202504010H

Reads like most other self represented taxpayers. Unfortunate.

Petitioner contends that transactions in Exam 600 were incorrectly categorized under purchases in profit and loss statements where they should have been classified under loans from shareholders in the balance sheets.

 

The auditor scheduled transactions listed in the general ledger for which no invoice was available as taxable purchases. Petitioner provided no evidence to show that the items assessed in Exam 600 were shareholder loans. Petitioner’s contention should be denied.

This feels particularly rough as generally there is sufficient documentation to resolve this sort of issue, assuming they know what they need.

202504010H

 

 

SOAH DOCKET NO. 304-25-05931

CPA HEARING NO. 119,554

 

RE:      **************

TAXPAYER NO:  **************

AUDIT OFFICE:   **************

AUDIT PERIOD:  May 1, 2017 THROUGH November 30, 2020

Sales And Use Tax/RDT

BEFORE THE COMPTROLLER OF PUBLIC ACCOUNTS

OF THE STATE OF TEXAS

GLENN HEGAR

Texas Comptroller of Public Accounts

ROBERT SCOTT

Representing Respondent

 

**************

Representing Petitioner

 

COMPTROLLER’S DECISION
 

This decision is considered final on April 28, 2025, unless a motion for rehearing is timely filed; this date of finality is calculated based on the Administrative Procedure Act (APA).[1]  The failure to timely file a motion for rehearing may result in adverse legal consequences.

Administrative Law Judge (ALJ) Kathy Pickup of the State Office of Administrative Hearings (SOAH) issued a Proposal for Decision (PFD) that includes Findings of Fact and Conclusions of Law.  SOAH served the PFD on each party and each party was given an opportunity to file exceptions and replies with SOAH in accordance with SOAH’s rules of procedure.  The ALJ recommended that the Comptroller adopt the PFD as written.

After review and consideration, IT IS ORDERED that the PFD is adopted as changed.[2] 

The result from this Decision is Attachment A.  The ALJ’s recommendation letter is Attachment B.  The PFD as changed is Attachment C.  Attachments A, B, and C are incorporated by reference.

Attachment A reflects a liability.[3]

 

The total sum of the tax, penalty, and interest is due and payable 20 days after a comptroller’s decision becomes final.[4]  If such sum is not timely paid, an additional penalty of 10 percent of the taxes due will accrue.

SIGNED on this 2nd day of April 2025
 

GLENN HEGAR

Comptroller of Public Accounts

By: Lisa Craven

Deputy Comptroller

Attachment A, Texas Notification of Hearing Results
Attachment B, ALJ’s recommendation letter
Attachment C, Proposal for Decision as changed

 

 

 

ATTACHMENT C

 

 

SOAH Docket No. 304-25-05931

Before the State Office of Administrative Hearings

TCPA Hearing No. 119,554

 

Proposal for Decision

 

************** (Petitioner) was audited for sales and use tax compliance by the Tax Division (Staff) of the Texas Comptroller of Public Accounts (Comptroller) and was assessed tax, a 10% late penalty for late-filed periods, and interest. Petitioner requested redetermination, contending transactions assessed in Exams 100 and 300 are nontaxable real-time replenishment (RTR) or stored value cards (SVC) and that COMPANY A is responsible for and has paid the sales tax on the sales, that it is not liable for sales and use tax for the sale of phones that were financed or leased by third parties, and that asset purchases were nontaxable shareholder loans. Petitioner also requested waivers of penalty and interest. Staff did not agree to adjust the assessment and asserts that Petitioner failed to prove audit error or that penalty or interest waiver were warranted. In this Proposal for Decision, the Administrative Law Judge (ALJ) recommends that the assessment be upheld.

 

I. Notice, Jurisdiction, and Procedural History

 

Staff referred the contested case to the State Office of Administrative Hearings (SOAH) and, on November 25, 2024, issued Petitioner a Notice of Hearing by Written Submission. On December 3, 2024, ALJ Kathy Pickup issued an Order Setting Written Submission Requirements, which set the written submission hearing, filing deadlines, and a record close date of February 18, 2025. Robert Scott represented Staff, and Petitioner was represented by its consultant, **************.

