HomeMy WebLinkAboutR-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.
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RESOLUTION NO. 2008- iO-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
LA PORTE, TEXAS, SOLICITING SUPPORT FROM THE
TEXAS MUNICIPAL LEAGUE FOR LEGISLATIVE ACTION
TO PROTECT TEXAS MUNICIPALITIES' SALES TAX
REVENUE BY MODIFYING TEXAS TAX CODE CHAPTER
321, MUNICIPAL SALES AND USE TAX ACT
WHEREAS, 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
WHEREAS, Section 321.002 ofthe Municipal Sales and Use Tax Act 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; and
WHEREAS, Section 321.203 of the Municipal Sales and Use Tax Act considers the sale of a
taxable item to be consummated at a retailer's place of business which can be either the location
from which the retailer ships or delivers the item or where the purchaser or lessee takes possession
and removes the item from the place of business; and
WHEREAS, 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; and
WHEREAS, this manipulation of current sales tax law has been the basis for reallocating
millions of dollars between municipalities within the State of Texas; and
WHEREAS, under existing law the municipalities from which sales tax revenue has been
reallocated have no recourse upon the State of Texas nor the retailer;
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LA
PORTE, TEXAS:
Section 1. That the facts and recitations set forth in the preamble of this resolution are
accurate and correct.
Section 2. That the City of La Porte, Texas, supports 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.
Section 3. That the City of La Porte, Texas, supports legislative action that would
require the Comptroller of Public Accounts to notify the affected municipalities and afford each the
opportunity to hear and dispute the facts in accordance with established procedures prior to any
reallocation of sales tax revenue.
Section 4. That the City of La Porte, Texas, opposes any legislative action that would
change existing sales tax laws from origin to destination-based sourcing.
PASSED, APPROVED, AND ADOPTED this 9Jl-dayof Sr;p(ElnIJER
,2008.
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Alton E. Porter, Mayor
ATTEST:
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M ha Gillett, City Secretary