Texas cities sue Texas comptroller for sales tax revenue
ROUND ROCK, Texas (KXAN) – Starting in October, the Texas Tax Code will change to redirect sales tax revenue, and some cities in Texas are not happy with it.
The city of Round Rock has joined at least three other cities in filing lawsuits against the Comptroller of Texas.
The Round Rock lawsuit alleges that the Texas Comptroller’s sales tax procurement rule is “invalid, void and inoperative” and should be rescinded.
Controller Rule 3.334 would generate sales tax revenue from online purchases at the buyer’s location instead of the seller’s establishment.
This would specifically affect the amount of tax revenue the Town of Round Rock generates on online sales made by Round Rock-based Dell Technologies.
“This rule change is bad for the state of Texas, bad for Round Rock and bad for our businesses,” said Mayor Craig Morgan. “This kind of fundamental change should only be made by our elected leaders to the Texas Legislature, not by the Comptroller. If this rule comes into effect, it will eliminate an economic development tool that was the basis of the “Texas Miracle” championed by former Governor Rick Perry and current Governor Greg Abbott. “
The Town of Coppell, in conjunction with the Towns of DeSoto and Humble, also filed a lawsuit against Texas Comptroller Glenn Hegar.
“Small towns will definitely benefit somewhere, but the amount of revenue they will bring in is relatively small,” Coppell Mayor Wes Mays said.
Mays said the move will cost Coppell, a suburban town just outside of Dallas, more than $ 26 million a year.
“We currently have our head office in 27 headquarters,” Mays said. “Some of these companies that you are going to know about, like Container Store and AAA Texas. ”
Mays argued that headquartered cities must retain sales tax revenues from these businesses to continue supporting businesses.
“We’re still going to provide the police, the fire department, the roads, the water and all those services that keep companies doing business. Yet we won’t get any income for it, ”Mays said.
In an opinion piece, the Texas Comptroller acknowledged that companies often make deals with cities to get tax breaks or rebates to procure local sales tax dollars on Internet purchases, but he said. also stated: “My duty is to the taxpayers. Taxpayers do not pay local sales tax on Internet purchases in the hope that the proceeds will be distributed to businesses and cities nowhere in their communities.
The lawsuits were filed by Desoto, Humble, Coppell and Round Rock on Monday.
Hegar sent KXAN a statement in response to the lawsuits:
“The lawsuits make the same arguments that were presented to my office during the rule-making process. Arguments are discussed in the preamble and in an earlier editorial I wrote. The arguments were also presented to the legislature, and the legislature chose not to change our rules.
Texas Comptroller Glenn Hegar
Kaitlyn Karmout of KXAN reached out to smaller neighboring towns to get their views on the tax code changes.
Taylor City Manager Brian LaBorde and Deputy City Manager Jeff Jenkins are monitoring the situation with the new sales tax laws and will consult with the Texas Municipal League on how to move forward.
The Town of Round Rock did not respond to KXAN’s request for the amount of money the current sales tax code is generating for the town.