 

Petitioner contends that collection of the total liability would make it insolvent. After reviewing Petitioner’s insolvency settlement proposal and documentation, Staff agreed that Petitioner met the criteria for insolvency settlement consideration and offered it an insolvency settlement proposal. Petitioner did not accept the proposal. The Comptroller will refer only factual disputes regarding whether the taxpayer established its eligibility for an insolvency settlement, whether the insolvency request was sufficiently specific, and whether the request included the required documentation. Because those factors are not in dispute, insolvency is not a contested case issue in this hearing.

 

There are no issues of notice or jurisdiction; therefore, those matters are set out in the Findings of Fact and Conclusions of Law without further discussion

 

II. Reasons for Decision

1. Evidence

Petitioner did not submit argument or evidence for the written submission hearing. Staff submitted the pleadings exchanged between the parties prior to referring the matter to SOAH and offered the following exhibits:

1. Hearing Request Receipt;

2. Texas Notification of Audit Results;

3. Penalty and Interest Waiver Worksheet;

4. Audit Report; and

5. Audit Plan.

Staff’s exhibits are admitted without objection.

 

B. Agreements

 

Staff did not agree to adjust the audit.

 

C. Material Facts and Issues Presented

 

During the period at issue, May 1, 2017, through November 30, 2020, Petitioner operated as an authorized retailer for COMPANY A, and sold phones, accessories, and prepaid wireless services. Petitioner receives a commission from COMPANY A for each new activation, device upgrade, phone finance agreement, and sale of COMPANY A RTR.

 

Petitioner operated multiple locations during the audit period using a cash basis accounting method. It collected and remitted sales tax for outright (non-financed) sales of mobile devices, accessories, and set-up fees, but did not collect sales tax on sales of prepaid wireless services and related service fees.

 

In February 2021, Staff initiated a sales and use tax compliance audit of Petitioner’s business. Petitioner provided the auditor with general ledgers, sales journals, sales invoices, federal income tax returns, financial statements, bank statements, chart of accounts, purchase invoices, financials statements, income tax returns, and depreciation schedules. No point-of-sale (POS) sales data was available for May 1, 2017, through November 30, 2017. COMPANY A was owned by COMPANY B until July 1, 2020, when COMPANY C purchased COMPANY A.

 

The auditor assessed sales tax on Petitioner’s nontaxed sales of RTR, payment processing charges, ePay service charges, device set up charges, down payments, and Easy Pay Program or COMPANY A Program installment financed sales of mobile devices. The auditor estimated additional tax due for the periods where no POS sales data was available. The audit assessed additional taxable sales (Exams 100, sample audit, 200, detail audit, and 300, audit estimate), taxable purchases of expense items (Exam 500), and assets (Exam 600).

 

During the audit, Petitioner requested an Independent Audit Review (IAR). The March 8, 2022 IAR Report recommended denial of Petitioner’s contentions. On May 26, 2022, Staff issued a Texas Notification of Audit Results to Petitioner. The assessment included tax, 10% penalty for late filed returns, and interest.  Petitioner timely requested redetermination. Staff did not agree to adjust the audit and referred the matter to SOAH.

 

D. ALJ Analysis and Recommendation

 

Texas imposes a tax on each sale of a taxable item in this state. Tex. Tax Code § 151.051. The term “taxable item” includes tangible personal property (TPP) and taxable services. Id. § 151.010. While all sales of TPP are presumed taxable, only those services defined in the Tax Code as taxable services are subject to tax. Id. § 151.0101. Therefore, when services have been assessed, Staff must establish a prima facie case for the imposition of tax before the burden shifts to the taxpayer to show error in the audit. See, e.g., Comptroller Decision No. 109,052 (2014). Once this initial burden is met, Petitioner bears the burden of proof to establish by a preponderance of the evidence that the service is not taxable or by clear and convincing evidence that, even though the services were taxable, they were exempt from taxation. See 34 Tex. Admin. Code § 1.26; see also Comptroller’s Decision Nos. 102,792 (2010), 100,933 (2009).

