination.
(b) A module listed in Subsection (a) is a component of the Texas Sales and Use Tax
Portal for all purposes, and a reference in this Act or in another TPTRP implementing act to a named
module is a reference to that module as maintained on the Texas Sales and Use Tax Portal.
(c) This section implements Article VIII, Sections 1-n(l), 1-u, and 1-v, of the
Texas Constitution.
Sec. 151A.802A. ADDRESS-BASED TAX STACK LOOKUP MODULE.
(a) The comptroller shall maintain, as a required module of the Texas Sales and Use
Tax Portal, an authoritative address-based tax-stack lookup for every taxable location in this state.
The module shall build on, and supersede, the address-lookup functionality of the Comptroller's
Sales Tax Rate Locator existing on the effective date of this Act.
(b) For each Texas address, the module shall identify:
(1) the state sales and use tax rate imposed under Article 2 of this Act;
(2) each taxing entity, by name and by sales-tax jurisdiction code, in whose
jurisdiction the address is located, including the county, municipality, independent school district,
transit authority, special purpose district, and any other taxing entity subject to this chapter;
(3) the current sales-tax rate imposed by each entity identified under Subdivision
(2), broken out by tier under Article 2 of this Act and by Maintenance and Operations sub-rate and
Interest and Sinking sub-rate;
(4) the total combined sales-tax rate applicable to a taxable transaction sourced to
that address under Section 151A.206 or Section 151A.207 of this code; and
(5) the effective date of each rate identified under Subdivisions (1) and (3) and, if
a rate change has been certified but is not yet effective, the effective date of that change.
(c) A taxing entity shall submit each proposed rate change to the comptroller for
certification not less than 60 days before the effective date of the change, or on such other schedule
as the comptroller may specify by rule. On certification of the change, the comptroller shall update the
address-based tax-stack lookup module and publish the change in accordance with Section 151A.804 of this
code.
(d) The comptroller shall make the address-based tax-stack lookup available to the
public without charge, and shall make the underlying data available for bulk download and by application
programming interface for point-of-sale software, electronic commerce platforms, tax compliance
software, and other integrators. The comptroller may impose reasonable rate limits and access controls
on the application programming interface, but may not impose a fee for public use of the lookup module
or of standard download and API access consistent with existing comptroller practice.
(e) A seller that determines a sales-tax rate in reasonable reliance on the
address-based tax-stack lookup module for a transaction sourced under Section 151A.206 or Section
151A.207 of this code is not liable for an underpayment of tax resulting from an error in the lookup
module, without prejudice to the comptroller's right to assess the underpaid tax against the seller
if the seller knew or should have known that the lookup module contained an error at the time of the
transaction.
(f) This section implements Article VIII, Sections 1-p and 1-r, of the Texas
Constitution.
Sec. 151A.802B. PERMIT-HOLDER TRANSACTION REPORTING MODULE.
(a) The comptroller shall maintain, as a required module of the Texas Sales and Use
Tax Portal, a permit-holder transaction reporting module keyed to the sales-tax permit identification
number issued to each permit-holder under Article 7 of this Act.
(b) The module shall enable a permit-holder, or a point-of-sale system, electronic
commerce platform, or tax compliance software integrated with the permit-holder's account on behalf
of the permit-holder, to:
(1) authenticate to the module using the permit-holder's sales-tax permit
identification number and secure credentials established by the comptroller;
(2) submit transaction-level data, in the form and manner the comptroller specifies
by rule, associating each taxable transaction with the address to which it is sourced under Section
151A.206 or Section 151A.207 of this code, the taxing entities in whose jurisdiction the address lies,
and the amount of tax collected;
(3) reconcile the permit-holder's own transaction records with the comptroller's
allocations and quarterly distributions under Article 7 of this Act; and
(4) view, download, and export permit-holder transaction reports by taxing entity, by
tier, by sourcing location, and by fiscal period.
(c) The comptroller shall design the module to minimize compliance burden on
permit-holders while providing sufficient granularity to support the residential-versus-commercial
permit-level accounting required by Article 8 of this Act, the Texas Living Exemption Set certifications
required by the TPTRP Texas Living Exemption Set Act, and the entity-level allocation and distribution
mechanics of Article 7 of this Act. The comptroller shall coordinate the module with the address-based
tax-stack lookup module under Section 151A.802A of this code, so that a permit-holder's transaction
reporting under this section automatically incorporates the tax-stack applicable to each sourced address
as of the transaction date.
(d) A permit-holder is not required to use the module directly if the permit-holder
submits transaction reports through a point-of-sale system, electronic commerce platform, tax compliance
software, or agent that satisfies the reporting requirements of this section through the module's
application programming interface.
(e) The comptroller may adopt rules governing authentication, data format,
submission frequency, correction of errors, retention, and enforcement under this section. Rules under
this subsection shall preserve, to the extent practicable, existing permit-holder reporting practice
under Chapter 151, Tax Code, as it existed immediately before the effective date of this Act, and shall
not impose a materially greater compliance burden on a permit-holder than that reporting practice
imposed as of that date, except as reasonably necessary to implement the tiered rate structure and the
sourcing rules of this Act.
(f) This section implements Article VIII, Sections 1-p, 1-q, and 1-r, of the Texas
Constitution.
Sec. 151A.803. OPERATOR; PERMANENCE.
(a) The Board operates the Texas Sales and Use Tax Portal during the transition
period, through the Division, as provided by Section 490.073, Government Code.
(b) The Division operates the Texas Sales and Use Tax Portal permanently upon the
Board's termination under Article VIII, Section 1-u, of the Texas Constitution, and Subchapter G,
Chapter 490, Government Code. The Division's operation of the Portal does not sunset and is not
subject to a termination date.
(c) The Texas Sales and Use Tax Portal shall remain continuously operational and
publicly accessible from the first day of the Board's operation, without interruption across the
transfer of operating responsibility from the Board to the Division.
(d) The Texas Sales and Use Tax Portal is administered from the appropriation to the
Division under Chapter 490, Government Code, and from such other appropriations as the Legislature makes
for the administration of the Texas Property Tax Replacement Plan.
(e) This section implements Article VIII, Sections 1-u and 1-v, of the Texas
Constitution.
Sec. 151A.804. DATA STANDARDS AND UPDATE FREQUENCY.
(a) All data published on the Texas Sales and Use Tax Portal shall be published in
machine-readable format, including comma-separated value (CSV) and JavaScript Object Notation (JSON)
files, or successor open-standard equivalents, together with a human-readable interface presenting the
same data.
(b) The comptroller shall update the Texas Sales and Use Tax Portal not less
frequently than the following schedule for each category of data:
(1) rate data — within 30 days of any material change to a taxing entity's total
rate, M&O sub-rate, or I&S sub-rate;
(2) collections and distributions — within 45 days after the close of each calendar
quarter;
(3) fund balances — within 30 days of the close of each fiscal period;
(4) budget certifications and Mandatory Expenditure Reduction Plan filings — within
10 days of receipt by the comptroller;
(5) the bond registry maintained on the Citizens First Bond module — in real time
upon bond issuance and upon any material change to outstanding bond terms; and
(6) disclosure items required by Article VIII, Section 1-n(l), of the Texas
Constitution — within 30 days of a material change and, in all events, within 60 days of the close of
the applicable fiscal year.
(c) The update frequencies established by Subsection (b) are minimum frequencies.
The Board, and after Board termination the Division, may update the Texas Sales and Use Tax Portal more
frequently, and nothing in this section limits real-time or continuous publication where the underlying
system supports it.
(d) The Texas Sales and Use Tax Portal shall retain historical data for not less
than ten fiscal periods, measured backward from the most recently completed fiscal period, for every
category of data described by Subsection (b). This retention requirement is a floor; the Board, and
after Board termination the Division, may retain historical data for a longer period and may not delete
or archive data in a manner that renders it unavailable to the public before the expiration of the
ten-fiscal-period minimum.
