Texas Supreme Court hears dispute over franchise-tax sourcing in NuStar Energy case

The Supreme Court of Texas heard oral arguments in NuStar Energy v. Hancock over how Texas’s franchise tax should treat receipts from sales of tangible personal property: should receipts be sourced where property is delivered in Texas or where the buyer ultimately uses or markets the goods? Petitioner counsel argued for an "ultimate destination" or market-based test; respondent counsel defended the comptroller’s longstanding place-of-delivery rule.

Why it matters: the court’s ruling could change how out-of-state buyers and Texas sellers apportion receipts for the Texas franchise tax, with implications for corporate taxpayers and state tax revenue. Counsel told the court the dispute affects decades of franchise-tax enforcement for goods such as marine fuel and other bulk shipments.

Petitioner counsel…