 

Telecommunications services are taxable services and are defined broadly as, “the electronic or electrical transmission, conveyance, routing, or reception of sounds, signals, data, or information utilizing wires, cable, radio waves, microwaves, satellites, fiber optics, or any other method now in existence or that may be devised, including but not limited to long-distance telephone service.” Tex. Tax Code §§ 151.0101(a)(6), .0103(a); 34 Tex. Admin. Code § 3.344(a)(13). The term includes mobile telecommunications services and prepaid telecommunications services. 34 Tex. Admin. Code § 3.344(a)(13). The total amount charged for a taxable telecommunications service, including mobile telecommunications services for which the place of the primary use is Texas, is subject to sales tax. Id. § 3.344(b)(6).

 

Sellers of taxable items and purchasers who store, use, or consume taxable items in this state shall keep books, papers, and records in the form the Comptroller requires. Tex. Tax Code § 151.025(a); 34 Tex. Admin. Code § 3.281(a)(1). For example, records must reflect total purchases of taxable items and must substantiate any claimed deductions or exclusions authorized by law. Tex. Tax Code § 151.025(a)(3); 34 Tex. Admin. Code § 3.281(b). A taxpayer must produce contemporaneous records and supporting documentation appropriate to the tax or fee for the transactions in question to substantiate and enable verification of the taxpayer’s claim related to the amount of tax, penalty, or interest to be assessed, collected, or refunded. Tex. Tax Code § 111.0041; 34 Tex. Admin. Code § 1.26(a). An audit based on available books and records from Petitioner and conducted pursuant to established audit methodologies it is entitled to the presumption of correctness. See, e.g., Comptroller’s Decision No. 110,187 (2017). The Comptroller has consistently treated missing invoices as 100% taxable. Tex. Tax Code §§ 151.025, .054; Comptroller’s Decision No. 113,163 (2018).

 

Petitioner must produce contemporaneous records and supporting documentation to enable the Comptroller to substantiate and verify Petitioner’s claims. Tex. Tax Code §§ 111.0041(c), 151.025(a); 34 Tex. Admin. Code § 1.26(a).

 

1. RTR Cards

 

Petitioner contends that Exams 100 and 300 erroneously assessed tax on sales of COMPANY A RTR cards and that its RTR sales and related service charges are nontaxable sales of future credits, equivalent to the sale of gift cards. Petitioner also contends the sales tax liability for the period May 1, 2017, through November 30, 2017, was incorrectly estimated in Exam 300, as bank statements were provided to the auditor.

 

Although a gift card is not generally subject to sales and use tax, a prepaid calling card is expressly defined under Texas Tax Code § 151.009 as TPP, and, under Texas Tax Code § 151.010, sales of TPP are defined as sales of taxable items. Similarly, under 34 Texas Administrative Code §§ 3.344(a)(9), (a)(15), and (b)(13), prepaid telephone calling cards are taxable.

 

Both the Notice of Hearing and the IAR Report refer to and quote a retailer agreement, affidavits, emails, and other documentation provided by Petitioner to the auditor and to the IAR reviewer. However, none of that documentation was provided for the hearing and it is therefore not part of the contested case record.

 

The law requires retailers to keep records that reflect the total gross receipts from sales and the total purchases of taxable items. Tex. Tax Code § 151.025; 34 Tex. Admin. Code § 3.281(b). If a taxpayer fails to keep accurate records of gross receipts, gross purchases, deductions, and exclusions, the Comptroller may take actions that include estimating the person’s tax liability based on any available information. Tex. Tax Code §§ 111.0042(d), .008(a).