(e) This section implements Article VIII, Sections 1-n(l) and 1-v, of the Texas
Constitution.
Sec. 151A.805. PUBLIC ACCESS AND API AVAILABILITY.
(a) Access to all public-facing data on the Texas Sales and Use Tax Portal is free
of charge to the public. No agency, board, division, or taxing entity may impose a fee, subscription
charge, registration requirement, or other condition on public access to the Texas Sales and Use Tax
Portal or to any module of it.
(b) The comptroller shall provide and maintain a public application programming
interface (API) for machine access to the data published on the Texas Sales and Use Tax Portal. The
public API shall be available without registration and without fee for reasonable public use.
(c) The comptroller may adopt reasonable technical safeguards against automated
abuse of the public API, including rate limiting calibrated to prevent service degradation, provided
that such safeguards may not be used to restrict, delay, or condition good-faith public access to Portal
data.
(d) Nothing in this section may be construed to authorize restriction of public
access to the Texas Sales and Use Tax Portal or to any module of it. Any statute, rule, order, or policy
that restricts, paywalls, or conditions public access to the Texas Sales and Use Tax Portal is void to
the extent of the restriction.
(e) This section implements Article VIII, Sections 1-n(l) and 1-v, of the Texas
Constitution.
Cross-references. Section 490.073, Government Code, as enacted by
the TPTRP Transition Board Act, is the constitutional and statutory anchor of the Texas Sales and Use
Tax Portal designated by this Article. Section 490.105, Government Code, as enacted by the TPTRP
Transition Board Act, establishes the Section 1-v Performance Publication module referenced by Section
151A.802(a)(7) of this code. The TPTRP Bond Management Act, the TPTRP Fund System Act, and the TPTRP
Remote Seller and Foreign Entity Act each maintain their respective modules of the Texas Sales and Use
Tax Portal and shall cross-reference the Portal by module name rather than establishing an independent
platform. Article 8 of this Act governs permit-level residential-versus-commercial accounting reflected
on the Permit and Certification module. Article 10 of this Act governs certifications, reporting, and
the Section 1-n(l) Disclosure Feed module, the Permit and Certification module, and the Rate
Certification module, and establishes the dispute process, modeled on Section 490.015(c), Government
Code, applicable to disputes over data published on the Texas Sales and Use Tax Portal. Article 11 of
this Act governs the Dedication Allocation module.
ARTICLE 10. CERTIFICATIONS, REPORTING, AND DISPUTE PROCESS
[Subchapter I, Chapter 151-A, Tax Code]
Sec. 151A.901. COMPTROLLER CERTIFICATIONS.
(a) The Comptroller shall certify, annually or more frequently as required by this
Act, the following with respect to each taxing entity:
(1) the entity's certified annual bond debt service and required Interest and
Sinking Rate under Sec. 151A.604 of this Act (Article 7);
(2) the entity's Total Budget Cap under Sec. 151A.307 of this Act (Article 4);
(3) the entity's Actual Need Ratio under Sec. 151A.310 of this Act (Article
4);
(4) the entity's Final Year Baseline, as certified under Section 490.015,
Government Code (TPTRP Transition Board Act) — this Act does not restate that certification and adopts
it by reference;
(5) the entity's status under the Assistance Eligibility Standard established by
Section 490.032, Government Code (TPTRP Transition Board Act) — this Act does not restate that standard
and adopts it by reference;
(6) if the entity is a Tier 5 entity, its apportioned share of the Tier 5 aggregate
cap under Sec. 151A.501-506 of this Act (Article 6);
(7) the annual Starting Combined Rate compliance certification, confirming that the
combined rate of all taxing entities whose jurisdictions include a given location does not exceed the
six percent (6.00%) ceiling established by Article VIII, Section 1-n(b)(3), of the Texas Constitution,
at every location in this state; and
(8) the economic-nexus threshold status of remote sellers and foreign entities under
Article VIII, Section 1-q, of the Texas Constitution and the TPTRP Remote Seller and Foreign Entity Act.
(b) All certifications issued under this section shall be published on the Texas
Sales and Use Tax Portal established under Section 490.073, Government Code, in the Rate Certification
module.
(c) This section implements Article VIII, Sections 1-n(f)(4), 1-n(g)(1), 1-n(h)(2),
1-n(m)(6), 1-q, and 1-u, of the Texas Constitution.
Sec. 151A.902. MANDATORY DISCLOSURE ITEMS UNDER ARTICLE VIII, SECTION 1-n(l), OF THE TEXAS CONSTITUTION.
(a) Every taxing entity shall maintain on its official public website, and shall
transmit to the Comptroller for publication on the Section 1-n(l) Disclosure Feed module of the Texas
Sales and Use Tax Portal, updated within 30 days of any material change and within 60 days of the close
of its fiscal year, the following, adopted verbatim from Article VIII, Section 1-n(l), of the Texas
Constitution as mandatory statutory disclosure items applicable to every taxing entity:
(1) the entity's current total rate, I&S sub-rate, M&O sub-rate, current
rate floor, and rolling 10-year rate history;
(2) actual year-to-date collections and planned compared with actual expenditures;
(3) the balance of every fund required by Article VIII, Section 1-s, of the Texas
Constitution (TPTRP Fund System Act);
(4) the amount and per-citizen value of every waterfall distribution under Article
VIII, Section 1-t, of the Texas Constitution (TPTRP Fund System Act);
(5) the entity's adopted annual budget in searchable form with year-over-year
comparisons;
(6) all outstanding bond obligations and projected payoff dates;
(7) the chief financial officer's written advisement at each budget and
waterfall decision point and the governing body's recorded vote on each;
(8) a plain-language summary of collections, expenditures, and distributions prepared
for a general audience;
(9) the annual Total Budget Cap certification issued by the Comptroller under Sec.
151A.901(a)(2) of this Act;
(9-A) for each of the two most recent fiscal periods, the entity's actual
Interest and Sinking collections compared with its certified annual bond debt service, stated as a
percentage, together with a statement of whether the automatic rate step-down under Sec. 151A.605 of
this Act (Article VIII, Section 1-n(h)(5-A) of the Texas Constitution) has been triggered or is one
period from being triggered; and
(10) in the case of an independent school district, the disclosure required by Sec.
151A.903 of this Act.
(b) Every entity shall publish the items required by Subsection (a) both (1) on the
entity's official website and (2) by transmission to the Comptroller for publication on the Section
1-n(l) Disclosure Feed module of the Texas Sales and Use Tax Portal.
(c) This section implements Article VIII, Section 1-n(l)(1)-(9-A), of the Texas
Constitution.
Sec. 151A.903. $10,000-PER-STUDENT ISD DISCLOSURE TRIGGER.
(a) In the case of an independent school district, the district shall disclose, as
part of the disclosure required by Sec. 151A.902 of this Act, the district's total Maintenance and
Operations revenue for the fiscal year divided by the number of students enrolled in the district,
stated as a dollar amount per enrolled student.
(b) The following is adopted verbatim from Article VIII, Section 1-n(l)(10), of the
Texas Constitution:
"If an independent school district's M&O revenue per enrolled student
exceeds $10,000 for a fiscal year, the district shall additionally publish, on the first page of its
adopted budget, on the front page of its official website, and in the notice of each budget hearing, a
plain-language statement that the district's maintenance and operations revenue per enrolled
student has exceeded $10,000 for the fiscal year, together with the amount by which the threshold was
exceeded."
(c) Disclosure only; not a distribution formula; not a cap. The $10,000
threshold established by this section is a disclosure trigger only. It does not limit, cap, reduce, or
condition a district's revenue, rate, or budget, and it is not a distribution formula. No district's
Tier 4 distribution, collections, rate, or budget may be reduced, adjusted, withheld, delayed, or
conditioned by reference to the threshold, in whole or in part, directly or indirectly, by the
Comptroller, the Board, the Division, or any other officer or agency of this state. The threshold
operates solely as a public-transparency mechanism under Article VIII, Section 1-n(l), of the Texas
Constitution. No rule, order, or administrative interpretation may convert this disclosure trigger into
a funding formula, weighting factor, or eligibility condition.
