A coalition of Texas business organizations is pushing for legislative action to address what they view as an unfair tax collection burden. The Texas Association of Mexican American Chambers of Commerce (TAMACC) is championing House Bill 2428, the Fair Business Reimbursement Act, which seeks to modernize how businesses are compensated for collecting state sales taxes via credit card transactions.
Currently, Texas retailers are required to collect sales taxes without receiving adequate compensation for processing fees associated with credit card transactions. These fees, typically ranging from 2 to 3 percent, are charged on the entire transaction amount, including sales tax, effectively requiring businesses to absorb significant financial costs.
The proposed legislation would increase the reimbursement rate from the current 0.5 to 1.75 percent to 2.5 percent for credit card and digital transactions. This adjustment aims to provide more equitable compensation for businesses, particularly small and minority-owned enterprises operating with minimal profit margins.
According to TAMACC Vice Chairman JR Gonzales, the bill is not about seeking additional funds but about establishing fairness in the tax collection process. The proposal aligns with practices in more than half of U.S. states, which already offer similar reimbursement models for businesses collecting sales taxes.
The proposed legislation has garnered support from multiple business associations, including the Texas Hotel & Lodging Association, Texas Food and Fuel Association, and the Neighborhood Beer Garden and Bar Association of Texas. These organizations argue that the current system places an undue burden on businesses that serve as unpaid tax collectors.
By updating the reimbursement rate, HB 2428 could potentially provide meaningful financial relief for businesses, especially those in the small and mid-sized sector. The bill represents a critical effort to modernize a tax collection system that was originally designed during an era when cash transactions were predominant.
The proposed changes could have significant implications for Texas' economic landscape, potentially improving the financial sustainability of small businesses and creating a more supportive environment for entrepreneurship. As the bill awaits consideration by the House Committee on Ways and Means, business leaders remain hopeful that lawmakers will recognize the importance of this proposed update.
