The bill would have required companies that contract with marketing companies inside Texas to collect Texas sales tax. Federal law requires companies with a physical presence inside a state to collect that state's sales tax. The bill would have expanded the definition.

Texas store owners have complained that Internet retailers have an unfair price advantage because they are not required to collect state sales tax. But Perry said he was afraid this bill would have unintended consequences. Perry called on lawmakers to continue working on the issue.

Big retailers like Amazon.com had threatened to cut off all relationships with marketers inside Texas if the bill became law.