(d) This section implements Article VIII, Section 1-n(l)(10), and Section 1-n(k)(2)
and (k)(5), of the Texas Constitution.
Sec. 151A.904. AUTOMATIC WITHHOLDING OF M&O DISTRIBUTION ON NONCOMPLIANCE; BOND SERVICE LEVY CARVE-OUT.
(a) The following is adopted verbatim from the closing paragraph of Article VIII,
Section 1-n(l), of the Texas Constitution:
"Failure to publish a required item under Sec. 151A.902 within the required
deadline results in automatic suspension of the M&O portion of the entity's quarterly
distribution under this Act until compliance is restored, as enforced by the Comptroller. The Bond
Service Levy portion of a distribution may never be suspended, withheld, or escrowed under this section
or under any other provision of this Act; the Bond Service Levy is inviolable as provided by Section
151A.607 of this Act."
(b) Automatic effect. The suspension imposed by Subsection (a) is automatic
upon the Comptroller's finding of noncompliance with a deadline under Sec. 151A.902 or Sec.
151A.903 of this Act. No hearing, notice-and-cure period, or discretionary determination by the
Comptroller is a precondition to suspension; the Comptroller's role is to find noncompliance and
enforce the automatic consequence, not to elect whether to impose it.
(c) Restoration. Suspension under this section ends automatically upon the
Comptroller's finding that the entity has restored compliance by publishing the omitted item in the
form required by Sec. 151A.902 or Sec. 151A.903 of this Act. Distribution of the M&O portion resumes
with the next scheduled quarterly distribution following the finding of restored compliance; suspended
amounts do not carry forward as a penalty beyond the period of actual noncompliance.
(d) Bond Service Levy carve-out is absolute. Notwithstanding Subsection
(a), (b), or (c) of this section, or any other provision of this Act, the Bond Service Levy — the I&S
component of a taxing entity's quarterly distribution — may never be suspended, withheld, escrowed,
offset, delayed, or otherwise diminished under this section for noncompliance with any disclosure
requirement of this Article, or for any other reason. This subsection does not create, and may not be
construed to create, any authority to suspend the Bond Service Levy that does not otherwise exist; it
restates and confirms the inviolability rule established by Sec. 151A.607 of this Act (Article VIII,
Section 1-n(l) closing paragraph, Section 1-s(i)(4), Section 1-s(k)(7), and Section 1-o, of the Texas
Constitution).
(e) This section implements Article VIII, Section 1-n(l) (closing paragraph), of the
Texas Constitution.
Sec. 151A.905. CERTIFICATION DISPUTE PROCESS.
(a) Exclusive process. A taxing entity that contests a certification issued
by the Comptroller under this Article, or under any other provision of this Act, shall proceed
exclusively under the Certification Dispute Process established by Section 490.015(c), Government Code
(TPTRP Transition Board Act), consisting of:
(1) Step One — Board-facilitated arbitration between the contesting entity and the
Comptroller, with the goal of reaching a mutually agreeable resolution not later than the 90th day after
the contest is filed, concluding in a written recommendation by the Board; and
(2) Step Two — if Step One does not resolve the contest, direct judicial review of
the certification in a district court of Travis County. Judicial review under this subdivision is
unavailable until the entity has completed Step One.
(b) Exclusivity; no parallel remedy. The process established by Subsection
(a) is the exclusive remedy for a challenge to a Comptroller certification under this Act. No writ,
injunction, declaratory judgment, or other judicial or administrative remedy may issue in any court or
before any agency of this state to stay, suspend, enjoin, modify, or set aside a Comptroller
certification issued under this Article except through the process established by this section. A taxing
entity may not maintain an action under Chapter 37, Civil Practice and Remedies Code, the Administrative
Procedure Act, or any other law to challenge a certification governed by this section, and no court has
jurisdiction to entertain such an action except as provided by Subsection (a)(2) of this section
following completion of Step One.
(c) No stay of Implementation Date or distributions. A contest,
arbitration, or judicial review under this section does not stay the Implementation Date, the collection
or distribution of the tax under this Act, or any other provision of this Act, including the automatic
withholding of the M&O distribution under Sec. 151A.904 of this Act pending resolution of the
contest. The Bond Service Levy carve-out of Sec. 151A.904(d) and Sec. 151A.607 of this Act applies
without regard to the pendency of any dispute under this section.
(d) Filing procedures. The Comptroller shall establish administrative
procedures for filing a contest under this section, consistent with the procedures established under
Section 490.015(d), Government Code, for contests of a Final Year Baseline Certification.
(e) This section implements Article VIII, Section 1-n(m)(6), of the Texas
Constitution, and adopts by reference the dispute process established by Section 490.015(c), Government
Code (TPTRP Transition Board Act).
Sec. 151A.906. AUDIT AUTHORITY.
(a) The Comptroller has audit authority over every taxing entity, every
permit-holder, and every remote seller subject to this Act, including authority to audit:
(1) compliance with the certifications enumerated in Sec. 151A.901 of this Act;
(2) compliance with the mandatory disclosure requirements of Sec. 151A.902 and Sec.
151A.903 of this Act;
(3) the permit-level residential-versus-commercial accounting required by Article 8
of this Act; and
(4) collection, remittance, and nexus compliance by remote sellers and foreign
entities under the TPTRP Remote Seller and Foreign Entity Act.
(b) The Comptroller shall establish audit rules by rule, consistent with the audit
authority and procedures preserved from Chapter 151, Tax Code, as that chapter is amended and conformed
by the TPTRP Tax Abolition and Conformity Act.
(c) Audit findings under this section shall be published on the Texas Sales and Use
Tax Portal, in the module appropriate to the subject of the audit, and, where the finding relates to a
certification under Sec. 151A.901 of this Act, are subject to the Certification Dispute Process
established by Sec. 151A.905 of this Act.
(d) This section implements Article VIII, Section 1-n(m)(6), of the Texas
Constitution.
Sec. 151A.907. ENFORCEMENT COORDINATION WITH THE BOARD AND THE DIVISION.
(a) The Comptroller, the TPTRP Transition Board (during the transition period), and
the TPTRP Transition Monitoring Division (permanently, including after the Board's termination)
shall coordinate the enforcement, monitoring, and reporting functions established by this Article to
avoid duplication of effort and gaps in enforcement.
(b) During the transition period, the Board shares responsibility with the
Comptroller for monitoring compliance with the certifications and disclosures required by this Article,
consistent with the Board's functions under Section 490.016, Government Code (TPTRP Transition
Board Act), and coordinates with the Comptroller regarding bond service coordination under Section
490.018, Government Code.
(c) On and after the termination of the Board, the Division is the permanent point
of enforcement coordination with the Comptroller for the certifications, disclosures, and dispute
process established by this Article, succeeding to the Board's monitoring and coordination
functions under this section.
(d) Nothing in this section diminishes the Comptroller's certification, audit,
and enforcement authority under Sec. 151A.901, Sec. 151A.904, and Sec. 151A.906 of this Act, and nothing
in this section confers on the Board or the Division authority to withhold, suspend, or escrow the Bond
Service Levy, which remains governed exclusively by Sec. 151A.607 and Sec. 151A.904(d) of this Act.
(e) This section implements Article VIII, Section 1-n(m)(6), and Section 1-u, of the
Texas Constitution.
Cross-references
- Article 4 (rate governance) — Sec. 151A.307 (Total Budget Cap), Sec. 151A.310 (Actual Need Ratio), Sec. 151A.306 (Mandatory Expenditure Reduction Plan).
- Article 5 (ISD funding parity) — Sec. 1-n(k)(5) parity rule; the $10,000/student trigger at Sec. 151A.903 is the sole ISD-specific exception.
