How could local sales tax be allocated when a retail building straddled the San Antonio and Leon Valley city boundary?

Plain-English summary

Two proposed retail buildings crossed the common boundary between San Antonio and Leon Valley. Both cities had a one-percent municipal tax and one-percent metropolitan-transit tax, producing the same combined 8.25% state-and-local rate.

The Comptroller approved, but did not require, allocating the municipal tax by the percentage of the building's square footage located in each city. That was considered fair because the rates matched.

If either city's rate changed, the tenant had to use the prior rule for a store crossing a local boundary: the tax rate followed the cash register's location.

What this means for you

The optional floor-area method depended on identical rates. Rate differences made register location necessary so the customer faced one determinable rate at checkout.

Common questions

Could the tenant allocate by floor area? Yes, while both city rates were the same.

Was that method mandatory? No.

What if the rates later differed? Cash-register location controlled.

Citations and references

• No numbered statute or rule was cited in the letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9009L1044E01

Original ruling text

Comptroller of Public Accounts
State of Texas
Austin, Texas 78774

Bob Bullock
Comptroller September 14, 1990

Dear ** :

Your client is going to build two buildings for retail businesses
that will each be dissected by the common city-limit boundary be-
tween San Antonio and Leon Valley.

Both cities have adopted the 1% municipal sales and use tax and
the 1% Metropolitan transit authority tax. The combined state
and local tax for both cities is 8.25%.

You are asking if the two anchor tenants can remit the 1% munici-
pal sales and use tax based on the percentage of the taxpayer's
place of business that falls within each city's boundaries, i.e.,
square feet of the building within a city divided by the total
square feet of the entire building.

We agree that this is a fair way to apportion the tax between two
cities with the same tax rate. However, it wouldn't work where
the two rates differ, because it would be impractical as far as
the customer was concerned. When he got to the cash register,
which rate would he pay?

Therefore, your client may use the proposed method of reporting
if it wishes, although it is not required to. But if either city's
rate changes the tenant should apply the system we have used be-
fore when a store is both inside and outside a local taxing juris-
diction. The tax rate is determined by the location of the cash
register.

If we can help further, please let me know. My number is 463-4677.

Sincerely,
Lucy Glover