Jay M. Chadha, Fulbright & Jaworski LLP A Q&A guide to sales and use tax law in Texas. This Q&A addresses key areas of sales and use tax law such as tax scope, multi-state transactions and collecting taxes and filing returns. This is just one example of the many online resources Practical Law Company offers. To access this resource and others, visit practicallaw.com. TAX SCOPE 1. Does the state levy sales and use taxes? Texas imposes a general sales and use tax, known as the Limited Sales, Excise, and Use Tax (Tex. Tax Code 151.001 and 151.051(a)). The state rate of the sales and use tax is 6.25% (Tex. Tax Code 151.051(b)). Local rates, which include municipalities, special purpose districts and counties, can be up to 2% (Tex. Tax Code 321.101(f), 322.101, 323.101 and 324.001). Therefore, the maximum amount of the combined total of Texas state and local sales and use taxes is 8.25%. The sales tax is a transaction based tax that is imposed on either: The retail sale, rental or lease of tangible personal property. The performance of taxable services in Texas. The use tax supplements the sales tax and is imposed on either: The use, storage or other consumption in Texas of tangible personal property if no sales tax was paid. The performance of taxable services in Texas if no sales tax was paid. 2. What is the taxable base or measure of tax? The taxable base or measure of the sales and use tax is determined by the sales price of the taxable item purchased. The Texas sales and use tax is levied on: Sales of tangible personal property, barter transactions and the lease or rental of taxable items in Texas by either: sellers engaged in business in Texas; or out-of-state sellers with a nexus with Texas (see Question 5). The performance of certain specified taxable services in Texas. (Tex. Tax Code 151.005 and 151.051.) All gross receipts of a seller are presumed taxable (unless specifically exempt) if the seller: Is engaged in business in Texas. Has a nexus with Texas. Performs taxable services in Texas. (Tex. Tax Code 151.054(a).) The terms seller and retailer have the same definitions in the Texas Tax Code and are used interchangeably (Tex. Tax Code 151.008). Services The Texas sales and use tax applies to the performance of certain specified taxable services in Texas, including: Amusement services. Cable television services. Personal services. Motor vehicle parking and storage services. The repair, remodeling, maintenance and restoration of most tangible personal property. Telecommunications services. Credit reporting services. Debt collection services. Insurance services. Information services. Real property services. Data processing services. Real property repair and remodeling. Security services. Telephone answering services. Internet access service. A sale by a transmission and distribution utility (as defined in Tex. Util. Code 31.002) of transmission or delivery of service directly to an electricity end-use customer whose consumption of electricity is subject to Texas sales and use tax. (Tex. Tax Code 151.0101.)
Source of Services Taxable services are sourced to Texas and therefore subject to sales and use tax in Texas if the services are performed in the state. The local portion of the tax due is determined first by the type of service performed. The Texas Tax Code provides specific directions on the sourcing of services: Amusement services. Sales tax due based on where the performance or event occurs (Tex. Tax Code 321.203(h)). Cable television. Sales taxes due based on where the customer receives the service (Tex. Tax Code 321.203 (j)). Landline telecommunications services. Sales taxes on landline telecommunications services sold on a call-by-call basis are based on the location of the telephone or other device from which the call or other transmission originates. If the seller cannot determine where the communication originates, sales tax is based on the address where the service is billed. (Tex. Tax Code 321.203(g-1) (g-3).) Mobile telecommunications services. Sales taxes on mobile telecommunications services (for example, cell phones) are based on the place of primary use (Tex. Tax Code 151.061 and 321.203(g)). Natural gas and electricity. Sales taxes based on where the customer receives the gas or electricity (Tex. Tax Code 321.203(f)). Nonresidential real property repair and remodeling. Sales taxes for labor and materials are based on the location of the job site (Tex. Tax Code 321.203(n)). Waste collection services. Sales taxes based on where the waste is collected (Tex. Tax Code 321.203(k)). Services not specifically identified in Sections 321.203(f) to (n) of the Texas Tax Code are sourced according to Sections 321.203 (b) to (e) of the Texas Tax Code. Generally, the sales of other services are sourced based either on: The location of a seller s place of business. If the order is not received at a place of business of the seller, the place of business of the seller s agent or employee. 