- Article 6 (Tier 5 apportionment) — Sec. 151A.501-506.
- Article 7 (collection, allocation, distribution; Bond Service Levy inviolability) — Sec. 151A.604 (I&S rate), Sec. 151A.605 (automatic step-down), Sec. 151A.607 (Bond Service Levy Inviolability).
- Article 8 (permit-level accounting) — audited under Sec. 151A.906.
- Article 9 (Texas Sales and Use Tax Portal) — Rate Certification module and Section 1-n(l) Disclosure Feed module, Sec. 151A.802.
- TPTRP Transition Board Act — Section 490.015 (Final Year Baseline Certification and Certification Dispute Process, adopted by reference at Sec. 151A.901(a)(4) and Sec. 151A.905), Section 490.016 (Comptroller notification and entity monitoring), Section 490.018 (bond service coordination), Section 490.032 (Assistance Eligibility Standard, adopted by reference at Sec. 151A.901(a)(5)).
Drafting notes
- Every substantive rule in this Article traces to Article VIII, Section 1-n(m)(6) (certification, reporting, audit, and dispute process delegated to general law), Section 1-n(f)(4) and (h)(2) (specific certifications), Section 1-n(l) (mandatory disclosure, verbatim), and Section 1-u (Assistance Eligibility Standard, transition governance).
- Sec. 151A.902 and Sec. 151A.903 adopt the constitutional text of Sec. 1-n(l)(1)-(10) verbatim, consistent with Universal Drafting Rule 4 (do not paraphrase the amendment).
- Sec. 151A.903(c) preserves, without softening, the constitutional statement that the $10,000/student threshold is disclosure-only and never a distribution formula or cap, consistent with Universal Drafting Rules 7 and 8 (ISD parity; No Formula/No Enrollment rule).
- Sec. 151A.904(d) preserves, without exception, the Bond Service Levy inviolability rule of Universal Drafting Rule 6; no suspension mechanism in this Article may reach the Bond Service Levy.
- Sec. 151A.905(b) implements Universal Drafting Rule 11 by adopting the Sec. 490.015(c) two-step process as the sole and exclusive remedy, with no parallel administrative or judicial remedy created by this Act.
ARTICLE 11. DEDICATIONS AND ALLOCATIONS TO CONSTITUTIONAL PURPOSES
Sec. 151A.1001. MOTOR FUEL SALES AND USE TAX DEDICATION.
(a) The amount of the sales and use tax collected under this Act on the taxable
transaction of the sale of gasoline, diesel fuel, motor vehicle fuel, and lubricants used to propel
motor vehicles over public roadways is dedicated as provided by Article VIII, Section 7-a, of the Texas
Constitution — three-fourths to the purposes stated in that section and one-fourth to the Available
School Fund.
(b) The Comptroller shall identify the taxable transactions subject to this
dedication using the North American Industry Classification System (NAICS) codes and product codes the
Comptroller establishes by rule, drawing on but not limited to NAICS 4471 (gasoline stations) and
equivalent classifications for diesel fuel and lubricants.
(c) The exemption established as TLES-7 (Gasoline — Consumer Personal Use) by the
TPTRP Texas Living Exemption Set Act continues to apply to consumer purchases of gasoline and diesel
fuel at retail pumps for personal vehicle use, including commuting and personal transportation. That
exemption is not affected, narrowed, or superseded by this section.
(d) Only the commercial share of the motor-fuel and lubricants base — that is, the
share not exempted by TLES-7, including commercial fleet fuel purchases, agricultural fuel, and aviation
fuel — is a taxable transaction under this Act and contributes to the dedication established by
Subsection (a). The residential-versus-commercial accounting required by Article 8 of this Act governs
the identification of the commercial share.
(e) This section does not modify the three-fourths/one-fourth division established
by Article VIII, Section 7-a, of the Texas Constitution. The Legislature may not by general law alter
that division.
This section implements Article VIII, Section 7-a, and Section 2.01 of the amendment
proposed by the 90th Legislature, of the Texas Constitution.
Sec. 151A.1002. SECTION 2.02(e) DEDICATIONS.
(a) For each dedication that, before the Amendment Effective Date, was funded by a
tax abolished by Article VIII, Section 1-m(c), of the Texas Constitution, the sales and use tax
collected under this Act on the same underlying transactions is dedicated to the same fund, agency, or
purpose to which the abolished-tax dedication flowed, in the proportion that dedication provided under
prior law.
(b) The Comptroller shall identify the taxable transactions subject to each
dedication under this section using the North American Industry Classification System (NAICS) codes and
product codes the Comptroller establishes by rule.
(c) The dedications the Comptroller shall operate under this section include,
without limitation:
(1) Utilities. Sales and use tax collected on utility services
(NAICS 22, non-residential subset), dedicated as provided by Article VII, Section 3, of the Texas
Constitution (Available School Fund), in the proportion the utility gross receipts tax dedication
provided before the Amendment Effective Date.
(2) Insurance. Sales and use tax collected on insurance premiums
(NAICS 5241, 5242, non-personal subsets), dedicated to each fund or purpose that received a share of the
abolished insurance premium tax under prior law, in the proportion prior law provided.
(3) Hotel occupancy. Sales and use tax collected on hotel occupancy
(NAICS 7211 and equivalent), dedicated to each fund or purpose that received a share of the abolished
hotel occupancy tax under prior law, in the proportion prior law provided.
(4) Mixed beverage. Sales and use tax collected on mixed beverage
transactions (NAICS 7224 and equivalent), dedicated in the proportion prior law provided.
(5) Motor vehicle sales. Sales and use tax collected on motor
vehicle sales (NAICS 4411, 4412, 4413), dedicated per the motor vehicle sales tax rekey under Section
2.02 of the amendment proposed by the 90th Legislature, in the proportion prior law provided.
(6) Oil and gas production. Sales and use tax collected on oil and
gas production transactions (NAICS 2111), dedicated in the proportion prior law provided.
(7) Venue projects. Sales and use tax collected on transactions
within venue-project jurisdictions established under former Chapter 334, Local Government Code, as
absorbed by the tier structure established by Article VIII, Section 1-n(b), of the Texas Constitution,
dedicated per the Tier 5 apportionment established by Article 6 of this Act.
(8) Other Section 2.02(e) dedications. Any dedication funded before
the Amendment Effective Date by a tax abolished under Article VIII, Section 1-m(c), of the Texas
Constitution, and not enumerated in Subdivisions (1) through (7) of this subsection, dedicated as prior
law provided.
(d) The Comptroller shall separately account for and report the collections
dedicated under this section, and shall publish, for each dedication, the specific statute or dedication
it continues, as required by Section 151A.1005 of this code.
(e) This section does not create a constitutional dedication where none existed
before the Implementation Date. A statutory dedication continued under this section may be modified by
the Legislature in the same manner it could have been modified before the Implementation Date.
This section implements Article VIII, Section 2.02(e) of the amendment proposed by
the 90th Legislature, and Article VII, Section 3, of the Texas Constitution.
Sec. 151A.1003. ALLOCATION MECHANICS.
(a) For each dedication established or continued by Section 151A.1001 or 151A.1002
of this code, the Comptroller shall:
(1) identify the NAICS codes and product codes for the dedication, and publish them
on the Dedication Allocation module of the Portal;
(2) compute the dedication's share of quarterly collections from remittances
categorized under the identified codes;
(3) allocate to the dedicated fund, agency, or purpose the amount so computed, on the
same quarterly schedule as ordinary distributions to taxing entities under Article 7 of this Act; and
(4) report the dedication's actual dollar amount for the quarter, alongside the
corresponding prior-year figure, on the Portal.
(b) The allocation required by this section is made from collections before those
collections become part of the state's distributable surplus pool, consistent with Article VIII,
Section 2.02(d), of the amendment proposed by the 90th Legislature.
