City, Comptroller reach agreement on sales tax rule change injunction

The City of Round Rock and the Texas Comptroller of Public Accounts reached an agreement Tuesday, Aug. 31, that prohibits the state from implementing a subsection of a new sales tax sourcing rule, pending a final hearing. 

The City filed a lawsuit in July seeking to overturn portions of the Comptroller’s Rule 3.334, which would source sales tax revenue from many online purchases to the buyer’s location instead of the seller’s place of business. This change to decades-old sourcing rules would have cost Round Rock millions of dollars a year in lost local sales tax revenue, most notably from online sales made by Round Rock-based Dell Technologies. 

The agreement was reached following a hearing in the 250th Civil District Court of Travis County on Monday, Aug. 30. A trial date for the lawsuit is anticipated to take place the week of June 13, 2022. 

On Thursday, Sept. 9, 2021, Justice Cindy Bourland provided an update to City Council regarding the lawsuit. A video of the presentation can be viewed below:

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