3. What kinds of transactions are taxable? The Texas sales and use tax applies to the sale or purchase of tangible personal property and the provision of taxable services (see Question 2). Sale or purchase is defined to mean any of the following when done or performed for consideration: A transfer of title or possession of tangible personal property in Texas. The exchange, barter, lease or rental of tangible personal property in Texas. The performance of a taxable service in Texas. The charge for an extended warranty or service contract for the performance of a taxable service in Texas. In the case of an amusement service, a transfer of title to or possession of a ticket or other admission document in Texas, and the collection of an admission fee in Texas, whether by individual performance, subscription series or membership privilege. The collection of dues or a fee, charge or assessment, including an initiation fee, by a club or organization for membership or a special privilege, status, or membership classification in the club or organization in Texas. The use of a coin-operated machine in Texas. The production, fabrication, processing, printing or imprinting of tangible personal property in Texas for consumers who directly or indirectly furnish the materials used in the production, fabrication, processing, printing or imprinting. The furnishing and distribution of tangible personal property by a social club or fraternal organization in Texas to anyone. The furnishing, preparation or service of food, meals or drinks in Texas. A transfer of the possession of tangible personal property in Texas if the title to the property is retained by the seller as security for the payment of the price. A transfer of the title or possession of tangible personal property in Texas that has been produced, fabricated or printed to the special order of the customer. (Tex. Tax Code 151.007.) 4. What are the most common exclusions from the tax base, tax-exempt transactions or tax deductible items? The most common tax-exempt transactions are: Sale for resale. Occasional sales. Certain items that qualify for the manufacturing exemption in Section 151.318(a) of the Texas Tax Code. Sale for Resale Section 151.302(a) of the Texas Tax Code exempts a sale for resale from Texas sales and use tax. A sale for resale is defined as the sale of: Tangible personal property or a taxable service to a buyer who acquires the property or service to resell it as a taxable item, in the normal course of business: in the form or condition in which it is acquired; or as an attachment to or integral part of other tangible personal property or taxable service. 2
Tangible personal property to a buyer solely so the buyer can lease or rent it in the normal course of business to another person, but not if incidental to the leasing or renting of real estate. Tangible personal property to a buyer who acquires the property to transfer it as an integral part of a taxable service. A taxable service performed on tangible personal property that is held for sale by the buyer of the taxable service. Except as provided by Section 151.006(c) of the Texas Tax Code, tangible personal property to a buyer who acquires the property to transfer it as an integral part of performing a contract, or a subcontract of a contract, with the US federal government but only if the buyer: allocates and bills the cost of the property as a direct or indirect cost to the contract; and transfers the property title to the US federal government under the contract and applicable federal acquisition regulations. (Tex. Tax Code 151.006.) A buyer can give a sale for resale exemption certificate for the acquisition of a taxable item if the buyer intends to, in the regular course of business, either: Sell, lease or rent it. Transfer it as an integral part of a taxable service performed. (Tex. Tax Code 151.151.) All gross receipts of a seller engaged in business in Texas, with a nexus with Texas or that performs taxable services in Texas are subject to sales and use tax unless a properly completed sale for resale or other exemption certificate is accepted by the seller (34 Tex. Admin. Code 3.285(b)(1)). Under Title 34 Section 3.285(g) of the Texas Administrative Code, a sale for resale exemption certificate must contain the following information: The name and address of the buyer. The number from the sales tax permit held by the buyer or a statement that an application for a permit is pending. If the application is pending, the resale certificate is valid for only 60 days. After that, the sale for resale exemption certificate must be renewed to show the permanent permit number. If the buyer holds a Texas sales and use tax permit, the number must consist of 11 digits which begin with a one, two or three. Federal employer s identification numbers or Social Security numbers are not acceptable evidence of sale for resale exemption. A description of the taxable items generally sold, leased or rented by the buyer in the regular course of business and a description of the taxable items to be purchased tax-free by use of the certificate. The items to be purchased are generally described on the certificate or itemized in an order or invoice attached to the certificate. The signature of the buyer or an electronic form of the buyer s signature authorized by the Texas comptroller and the date. The name and address of the seller. Occasional Sale Section 151.304(a) of the Texas Tax Code exempts the occasional sale of a taxable item from Texas sales and use tax. An occasional sale is defined as: One or two sales of taxable items, other than an amusement service, during a 12-month period by a person who does