(c) The Bond Service Levy carve-out established by Section 151A.004(7) and Article 7
of this Act applies to a dedication under this Article that is pledged to the payment of principal and
interest on bonds or warrants. The Comptroller may not withhold, suspend, or escrow that portion of a
dedication for any reason.
This section implements Article VIII, Section 2.02(d) and (e) of the amendment
proposed by the 90th Legislature, and Section 7-a, Article VIII, of the Texas Constitution.
Sec. 151A.1004. NO BASELINE-MATCHING GUARANTEE.
The dedications established or preserved by this Article and by the Texas
Constitution flow the sales and use tax collected on the underlying transactions to the constitutional
or statutory purpose specified, in the proportion specified. Neither this Article nor Article VIII,
Section 7-a, or Section 2.02(e), of the Texas Constitution requires the amount of a dedication to equal,
match, exceed, or bear any specified relationship to the revenue the abolished tax generated for the
same purpose in any prior fiscal year. If the revenue generated by a dedication under this Article is
greater than or less than the revenue previously generated by the abolished tax it supersedes, the
dedicated purpose receives the actual amount collected, and neither an appropriation, an offset, nor a
make-whole payment from general revenue is required, though the Legislature retains its ordinary
appropriations authority.
This section implements Article VIII, Section 7-a, and Section 2.02(e) of the
amendment proposed by the 90th Legislature, of the Texas Constitution.
Sec. 151A.1005. DEDICATION ALLOCATION MODULE OF THE PORTAL.
(a) The Comptroller shall publish, on the Dedication Allocation module of the
Portal, for each dedication established or continued by Section 151A.1001 or 151A.1002 of this code:
(1) the dedication's NAICS codes and product codes;
(2) the dedication's quarterly and annual dollar amount;
(3) the dedication's rolling five-year history;
(4) the methodology used to identify and allocate transactions to the dedication;
and
(5) any change in methodology, with an explanation.
(b) The Dedication Allocation module is part of the Texas Sales and Use Tax Portal
established under Section 490.073, Government Code.
This section implements Article VIII, Section 7-a, and Section 2.02(e) of the
amendment proposed by the 90th Legislature, of the Texas Constitution.
Cross-references: Article 3 (sourcing, determining whose transactions contribute);
Article 6 (Tier 5 apportionment for venue-project dedications); Article 7 (quarterly distribution
schedule; Bond Service Levy inviolability); Article 8 (permit-level residential-versus-commercial
accounting, separating the residential share from the commercial share on which dedications ride);
Article 9 (Portal and its modules); TPTRP Bond Management Act (bond-related dedications preserved
through the Bond Service Levy carve-out); TPTRP Texas Living Exemption Set Act (TLES-7 exemption for
personal-vehicle fuel purchases).
ARTICLE 12. CONFORMING AMENDMENTS, REPEALER REFERENCES, EFFECTIVE DATE, AND IMPLEMENTATION DATE
Sec. 151A.1101. EFFECTIVE DATE OF THIS ACT.
(a) This Act takes effect on the Amendment Effective Date, January 1, 2028,
contingent on approval by the voters of the State of Texas, at the constitutional election held in
November 2027, of the constitutional amendment proposed by the 90th Legislature, Regular Session, 2027,
establishing Article VIII, Sections 1-e, 1-m through 1-w, and 9.01, of the Texas Constitution.
(b) If the amendment described by Subsection (a) of this section is not approved by
the voters, this Act does not take effect and has no force or effect.
(c) The Amendment Effective Date is the date established by Article VIII, Section
9.01(a), of the Texas Constitution, for the purpose of authorizing and requiring the legislature to
enact the general laws necessary to implement the Texas Property Tax Replacement Plan. Nothing in this
section alters that date.
This section implements Article VIII, Section 9.01(a), of the Texas Constitution.
Sec. 151A.1102. IMPLEMENTATION DATE.
(a) Collection of the sales and use tax imposed by this Act begins on the
Implementation Date, January 1, 2029, as established by Article VIII, Section 9.01(b), of the Texas
Constitution.
(b) On the Implementation Date:
(1) the sales and use tax imposed by this Act supersedes the sales and use tax
imposed by Chapter 151 of this code, as that chapter is repealed by the TPTRP Tax Abolition and
Conformity Act;
(2) the prohibition on ad valorem taxation established by Article VIII, Section 1-e,
of the Texas Constitution becomes operative, and no taxing entity may thereafter levy, assess, or
collect an ad valorem tax for any period beginning on or after that date;
(3) the state taxes abolished by Article VIII, Section 1-m(c), of the Texas
Constitution are abolished, subject to the wind-down and continued-collection provisions of the TPTRP
Tax Abolition and Conformity Act and of Section 9.02(g), Temporary Provision, of the Texas Constitution;
and
(4) each local sales and use tax imposed under general law before that date is
superseded by, and its rate is absorbed into, the tier rate of the taxing entity that imposed it, so
that no transaction is subject both to a superseded local sales tax and to the sales and use tax imposed
by this Act, as provided by Article VIII, Section 9.01(b)(4), of the Texas Constitution.
(c) Nothing in this section alters the Implementation Date or any other date fixed
by Article VIII, Section 9.01, of the Texas Constitution, or by Section 9.02, Temporary Provision, of
the Texas Constitution.
This section implements Article VIII, Section 9.01(b), of the Texas Constitution.
Sec. 151A.1103. INTERIM PROVISIONS DURING THE TRANSITION-PREPARATION YEAR.
(a) In this section, "transition-preparation year" means the period beginning on the
Amendment Effective Date and ending on the day before the Implementation Date — January 1, 2028, through
December 31, 2028.
(b) During the transition-preparation year, Chapter 151 of this code remains
operative for sales and use tax collection purposes, and this Act does not impose or authorize the
collection of any tax before the Implementation Date. Nothing in this section extends the operation of
Chapter 151 beyond the Implementation Date.
(c) During the transition-preparation year, the Comptroller shall:
(1) publish the standard permit categories established under Article 8 of this Act;
(2) certify, for every taxing entity in this state, the entity's Final Year
Baseline, as required by Section 490.015, Government Code, and by Section 9.01(e), Temporary Provision,
of the Texas Constitution;
(3) certify, for every taxing entity in this state, the entity's compliance with
the Starting Combined Rate established by Article VIII, Section 1-n(c)(2), of the Texas Constitution and
Section 151A.103 of this code;
(4) establish the Texas Sales and Use Tax Portal under Section 490.073, Government
Code, and Article 9 of this Act;
(5) coordinate with the TPTRP Transition Board on transition administration under the
TPTRP Transition Board Act; and
(6) complete rulemaking necessary to implement Articles 3, 6, 7, 8, 10, and 11 of
this Act.
(d) The certifications, permit categories, Portal, and rules established or
completed under Subsection (c) of this section take effect concurrently with the imposition and
collection of the tax under this Act on the Implementation Date. A certification, permit category, or
rule adopted under this section before the Implementation Date does not itself impose a tax obligation
before that date.
(e) Ad valorem property tax collections for the final ad valorem tax year — tax year
2028, billed and collected in 2028 and, as to delinquent amounts, in 2029 and thereafter — continue
under existing law until superseded by the wind-down provisions of the TPTRP Tax Abolition and
Conformity Act and of Section 9.02(g), Temporary Provision, of the Texas Constitution. Nothing in this
section shortens the collection period for the final ad valorem tax year or affects the validity of a
tax lien securing that tax.
(f) This section does not authorize the Comptroller, the TPTRP Transition Board, or
any other person to alter the Amendment Effective Date or the Implementation Date.
This section implements Article VIII, Section 9.01, of the Texas Constitution, and
Section 9.02(b) and (c), Temporary Provision, of the Texas Constitution.
Sec. 151A.1104. CONFORMING AMENDMENTS TO THE TAX CODE.
