§ 37.0055.Declarations Relating to Liability for Sales and Use Taxes of Another State

A narrow and modern provision, aimed at a specific interstate problem.

A district court has original jurisdiction of a declaratory judgment proceeding involving a Texas business and an official of another state asserting that the business must collect sales or use taxes for that state.

The qualifying business is defined two ways: one organized under the laws of this state or otherwise owned by a resident of this state, or a retailer registered with the comptroller under the Tax Code.

The responding party must be an official of another state asserting a collection duty based on conduct of the business that occurs in whole or in part within this state.

The problem is a real one for remote sellers. A Texas business selling into many states may receive demands from revenue departments across the country, each asserting an obligation to collect and remit that state’s tax.

Litigating each demand in the demanding state is expensive and slow, and this gives the business a Texas forum in which to raise the question.

The declaration available is on one issue: whether the other state’s requirement constitutes an undue burden on interstate commerce under the commerce clause.

So the section supplies a forum for a federal constitutional question, rather than a Texas-law answer to a tax dispute.

Two things must be considered in deciding whether to grant relief: the factual circumstances of the business’s operations that give rise to the demand, and the decisions of other courts interpreting the commerce clause.

The second is a candid acknowledgment. This is contested federal ground, and a Texas court deciding it is required to look at how other courts have.