Relating to limitations applicable to certain agreements providing for a rebate of municipal sales and use taxes or a grant or loan based on those taxes.

89(R) SB 2747 - House Committee Report version - Bill Text

By: Paxton

S.B. No. 2747

(Shaheen)

A BILL TO BE ENTITLED

AN ACT

relating to limitations applicable to certain agreements providing

for a rebate of municipal sales and use taxes or a grant or loan

based on those taxes.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subchapter A, Chapter 321, Tax Code, is amended

by adding Section 321.006 to read as follows:

Sec.

321.006.

LIMITATIONS ON CERTAIN SALES TAX INCENTIVES.

(a) In this section, "affiliated group" has the meaning assigned by

Section 171.0001.

(b) This section applies to one or more agreements:

(1) the parties to which include:

(A)

a municipality or a local government

corporation or other entity created by the municipality; and

(B)

a retailer or an entity that is a member of

the same affiliated group as a retailer;

(2) the terms of which include:

(A)

the relocation of an existing place of

business of the retailer described by Subdivision (1)(B) or a

retailer that is a member of the same affiliated group as the

retailer or entity described by Subdivision (1)(B) to the

municipality described by Subdivision (1)(A) from one or more other

municipalities in this state; or

(B)

the establishment in the municipality

described by Subdivision (1)(A) of a new place of business of the

retailer described by Subdivision (1)(B) or a retailer that is a

member of the same affiliated group as the retailer or entity

described by Subdivision (1)(B);

(3)

that have the effect of sales tax being payable to

the municipality described by Subdivision (1)(A) instead of one or

more other municipalities in this state; and

(4)

under which the municipality, corporation, or

other entity described by Subdivision (1)(A) agrees to:

(A)

rebate to the retailer or entity described by

Subdivision (1)(B), a member of the retailer or entity's affiliated

group, or another party designated by the retailer or entity an

amount of tax imposed by the municipality under this chapter or an

amount of revenue derived from that tax; or

(B)

provide a grant or loan to the retailer or

entity described by Subdivision (1)(B), a member of the retailer or

entity's affiliated group, or another party designated by the

retailer or entity in an amount that is based on an amount of tax

imposed by the municipality under this chapter or based on an amount

of revenue derived from that tax.

(c)

Notwithstanding any other law, a municipality or a local

government corporation or other entity created by the municipality

may not enter into an agreement to which this section applies with a

retailer, a member of the retailer's affiliated group, or another

party designated by the retailer that results in the relocation or

establishment of a place of business as described by Subsection

(b)(2)(A) or (B) unless:

(1)

the agreement changes the economic position, other

than through a tax benefit, of the retailer, a member of the

retailer's affiliated group, or another party designated by the

retailer; and

(2)

the retailer, member of the retailer's affiliated

group, or another party designated by the retailer has a

substantial purpose, other than a tax benefit, for entering into

the agreement.

(d)

If the comptroller determines that a municipality,

local government corporation, or other entity has violated

Subsection (c), the comptroller shall, with respect to the

retailer, disregard the place of business described by Subsection

(b)(2)(A) or (B) when determining where the sale of taxable items is

consummated under Section 321.203 and revoke any sales tax permit

issued for the location.

SECTION 2. This Act takes effect September 1, 2025.