(a) Chapter 151 of this code is amended by adding introductory language to read:
"This chapter is superseded by Chapter 151-A of this code on and after the Implementation Date
established by Article VIII, Section 9.01(b), of the Texas Constitution. This chapter is repealed by the
TPTRP Tax Abolition and Conformity Act, effective on the Implementation Date. Until the Implementation
Date, this chapter remains operative as provided by Section 151A.1103 of this code."
(b) The audit rules, criminal penalties, and administrative procedures of Chapter
151 of this code, as those provisions exist on the Implementation Date and as amended by the TPTRP Tax
Abolition and Conformity Act, are preserved and incorporated into Chapter 151-A by reference, and apply
to the tax imposed by this Act to the same extent and in the same manner they applied to the tax imposed
by Chapter 151, except where this Act or another TPTRP implementing act expressly provides a different
rule. A reference in an incorporated provision to a tax imposed by Chapter 151 is a reference to the
corresponding tax imposed by Chapter 151-A.
(c) Chapter 321 of this code (municipal sales and use tax), Chapter 322 of this code
(sales and use tax for special purpose taxing authorities), and Chapter 323 of this code (county sales
and use tax) are each superseded, on and after the Implementation Date, by the tier structure
established by Article VIII, Section 1-n(b), of the Texas Constitution and Article 6 of this Act. Each
of those chapters is repealed by the TPTRP Tax Abolition and Conformity Act, effective on the
Implementation Date. Until the Implementation Date, each of those chapters remains operative as provided
by Section 151A.1103 of this code.
(d) This section does not itself repeal Chapter 151, 321, 322, or 323 of this code.
Repeal of those chapters is effected exclusively by the TPTRP Tax Abolition and Conformity Act.
This section implements Article VIII, Sections 1-n and 9.01, of the Texas
Constitution.
Sec. 151A.1105. CONFORMING AMENDMENTS TO OTHER CODES.
(a) Government Code, Chapter 490. No amendment to Chapter 490, Government Code, is
made by this Act. Chapter 490, Government Code, as enacted and amended by the TPTRP Transition Board
Act, governs the TPTRP Transition Board, the Assistance Eligibility Standard, the Texas Sales and Use
Tax Portal, and the certifications referenced in Section 151A.1103 of this code, and this Act
cross-references that chapter rather than restating it.
(b) Education Code, Chapters 48 and 49. Chapters 48 and 49, Education Code, govern
the Foundation School Program and the excess local revenue recapture system, both of which are
superseded and have no further force or effect on and after the Implementation Date, as provided by
Section 9.02(h), Temporary Provision, of the Texas Constitution. This Act cross-references those
chapters for that purpose only. The full repeal of Chapters 48 and 49, Education Code, is effected by
the TPTRP Tax Abolition and Conformity Act, and this section does not itself repeal any provision of
those chapters. A recapture payment attributable to a tax year ending before the Implementation Date
remains due and is administered under Chapter 49, Education Code, as it existed before its repeal, as
provided by Section 9.02(h), Temporary Provision, of the Texas Constitution.
(c) Local Government Code, Chapter 334. Chapter 334, Local Government Code (venue
projects), governs venue project sales and use taxes that are superseded, on and after the
Implementation Date, by the tier structure established by Article VIII, Section 1-n(b), of the Texas
Constitution and by the Tier 5 apportionment provisions of Article 6 of this Act. This Act
cross-references Chapter 334, Local Government Code, for that purpose only. The full repeal of Chapter
334, Local Government Code, is effected by the TPTRP Tax Abolition and Conformity Act, and this section
does not itself repeal any provision of that chapter.
(d) Business Organizations Code, Chapter 9. No amendment to Chapter 9, Business
Organizations Code, is made by this Act. That chapter, as amended by the TPTRP Remote Seller and Foreign
Entity Act, governs the registration and reporting obligations of remote and foreign entities in
connection with the economic nexus thresholds established by Article VIII, Section 1-q, of the Texas
Constitution, and this Act cross-references that chapter rather than restating it.
This section implements Article VIII, Sections 1-n, 1-q, and 9.01, of the Texas
Constitution, and Section 9.02(h), Temporary Provision, of the Texas Constitution.
Sec. 151A.1106. REPEAL REFERENCES.
(a) This Act does not repeal any statute. This section identifies, for the sole
purpose of guiding the repealer sweep of the TPTRP Tax Abolition and Conformity Act, each provision of
law that this Act supersedes, displaces, or renders obsolete but does not itself repeal.
(b) The following provisions are superseded, displaced, or rendered obsolete by this
Act and by the Texas Property Tax Replacement Plan, and are identified for repeal by the TPTRP Tax
Abolition and Conformity Act:
(1) Chapter 151, Tax Code (Limited Sales, Excise, and Use Tax), in full;
(2) Chapter 321, Tax Code (municipal sales and use tax);
(3) Chapter 322, Tax Code (sales and use tax for special purpose taxing
authorities);
(4) Chapter 323, Tax Code (county sales and use tax);
(5) Chapter 152, Tax Code (motor vehicle sales and use tax);
(6) Chapter 154, Tax Code (cigarette tax) and Chapter 155, Tax Code (cigars and other
tobacco products tax);
(7) Chapter 156, Tax Code (hotel occupancy tax);
(8) Chapter 171, Tax Code (franchise tax);
(9) Chapter 182, Tax Code (miscellaneous gross receipts taxes on utilities);
(10) Chapter 183, Tax Code (mixed beverage taxes);
(11) Chapters 201 and 202, Tax Code (oil production tax and gas production tax);
(12) the premium tax provisions of the Insurance Code applicable to insurers subject
to this Act's tax base;
(13) Chapter 2153, Occupations Code (bingo and coin-operated machines regulation and
taxation provisions superseded by this Act);
(14) Chapter 334, Local Government Code (venue projects), as provided by Section
151A.1105(c) of this code; and
(15) Chapters 48 and 49, Education Code (Foundation School Program and excess local
revenue recapture), as provided by Section 151A.1105(b) of this code.
(c) The list in Subsection (b) of this section is not exclusive. The TPTRP Tax
Abolition and Conformity Act may identify and repeal any other provision of law rendered obsolete by the
Texas Property Tax Replacement Plan.
(d) Nothing in this section repeals, suspends, or limits the effect of any provision
listed in Subsection (b) of this section before the effective date of its repeal by the TPTRP Tax
Abolition and Conformity Act.
This section implements Article VIII, Section 9.01, of the Texas Constitution.
Sec. 151A.1107. SEVERABILITY.
If any provision of this Act, or the application of any provision of this Act to any
person or circumstance, is held invalid, the invalidity does not affect other provisions or applications
of this Act that can be given effect without the invalid provision or application, and to this end the
provisions of this Act are severable.
This section implements Article VIII, Section 9.01(e), of the Texas Constitution.
Cross-references
- Every prior article of this Act (Articles 1 through 11).
- TPTRP Tax Abolition and Conformity Act — the exclusive repealer of the Tax Code chapters, Education Code chapters, Local Government Code chapter, Insurance Code provisions, and Occupations Code chapter identified in Section 151A.1106 of this code, and the act governing wind-down of ad valorem administration under Section 9.02(g), Temporary Provision, of the Texas Constitution.
- TPTRP Transition Board Act — Chapter 490, Government Code, including Section 490.015 (Final Year Baseline certification) and Section 490.073 (Texas Sales and Use Tax Portal).
- TPTRP Remote Seller and Foreign Entity Act — Business Organizations Code Chapter 9 amendments.
- TPTRP Texas Living Exemption Set Act — cross-referenced throughout Articles 1, 8, and 11.
This Article implements Article VIII, Section 9.01, of the Texas Constitution, and
Section 9.02, Temporary Provision, of the Texas Constitution.
Drafting Log — Stage 2 (2026-08-02)
This Act was drafted as a coordinated first-pass draft of the primary
implementing statute for the Texas Property Tax Replacement Plan. Every article implements one or
more sections of Article VIII, Sections 1-e, 1-m through 1-w, and 9.01, of the Texas Constitution
(the consolidated HJR adopted by the Legislature and submitted to the voters at the November 2027
constitutional election).
