R-2008-10 oppose any legislative action that would change existing sales tax laws

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REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested: September 8. 2008 Appropriation Requested By: Ron Bottoms, City Mana~er Source of Funds: Department: Administration Account Number: Report: Resolution: X Ordinance: Amount Budgeted: Exhibits: Resolution 2008- Amount Requested: Exhibits: Budgeted Item: Exhibits: SUMMARY & RECOMMENDATION Chapter 321 of the Texas Tax Code, also known as the Municipal Sales and Use Tax Act, authorizes a municipality to impose a tax upon the sale or use of certain items within its jurisdiction and defines a place of business of a retailer to be an established outlet, office, or location operated by the retailer for the purpose of receiving orders for taxable items and includes any location at which three or more orders are received by the retailer during a calendar year, specifically excluding a warehouse, storage yard, or manufacturing plant unless three orders are received at that location. A retailer can easily create a very small number of sales transactions for the purpose of meeting the definition of a place of business for its own financial reward, causing harm to the municipalities supporting the retail establishment. This manipulation of the current sales tax law has been the basis for reallocating millions of dollars between municipalities within the State of Texas and under the existing law the municipalities from which sales tax revenue has been reallocated have no recourse upon the State of Texas nor the retailer. Therefore, the City of La Porte should consider support of legislative action that would significantly increase the three-sale requirement in Section 321.002 of the Municipal Sales and Use Tax Act for determining whether a warehouse, storage yard, or manufacturing plant can be considered a place of business of the retailer for sales tax sourcing. ~~Lr>B e I