not habitually engage, or hold himself out as engaging, in the business of selling taxable items. The sale of the entire operating assets of a business or of a separate division, branch, or identifiable segment of a business. Stock is an intangible asset so sales of stock are not subject to Texas sales and use tax. A transfer of all or substantially all the property used by a person in the course of an activity, if after the transfer the real or ultimate ownership of the property is substantially similar to that which existed before the transfer. The sale of not more than ten admissions for amusement services during a 12-month period by a person who does not hold himself out as engaging, or does not habitually engage, in providing amusement services. The sale of tangible personal property by an individual if: the property was originally bought by the individual or a member of the individual s family for their personal use; the individual does not hold a permit as a seller or retailer and is not required to obtain this type of permit; the individual does not employ an auctioneer, broker, or factor, other than an online auction, to sell the property; and the total receipts from sales of the individual s tangible personal property in a calendar year do not exceed $3,000. (Tex. Tax Code 151.304(b).) The sale of the entire operating assets of a separate division, branch, or identifiable segment of a business is an occasional sale if: Before the sale, the income and expenses attributable to the separate division, branch or identifiable segment can be separately established from the books of account or record (34 Tex. Admin. Code 3.316(d)(2)). The entire operating assets of the business or of the division, branch or identifiable segment of the business are sold in a single transaction to a single buyer. Importantly, the sale of the entire operating assets through several transactions to several buyers does not qualify as an occasional sale (34 Tex. Admin. Code 3.316(d)(4)). Manufacturing Exemption Under Section 151.318(a) of the Texas Tax Code, persons who are engaged in manufacturing can purchase, lease, store, use or consume a number of items exempt from sales taxes. Section 3
151.318(a) to (b) of the Texas Tax Code includes a complete list of exempt items. Section 151.318(c) of the Texas Tax Code includes a list of excluded items. Exempt items generally include: Tangible personal property that will become an ingredient or component part of tangible personal property manufactured, processed, or fabricated for ultimate sale. Tangible personal property directly used or consumed in or during the actual manufacturing, processing, or fabrication of tangible personal property for ultimate sale if the use or consumption of the property is necessary or essential to the manufacturing, processing, or fabrication operation and directly makes or causes a chemical or physical change to either: the product being manufactured, processed, or fabricated for ultimate sale; or any intermediate or preliminary product that will become an ingredient or component part of the product being manufactured, processed, or fabricated for ultimate sale. (Tex. Tax Code 151.318(a)). Other Exemptions Taxable items sold, leased, or rented to, or stored, used, or consumed by specified governmental entities are exempt from Texas sales and use tax. The governmental entities entitled to this exemption include: The US. An unincorporated instrumentality of the US. A corporation that is an agency or instrumentality of the US and is wholly owned by the US or by another corporation wholly owned by the US. The state of Texas. A county, city, special district, or other political subdivision of the state of Texas. A state, or a governmental unit of a state that borders this state, but only to the extent that the other state or governmental unit exempts or does not impose a tax on similar sales of items to Texas or a political subdivision of Texas. (Tex. Tax Code 151.309). Religious, educational and public service organizations qualify for an exemption from Texas sales and use tax if the taxable items are: Purchased for use by the exempt organization. Relate to the purpose of the exempt organization. Not used for the personal benefit of an individual or private party. (Tex. Tax Code 151.310.) A valid exemption certificate should be issued instead of paying tax when buying taxable items necessary to the exempt purpose of the exempt organization. The exemption certificate does not need a taxpayer identification number to be valid, but an exempt organization can provide its taxpayer identification number if the seller requests it. A number of health care items are also exempt from Texas sales and use tax. A full list is included in Section 151.313 of the Texas Tax Code. Food and food products for human consumption are generally exempt from Texas sales and use tax (Tex. Tax Code 151.314(a)). However, many prepared foods are taxable (Tex. Tax Code 151.314(c-2)). MULTI-STATE TRANSACTIONS 5. What types of business activities create "nexus" for sales and use tax liability in the state? In Texas, the following categories of persons and businesses are subject to sales and use tax: Persons who perform taxable services in Texas (see Question 2). Sellers engaged in business in Texas. Out-of-state sellers with a nexus