Companion acts (referenced but not restated):
- TPTRP Transition Board Act (Government Code Chapter 490)
- TPTRP Fund System Act
- TPTRP Bond Management Act
- TPTRP Remote Seller and Foreign Entity Act
- TPTRP Texas Living Exemption Set Act
- TPTRP Tax Abolition and Conformity Act (HB C, to be drafted last)
Load-bearing constitutional citations by article:
| Article | Primary constitutional source |
|---|---|
| 1 | General framing and Sec. 1-x |
| 2 | Sec. 1-n(b), (c) — tier structure, CCR, Starting Combined Rate |
| 3 | Sec. 1-p — Taxable Transaction, Definition Filter, sourcing |
| 4 | Sec. 1-n(c)-(g), (i)-(j) — rate governance, budget caps, ANR, new-debt approval |
| 5 | Sec. 1-n(k) — ISD funding (No Formula, No Enrollment) |
| 6 | Sec. 1-n(b)(4)-(5) — Tier 5 apportionment and sufficiency review |
| 7 | Sec. 1-n(h), (m) — I&S rate, collection, allocation, distribution; Bond Service Levy inviolability |
| 8 | Sec. 1-r — Cost of Living Standard (permit-level accounting) |
| 9 | Sec. 490.073 anchor — the Texas Sales and Use Tax Portal |
| 10 | Sec. 1-n(l), (m)(6) — mandatory disclosure and dispute process |
| 11 | Sec. 7-a, 2.02(e) — dedications |
| 12 | Sec. 1-x, Sec. 9.02 — effective date, Implementation Date, transition |
Change Log entries: each article carries its own change-log or
drafting-notes section documenting the specific constitutional citations implemented,
cross-references made, and drafting decisions taken.
Known pending items (flagged for Stage 4 pre-filing conformity
pass):
- Chapter number assignments (Chapter 151-A, Tax Code) subject to Legislative Council codification.
- NAICS code specifications in Article 8 and Article 11 subject to Comptroller rulemaking during the transition-preparation year.
- Some cross-references to companion acts use working act titles; final captions may adjust.
Change Log — Version 6 (2026-08-07)
| # | Section | Edit description |
|---|---|---|
| v6.1 | Whole Act | Conformed the former temporary constitutional citations to Article VIII, Section 9.01 and corrected the former Section 9.02 temporary citation to Section 9.02(h). |
| v6.2 | Secs. 151A.004, .103, .601, .1102–.1105 | Corrected broken internal and constitutional cross-references, including permit issuance, Bond Service Levy, Final Year Baseline, rate certification, and transition wind-down citations. |
| v6.3 | Secs. 151A.410, .611, .615–.620 | Added the ISD bond-continuation rule, permit registration, bond registry and Tier 1 rate rules, and successor remote-seller, marketplace-facilitator, and remote-reporting provisions relocated from repealed chapters. |
| v6.4 | Articles 4 and 7 | Added cross-references to Fund System Act Article 16 sub-rate dedications and Article 15 dedicated funds. |
| v6.5 | Article 9 and transition narrative | Conformed Portal headings and replaced obsolete hard-coded explanatory timing with the constitutional Implementation Date reference. |
Change Log — Version 5 (2026-08-06)
| # | Section | Edit description |
|---|---|---|
| v5.1 | Portal rename (44 occurrences) | Renamed "Texas Sales and Use Tax Portal" to "Texas Sales and Use Tax Portal" throughout this Act, including the definitions section, the Article 9 heading, and every operational cross-reference. Section 490.073, Government Code, continues to be the codification anchor for the portal; only the portal's public name changes. Corresponding renames applied in the TPTRP Transition Board Act, TPTRP Fund System Act, TPTRP Bond Management Act, and TPTRP Remote Seller and Foreign Entity Act. |
| v5.2 | Sec. 151A.702(a) | Removed the specific reference to "the categories of the Texas Living Exemption Set" of the Texas Living Exemption Set. Substituted "the categories of the Texas Living Exemption Set … as those categories are constituted, amended, added, or removed from time to time by the legislature," so that HB A does not embed a fixed count that the TPTRP Texas Living Exemption Set Act may adjust over time. |
| v5.3 | Sec. 151A.705 | Full substantive Primary Residence Certificate framework relocated to the TPTRP Texas Living Exemption Set Act; HB A now retains only a one-provision cross-reference confirming that a Primary Residence Certificate filed under that Act satisfies Section 151A.702's certification requirement for the transaction to which it relates. This aligns with the design principle that TLES-specific mechanics belong in the TLES Act, not in the primary sales and use tax act. |
| v5.4 | New Sec. 151A.802A | Added new Section 151A.802A (Address-Based Tax Stack Lookup Module) codifying, as a required module of the Texas Sales and Use Tax Portal, an authoritative address-based tax-stack lookup for every taxable location in this state. Section builds on and supersedes the Comptroller's existing Sales Tax Rate Locator infrastructure, and requires the module to identify the state rate, every taxing entity in whose jurisdiction the address lies, the current M&O and I&S sub-rates and tier for each entity, the total combined rate, and effective dates for each rate. Requires 60-day-advance rate-change certification by taxing entities, free public access, bulk download, application programming interface access for POS/e-commerce integration, and reliance protection for sellers acting in reasonable reliance on the lookup. |
| v5.5 | New Sec. 151A.802B | Added new Section 151A.802B (Permit-Holder Transaction Reporting Module) codifying, as a required module of the Texas Sales and Use Tax Portal, a permit-holder transaction reporting module keyed off the sales-tax permit identification number. Enables permit-holders and integrated POS/e-commerce platforms to authenticate via permit ID, submit transaction-level data associated with sourced addresses, reconcile with comptroller allocations, and view reports by entity, tier, sourcing location, and fiscal period. Includes an anti-burden clause preserving existing Chapter 151 permit-holder reporting practice to the extent practicable. |
| v5.6 | Sec. 151A.605(g) | Added new Subsection (g) (Final-Bond Retirement) providing that on retirement of the taxing entity's final outstanding bond, the entity's I&S sub-rate automatically decreases to zero effective the next fiscal period, without governing body action; and that any residual I&S Reserve Fund balance at the close of the fiscal period in which the final bond is retired transfers to the entity's Infrastructure Fund. Preserves the design principle that bond proceeds and reserves exist for infrastructure and remain available for that purpose without new debt issuance. Coordinating mechanics governed by the TPTRP Bond Management Act and TPTRP Fund System Act (companion edits in those acts). |
Transition timeline (informational, not enacted text). The
intended TPTRP transition sequence is governed by the Amendment Effective Date and the
Implementation Date established by Article VIII, Section 9.01, of the Texas Constitution. Actual
election dates, legislative-session timing, and administrative milestones are set by the
Constitution and other applicable law and are not fixed by this Act.
