Texas Practice and Procedure

Texas has no income tax and two regimes that surprise businesses expecting simplicity: a franchise tax on margin that reaches out-of-state companies on receipts alone, and a local sales tax sourced to the seller's place of business rather than the buyer's doorstep, a rule that has been in active litigation for years. This hub collects the questions that recur for businesses selling into or operating in the state.

2 articles Search within Texas

Nexus and registration

When does an out-of-state business owe Texas franchise tax with no Texas footprint?An out-of-state business with no office, employees, or property in Texas can still owe the Texas franchise tax once its Texas gross receipts cross a fixed dollar threshold. This piece walks through the economic nexus rule adopted after Wayfair, the physical presence rule it supplements rather than replaces, why Public Law 86-272 does not provide cover, and what the 2023 overhaul of the no-tax-due filing regime changed and did not change.

Local and district taxes

Where is a Texas sale consummated for local sales tax purposes?Texas sources local sales tax to the place of business where a sale is legally consummated, not automatically to the delivery address, and the statute's own layered rules and a still-unresolved rulemaking fight over internet orders make that point easy for an in-state seller to get wrong. This article works through Tax Code section 321.203's consummation ladder, the anti-sham place-of-business definition, the destination rules that do apply to out-of-state and unreceived orders, the multi-year litigation over the Comptroller's 2020 internet-order amendments to Rule 3.334, and the single local use tax rate election available to remote sellers.