with Texas. Engaged in Business in Texas A seller is considered to be engaged in business in Texas if it engages in any of the following activities: Maintains, occupies or uses in Texas permanently, temporarily, directly, or indirectly or through a subsidiary or agent by whatever name an: office; distribution center; sales or sample room; or place, warehouse, storage place or any other physical location where business is conducted. Has a representative, agent, salesman, canvasser or solicitor operating in Texas under the authority of the seller or its subsidiary for the purpose of selling or delivering or the taking of orders for a taxable item. Derives receipts from the sale, lease or rental of tangible personal property situated in Texas. Engages in regular or systematic solicitation of sales of taxable items in Texas by the distribution of catalogs, periodicals, advertising flyers or other advertising, by means of: print; radio or television media; mail; telegraphy; telephone; 4
computer data base; or cable, optic, microwave or other communication system for the purpose of effecting sales of taxable items. Solicits orders for taxable items by mail or through other media and under federal law is subject to or permitted to be subjected to the jurisdiction of Texas for the purposes of collecting the taxes imposed under Chapter 151 of the Texas Tax Code (Tex. Tax Code 151.001 et seq.). Has a franchisee or licensee operating under its trade name if the franchisee or licensee must collect the tax under Section 151.107(a) of the Texas Tax Code. Otherwise does business in Texas. (Tex. Tax Code 151.107(a).) Nexus with Texas The Texas comptroller has identified certain activities that attribute nexus for sales and use tax purposes to an out-of-state seller: Physical location in Texas. This includes both permanent and temporary locations, whether operated by the retailer directly or by an agent. It may be an: office; warehouse; distribution center; storage place; sales or sample room; or any other business location. Having an agent in Texas. A representative operating under the authority of the seller for the purpose of selling, delivering or taking orders for taxable goods or services. Texas franchisee or licensee who sells taxable goods or services. Trade show participant. An out-of-state seller that participates in a trade show for the purpose of soliciting or taking orders for taxable goods or services sold, shipped or delivered in Texas. Delivery of taxable items to Texas customers via company vehicles (whether owned, leased or rented). Deriving income from the rental or lease of equipment or other tangible personal property in Texas. Providing taxable services through company employees, authorized repair or service agents, or independent contractors. Using independent salespersons to make sales or take orders for taxable goods or services on behalf of an out-of-state seller. (Texas Tax Publication 94-108, Engaged in Business (Sales and Use Tax) (Nov. 11, 2006).) 6. Are there special rules for sales and use taxes on multistate transactions? Texas has not adopted a New York style Amazon law which seeks to attribute nexus to an out-of-state seller or retailer based on affiliate contacts. Instead, Texas amended the definition of a retailer engaged in business in this state, effective January 1, 2012, to include any retailer that holds a substantial ownership interest in, or is owned in whole or substantial part by, a person who maintains a location in Texas from which business is conducted if either: The retailer sells the same or a substantially similar line of products as the person with the location in Texas and sells those products under a business name that is the same as or substantially similar to the business name of the person with the location in Texas. The facilities or employees of the person with the location in Texas are used to: advertise, promote or facilitate sales by the retailer to consumers; or perform any other activity on behalf of the retailer that is intended to establish or maintain a marketplace for the retailer in Texas, including receiving or exchanging returned merchandise. (Tex. Tax Code 151.107(a)(7).) Further, Section 151.107(a)(8) of the Texas Tax Code provides that a retailer engaged in business in Texas includes a retailer who holds a substantial ownership interest in, or is owned in whole or substantial part by, a person that both: Maintains a distribution center, warehouse or similar location in Texas. Delivers property sold by the retailer to consumers. For this purpose, the term ownership includes: Direct ownership. Common ownership. Indirect ownership through a parent entity, subsidiary or affiliate. (Tex. Tax Code 151.107(d)(1).) Section 151.107(d)(2) of the Texas Tax Code defines the term substantial with respect to an ownership interest to mean an interest in an entity that is: If the entity is a corporation, at least 50%, directly or indirectly, of the total combined voting power of all classes of stock of the corporation or the beneficial ownership interest in the voting stock of the corporation. If the entity is a trust, at least 50%, directly or indirectly, of the current beneficial interest in the trust corpus or income. 5