Change Log — Version 4 (2026-08-04)
| # | Section | Edit description |
|---|---|---|
| v4.1 | Sec. 151A.310(a) | Rewrote the Actual Need Ratio numerator to be the entity's actual total cash collections from the tax imposed by this chapter (combining amounts attributable to both the Maintenance and Operations sub-rate and the Interest and Sinking sub-rate), rather than M&O collections alone. This aligns the numerator with the denominator, which already combines M&O expenditures, I&S debt service, and the 5% buffer. Over-collection on either sub-rate now contributes to the ratio. |
| v4.2 | Sec. 151A.310(a-1) | Added new Subsection (a-1) defining "actual total cash collections" for purposes of the ratio, and clarifying that although the ratio measures whether the entity's combined tax rate is generating revenue in excess of actual budget need, the ballot remedy under Section 151A.311 is applied only to the M&O sub-rate because the I&S sub-rate is separately governed by the TPTRP Bond Management Act and Section 151A.607. |
| v4.3 | Sec. 151A.311(a) | Three changes: (i) trigger threshold changed from "exceeds" 1.10 to "equals or exceeds" 1.10, so a ratio of exactly 1.10 counts as a trigger year; (ii) ballot target ratio changed from ANR ≤ 1.05 to ANR ≤ 1.00, so the reduction hits the M&O budget plus I&S obligations plus 5% buffer exactly, without an additional cushion (the 5% buffer already lives in the denominator); (iii) ballot mechanic spelled out explicitly — the proposition reduces the M&O sub-rate to the level that, when combined with the current I&S sub-rate and applied to the projected tax base for the next full fiscal year, is projected to produce ANR ≤ 1.00. Projected tax base is the greater of (i) the actual tax base for the most recently completed fiscal year or (ii) the average of the two most recently completed fiscal years, as certified by the comptroller. |
| v4.4 | Sec. 151A.311(d-1) | Added new Subsection (d-1) creating a two-rejection escape hatch: if voters reject the mandatory-reduction proposition in two consecutive elections in which the proposition has been placed on the ballot, the mandatory ballot requirement is suspended for the entity until its next Qualified Rate Change Event, as defined by Section 151A.302(e). During the suspension, the entity continues to certify the ANR and to distribute surplus, but is not required to place a new proposition on the ballot. A Qualified Rate Change Event re-arms the mechanism and restarts the two-year measurement clock. |
| v4.5 | Sec. 151A.311(g) | Rewrote to reflect the new numerator: the I&S sub-rate now contributes to the numerator of the ANR (as part of total cash collections) and the I&S debt service contributes to the denominator (as part of total obligations), but any ballot remedy under this section is applied only to the M&O sub-rate. Removed the pre-v4 language that described I&S as "excluded from the ANR's M&O calculation," which no longer matches the corrected formula. |
Worked example against v4 text. An entity has adopted M&O of
$900,000, I&S debt service of $50,000, and a 5% buffer of $50,000 (denominator = $1,000,000).
Its current combined rate is 0.60%. Year 1 total collections are $1,110,000 (ANR = 1.11). Year 2
total collections are $1,150,000 (ANR = 1.15). Both years ≥ 1.10 and Stabilization Fund is at
Six-Month Minimum Balance → trigger fires. Projected tax base at year 2 = $1,150,000 / 0.006 =
$191,666,667. Target total collections at ANR ≤ 1.00 = $1,000,000. Target combined rate = $1,000,000
/ $191,666,667 = 0.522%. The I&S sub-rate is untouched; the M&O sub-rate is
reduced so that (new M&O sub-rate + current I&S sub-rate) = 0.522%. Ballot proposition is
placed at the next scheduled election.
Change Log — Version 3 (2026-08-03)
| # | Section | Edit description |
|---|---|---|
| v3.1 | Sec. 151A.206 | Full rewrite to restructure sourcing into Category A (Point-of-Sale) and Category B (Point-of-Receipt), preserving the operative framework of former Tax Code Sections 321.203, 321.205, 323.203, 323.205, and 34 TAC Section 3.334, while adapting to the point-of-possession rule of Article VIII, Section 1-p(b), of the Texas Constitution. Adds explicit subdivisions for walk-in purchase with on-site receipt (b)(1), walk-in with pickup at seller's Texas location (b)(2), walk-in with off-site delivery (b)(3), remote order with in-person pickup at seller's Texas location (b)(4), itinerant vendor sales (b)(5), remote order with Texas delivery (c)(1), drop-shipped sales (c)(2), marketplace facilitator transactions (c)(3), services performed at physical location (c)(4), mobile telecommunications and voice services with federal Mobile Telecommunications Sourcing Act reference (c)(5), lease/rental/license (c)(6), motor vehicle/boat/aircraft/manufactured home (c)(7) with cross-reference to Section 151A.210, digital goods and services (c)(8) with cross-reference to Section 151A.207, and residual Category B (c)(9). Adds explicit subsections for direct-payment permit sourcing (d), use tax destination principle (e), non-Texas sourced transactions (f), sourcing distinct from nexus (g), wellhead/well-site/place-of-business sourcing preserved (h), anti-avoidance (i), occasional sale exclusion (j), and constitutional basis (k). |
| v3.2 | Sec. 151A.207 | Full rewrite to preserve and clarify the multi-location per-seat, per-location apportionment framework for digital goods and digital services; restructures into scope (a), individual purchasers (b), single-location business purchasers (c), multi-location business purchasers with per-seat apportionment (d)(1), out-of-state-headquartered purchasers with Texas end users (d)(2), fair-value fallback (d)(3), comptroller rulemaking (d)(4), purchaser certification with reliance protection and update requirements (e), interaction with Section 151A.206 including bundling rules (f), and constitutional basis (g). Adds an explicit rule that Texas taxability attaches to the Texas-apportioned portion of a transaction whose purchaser is headquartered out of state but has Texas end users. |
| v3.3 | New Sec. 151A.210 | Added new Section 151A.210 (Motor Vehicle, Boat, Aircraft, and Manufactured Home Sales — Conforming Sourcing) confirming that the general sourcing rules of Section 151A.206 apply to these transactions to the same extent and under the same Category A or Category B principles as any other taxable good, ending the pre-TPTRP disparity under Chapters 152, 160, and 161, Tax Code. Preserves county tax assessor-collector titling and registration functions, Texas Parks and Wildlife Department boat certification, Federal Aviation Administration aircraft registration coordination, and Texas Department of Housing and Community Affairs manufactured housing functions. Cross-references the TPTRP Tax Abolition and Conformity Act for the corresponding repeals and conforming amendments to Chapters 152, 160, and 161. |
| v3.4 | New Sec. 151A.211 | Added new Section 151A.211 (Occasional Sales; Engaged in Business; Anti-Avoidance) preserving the occasional-sale exemption of former Tax Code Section 151.304 in a modernized form. Establishes an automatic safe harbor for a person whose gross sales in this state do not exceed $5,000 in the current calendar year or in either of the two preceding calendar years, above which a preponderance-of-factors multi-factor test applies (regularity, profit intent, holding out to public, volume, employment of others, business licensing, and comptroller-specified factors). Provides for aggregation of related persons, reclassification and enforcement procedures with good-faith protection for prior periods, and consideration of prior-law precedent and IRC Section 183 hobby/business authority as persuasive but non-binding. |
| v3.5 | Article 3 header and Table of Contents | Updated the Article 3 range from Sec. 151A.201-151A.208 to Sec. 151A.201-151A.211 to reflect the two new sections added at v3.3 and v3.4. |
Change Log — Version 2 (2026-08-03)
| # | Section | Edit description |
|---|---|---|
| v2.1 | Sec. 151A.201(c) | Replaced the buyer-location taxability rule with a point-of-possession taxability rule to conform to the amended Article VIII, Section 1-p(b), of the Texas Constitution (consolidated HJR v7, 2026-08-03). A transaction in which the buyer takes possession of the good or first receives the service in this state is now expressly subject to the tax, regardless of the buyer's domicile or residence; a transaction in which the buyer takes possession outside this state is not subject to the tax. Constitutional citation updated. |
| v2.2 | New Sec. 151A.209 | Added new Section 151A.209 (Interstate Shipments and Exports) preserving the operative point-of-possession mechanics of former Tax Code Section 151.330 as applied to the sales and use tax imposed by this chapter, including: shipments outside this state by the seller (subsection (b)); documentation requirements (subsection (c)); pickup or receipt in this state with no refund for post-purchase export (subsection (d)); services across state lines (subsection (e)); common carrier purchases for out-of-state use (subsection (f)); Import-Export Clause preservation (subsection (g)); no domicile-based or post-purchase-export refund except as required by federal law (subsection (h)); no effect on Article VIII, Section 1-q, obligations (subsection (i)); and preservation of the Article VIII, Section 1-p(b)(3)-(5) inbound categories (subsection (j)). |
End of Act.