Kiosks and Sellers with Multiple Stores in Texas Discussed

Kiosks and Sellers with Multiple Stores are Discussed in Texas Texas issued a notice on Senate Bill 636, which amends the definition of a “place of business” and changes how retailers who operate multiple places of business in Texas should collect local sales taxes.

SB 636 provides that a “kiosk” is not a place of business for local sales and use tax purposes. A kiosk is defined as a small stand-alone area or structure that is used solely to display merchandise or to submit orders for taxable items from a data entry device, or both, but at which taxable items are not available for immediate delivery to a customer; and that is located entirely within a location that is a place of business of another retailer, such as a department store or shopping mall. A kiosk does not include booths, stalls or similar structures that are not located within a place of business of another retailer; any location where inventory is available for immediate transfer to customers (over-the-counter sales); or temporary locations operated in this state for the purpose of receiving orders for taxable items if the retailer does not operate another place of business in Texas.

Previously, local sales tax collected on delivery sales by a seller with more than one place of business in Texas was determined by the place of business from which the items were shipped, not the location where the order was received. Now, when a purchaser places an order in person, retailers should collect local sales tax based on the location of the place of business where the order is received rather than the place of business from which the item is shipped. When the order is not placed in person i.e. over the internet, by telephone, or mail, retailers should continue to collect local sales tax based on the “ship from” location on all delivery sales of taxable items that are shipped from a place of business in Texas.

Warehouses, that are places of business of a retailer, are temporarily excluded from this change if the retailer has an existing economic development agreement with the municipality or county in which the warehouse is located that was entered into before Jan. 1, 2009. To be eligible for the exclusion, the county or municipality must provide the Comptroller’s office certain information before September 1, 2009. This exclusion expires September 1, 2014. (Notice Regarding S.B. 636, Texas Comptroller of Public Accounts, August 7, 2009, released August 12, 2009)

Posted on September 27, 2009