If the entity is a limited liability company, at least 50%, directly or indirectly, of the total membership interest of the limited liability company or the beneficial ownership interest in the membership interest of the limited liability company. For any other entity, including a partnership or association, at least 50%, directly or indirectly, of the capital or profits interest in the entity. COLLECTING TAXES AND FILING RETURNS 7. Who has a duty to collect and pay sales and use taxes? The seller that is engaged in business in Texas or that has a nexus with Texas (see Question 5) must collect sales and use tax from a buyer in Texas (Tex. Tax Code 151.052(a)). When the amount of the sales and use tax is added, it becomes a part of the sales price and is a debt of the buyer to the seller until paid. If unpaid, the sales tax is recoverable at law in the same way as the original sales price (Tex. Tax Code 151.052(a)). A person responsible for collection or payment of sales tax must file a tax report (Tex. Tax Code 151.403). Sales Tax Permit A person who wants to be a seller in Texas must file with the Texas comptroller an application for a sales tax permit for each place of business (Tex. Tax Code 151.202(a)). Even though an out-ofstate seller may not be required to obtain a Texas sales tax permit, an out-of-state seller who sells a taxable item for storage, use or consumption in Texas must register with the Texas comptroller (Tex. Tax Code 151.202(a)). The registration for an out-of-state seller must include: The name and address of each agent of the seller operating in Texas. The location of all distribution or sales houses, or offices or other places of business in Texas. Any other information that the Texas comptroller requires. (Tex. Tax Code 151.202(b).) Fraudulent Scheme or Plan The following persons are personally liable for taxes and any penalty and interest due, when as officers, managers, directors or partners, they took an action or participated in a fraudulent scheme or plan to evade the payment of sales and use taxes: An officer, manager or director of a corporation, association or limited liability company. A partner of a general partnership. A managing general partner of a limited partnership or limited liability partnership. (Tex. Tax Code 111.0611(a).) The following actions indicate the existence of a fraudulent scheme or plan to evade the payment of sales and use taxes: Filing, or causing to be filed, a fraudulent tax return or report with the Texas comptroller on behalf of the business entity. Intentionally failing to file a tax return, report or other required document with the Texas comptroller when the business entity is under a legal obligation to file. Filing, or causing to be filed, a tax return or report with the Texas comptroller on behalf of the business entity that contains an intentionally false statement that results in the amount of the tax due exceeding the amount of tax reported by 25% or more. Altering, destroying, or concealing any record, document, or thing, presenting to the Texas comptroller any altered or fraudulent record, document, or thing, or otherwise engaging in fraudulent conduct with the intent to affect the course or outcome of: a Texas comptroller audit or investigation; a redetermination hearing; or another proceeding involving the Texas comptroller. (Tex. Tax Code 111.0611(b).) 8. Do out-of-state sellers have a duty to collect sales and use taxes? Out-of-state sellers engaged in business in Texas and selling, leasing or renting taxable items for storage, use or other consumption in Texas must collect sales and use tax from the buyer (Tex. Tax Code 151.107) (see Question 5). An out-ofstate seller who sells taxable items in Texas for storage use or consumption in Texas must collect the use tax from the buyer and give the buyer a receipt for the tax payment (Tex. Tax Code 151.103(a)) (see Question 5). In addition, an out-of-state seller with a nexus with Texas must collect sales and use tax (see Question 5). An out-of-state seller that has no physical presence in Texas and conducts business in Texas only by telephone, Internet, catalog sales or through shipments by common carrier or the US mail is not engaged in business in Texas and has no responsibility to collect and remit state or local Texas taxes (Texas Tax Publication 94-108, Engaged in Business (Sales and Use Tax) (Nov. 11, 2006)). 6
9. What is the last day payment of sales and use tax can be made without incurring a penalty and to whom is payment made? A taxpayer generally must file reports of sales and use tax on a monthly basis. Payments of sales and use taxes are generally due and payable to the Texas comptroller on or before the 20th day of the month following the end of each calendar month (Tex. Tax Code 151.401(a)). However, if a taxpayer owes less than $500 for a month or $1,500 for a calendar quarter, the tax is due on the 20th of the month following the end of the calendar quarter (Tex. Tax Code 151.401(b)). In addition, if a taxpayer has less than $1,000 in sales and use tax to report during a calendar year, that taxpayer may file yearly returns on authorization from the Texas comptroller (34 Tex. Admin. Code 3.286(g)(2)). In this case, the return and payment of sales and use taxes are due on or before January 20 of the next calendar year (34 Tex. Admin. Code 3.286(g)(2)(F)). 