Texas Franchise Tax Ruling for Sirius XM Leaves Rules in Limbo

It isn’t clear when—or if—the Texas comptroller will align his office’s regulations on taxation of services with a recent, contradictory state Supreme Court ruling. But that shouldn’t stop taxpayers from following the court’s ruling, not the regulations, tax professionals said.

The court decision in favor of Sirius XM invalidates the comptroller’s position in the case: that the company’s receipts for Texas customers should be assigned there because the taxable act occurs when the customers’ vehicles decrypt the satellite radio signal. Instead, the court said the tax is based on the location of personnel and equipment that perform the ...