In a recently issued taxpayer-favorable opinion, the Texas Supreme Court overturned the court of appeals' decision holding that the state's performance-based sourcing statute for service receipts essentially looks to customer location. The Court, relying on the statute's plain language, then affirmed the taxpayer's methodology, which sourced its receipts to the location where the taxpayer's performance occurred. Sirius XM Radio, Inc. v. Comptroller, no. 20-0462 (Tex. Mar. 25, 2022) ("Sirius Op.").
The dispute concerned the receipts Sirius XM Radio, Inc. ("Sirius") earned from customer subscription fees to access Sirius' radio programming, which it transmitted using satellites. Sirius produced most of the content broadcast on its satellite radio channels, and its production primarily took place outside of Texas. Similarly, Sirius' "headquarters, transmission equipment, and production studios were located almost exclusively outside of Texas." Hegar v. Sirius XM Radio Inc., 604 S.W.3d 125, 128 (Tex. Ct. App. May 1, 2020). Sirius' satellites, which orbited thousands of miles above the planet, are controlled by Sirius' facilitates also located outside of Texas. Sirius' customers, located in Texas and other states, receive Sirius programming using satellite-enabled radios (many of which were located in customers'...
