Texas, Cities Fight Over Sales Tax Allocation in State Court

Texas and several of its cities quarreled over how local sales taxes are allocated in the state, particularly for online sales.

The Texas cities, led by Coppell, sued the state comptroller over changes to rules that determine where a sale is “consummated” for local sales tax purposes. The dispute centers on the interpretation of Texas Tax Code Sections 321.002(a)(3)(A) and 321.203, which define a “place of business” and determine where a sale is consummated.

Coppell argued the comptroller’s new rules narrowed these definitions too much, potentially excluding fulfillment centers and online sales from being taxed in their jurisdictions, which could ...