10. What are the penalties for failure to comply with the sales and use tax statute(s)? There are several penalties related to the collection, reporting and remitting of the Texas sales and use tax: Failure to report or pay tax. Fraud or intent to evade tax. Failure to use electronic funds transfer. Interest on penalties. Failure to Report or Pay Tax A person who fails to file a sales and use tax report or to pay sales and use tax when it is due is subject to a penalty of 5% of the amount due. If the person fails to file or pay within 30 days after the tax is due, an additional 5% penalty is imposed (Tex. Tax Code 151.703(a)). An additional penalty of $50 is imposed on a person who fails to file a required sales and use tax report and this penalty is assessed regardless of whether the taxpayer subsequently files the sales and use tax report or whether any sales and use taxes were due from the taxpayer for the reporting period (Tex. Tax Code 151.703(d)). Fraud or Intent to Evade Tax Except where another penalty for fraud or intent to evade the sales and use tax is specifically provided, an additional penalty of 50% of the tax due is imposed if it is determined that either: The failure to pay the sales and use tax or file a sales and use tax report when due was a result of fraud or an intent to evade the tax. The taxpayer alters, destroys, or conceals any record, document, or thing, or presents to the Texas comptroller any altered or fraudulent record, document, or thing, or otherwise engages in fraudulent conduct, for the apparent purpose of affecting the course or outcome of an audit, investigation, redetermination, or other proceeding before the Texas comptroller. (Tex. Tax Code 111.061(b).) Failure to use Electronic Funds Transfer The Texas comptroller can also impose a penalty of 5% of the tax due on a person who must either: Pay by electronic funds transfer and does not do so. File a report electronically and does not file electronically. (Tex. Tax Code 111.063.) Interest on Penalties In addition to the penalties for failure to report or pay the sales and use tax, delinquent sales and use tax draws interest beginning 60 days after the due date of the taxes (Tex. Tax Code 151.703(c)). 11. Is the buyer, transferee or assignee of the assets of a business liable for the seller's unpaid sales tax? Texas does have a successor liability provision under which the unpaid sales tax liabilities of the seller can follow the assets bought by a buyer. In an asset acquisition of a Texas business, the buyer of the assets or inventory of a Texas business could potentially be liable as a successor of the seller for any past due state taxes or fees, plus any interest and penalties that are owed by the seller, up to the full amount of the purchase price (Tex. Tax Code 111.020(a)). In a stock acquisition of a Texas business, the buyer is buying the Texas business that owes the unpaid sales tax liability, and therefore, the purchased Texas business remains liable for any unpaid tax liabilities after the transaction. If a seller who has unpaid sales tax liability sells the assets of an existing Texas business, the inventory of an existing Texas business or the name and goodwill of an existing Texas business, the buyer must withhold Texas sales and use tax from the purchase price unless the seller provides a receipt from the Texas comptroller showing that the amount has been paid or a tax certificate stating that no tax is due (a Certificate of No Tax Due ) (Tex. Tax Code 111.020(a)). The buyer of a Texas business who is required to but fails to withhold Texas sales and use tax is generally liable for the amount that must be withheld up to the value of the purchase price (Tex. Tax Code 111.020(b)). 7
However, a buyer can avoid successor liability by requesting from the Texas comptroller either a: Certificate of No Tax Due. Statement of the amount that must be paid before a Certificate of No Tax Due can be issued. The Texas comptroller generally must issue the Certificate of No Tax Due or statement by the later of 60 days after either: Receiving the request. The day on which the records of the former owner of the business are made available for audit. Practical Law Company provides practical legal know-how for law firms, law departments and law schools. Our online resources help lawyers practice efficiently, get up to speed quickly and spend more time on the work that matters most. This resource is just one example of the many resources Practical Law Company offers. Discover for yourself what the world s leading law firms and law departments use to enhance their practices. To request a complimentary trial of Practical Law Company s online services, visit practicallaw.com or call 646.562.3405. However, in all cases, the Texas comptroller must issue the Certificate of No Tax Due or statement within 90 days after receiving the request (Tex. Tax Code 111.020(c)). If the Texas comptroller fails to mail the Certificate of No Tax Due or statement within the applicable period, the buyer is released from the obligation to: Withhold sales and use tax from the purchase price. Pay any sales and use tax due on the transaction. (Tex. Tax Code 111.020(d).) Use of PLC websites and services is subject to the Terms of Use (http://us.practicallaw.com/2-383-6690) and Privacy Policy (http://us.practicallaw.com/8-383-6692). 8 06-12