Texas Software Taxation - Court Looks for More Information

Friday, April 23, 2010

The Texas Court of Appeals determined that more information was needed when it decided to send the 7-Eleven, Inc. v. Combs case back to Trial Court in order to "resolve fact issues."

By way of background:

A decision was reached at the Trial Court level in Texas. This decision made it to the Appeals Court and they decided that no tax was due on 7-Eleven's purchases of software that went into inventory for shipment outside of Texas.

The state pushed for a second look at the Appeals Court's decision, persuading the Appeals Court that they didn't have enough facts to make their decision - "that more information was needed." The Appeals Court agreed and ordered the case to be sent back to a Trial Court for more information.

The fact that this case involves software resold by 7-Eleven is almost irrelevant for purposes of the Appeals Court decision to get more information. What is relevant is the exact piece of information the Court agreed was relevant:

Whether 7-Eleven made use of the software in Texas before removing it from tax-free inventory.

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