 

The ALJ concludes that Staff’s evidence demonstrates, prima facie, that the transactions assessed in Exams 100 and 300 of the audit represent Petitioner’s sales of taxable prepaid telecommunications services for primary use in Texas. The ALJ also finds that the best available records were used to estimate additional taxable sales for the audit period May 1, 2017 through November 30, 2017, when no POS sales records were available for review. Petitioner’s contentions should be denied.

 

2. Party Responsible for Paying the Tax

 

Petitioner does not dispute the taxability of the prepaid telecommunications services at issue but argues that it was not the provider of the taxable services. The auditor scheduled RTR sales made in-person in Texas retail stores. A seller or retailer is a person engaged in the business of making sales of taxable items, such as taxable telecommunications services, and includes every retailer, wholesaler, distributor, manufacturer, or any other person who sells, leases, rents, or transfers ownership of taxable items for a consideration. See Tex. Tax Code § 151.008(a), 34 Tex. Admin. Code § 3.286(a)(13)(10). [ENDNOTE 5] A seller who makes a sale subject to the sales tax is required to add the amount of the tax to the sales price. See Tex. Tax Code § 151.052(a); 34 Tex. Admin. Code § 3.286(d).

 

The responsibility for collection and remittance of the applicable sales tax falls on Petitioner as the entity collecting the receipts at the point of sale. The ALJ concludes that the transactions at issue represent Petitioner’s sales of taxable mobile and prepaid telecommunications services for primary use in Texas and, as such, Petitioner was required to collect and remit the sales tax due on the amount charged for those services. Petitioner’s evidence is insufficient to demonstrate error in the audit and, therefore, its contention should be denied.

 

3. Finance or Lease Sales

 

Petitioner contends that it is not liable for phones that were leased or financed by a third party and that the sales of mobile devices assessed in Exams 100 and 200, made via the Easy Pay Program and COMPANY A Program, and related service charges potentially assessed in Exam 100, are nontaxable transactions. Petitioner also contends the sales tax was collected and remitted by COMPANY A. The Notice of Hearing and IAR Report again refer to documents that are not in evidence. Petitioner did not provide any evidence that sales tax was collected and remitted on the sale of mobile devices associated with the Easy Pay Program or COMPANY A Program. The ALJ recommends that Petitioner’s contentions be denied.

 

4. Asset Purchases

 

Petitioner contends that transactions in Exam 600 were incorrectly categorized under purchases in profit and loss statements where they should have been classified under loans from shareholders in the balance sheets.

 

The auditor scheduled transactions listed in the general ledger for which no invoice was available as taxable purchases. Petitioner provided no evidence to show that the items assessed in Exam 600 were shareholder loans. Petitioner’s contention should be denied.

 

5. Penalty and Interest Waiver

 

Petitioner requested waivers of penalty and interest. Late penalties are automatically imposed on delinquent taxes. Tex. Tax Code §§ 111.061. The Comptroller has the discretionary authority to waive late penalties if a taxpayer has exercised reasonable diligence to comply with tax laws. Id. § 111.103. A taxpayer must establish reasonable diligence by a preponderance of evidence. See Comptroller’s Decision No. 102,695 (2010). In making the reasonable diligence determination, the Comptroller considers the following factors: the taxpayer’s audit history, the tax issues involved, whether a change in Comptroller policy occurred during the audit period, whether changes in the law took effect during the audit period, the size and sophistication of the taxpayer, whether tax was collected but not remitted, whether returns were timely filed, the completeness of the taxpayer’s records, the taxpayer’s efforts to comply with the recordkeeping requirements of this state, delinquencies in other taxes, reliance on advice provided by the Comptroller’s office, and the error rate in the current audit. 34 Tex. Admin. Code § 3.5(b)(3), (d). Penalty was waived except for late filed periods. Petitioner did not provide argument or evidence to support any additional penalty waiver and, therefore, Petitioner’s contention must be denied.

 

Delinquent taxes draw interest beginning 60 days after the date due. Tex. Tax Code § 111.060(c). The Comptroller has discretionary authority to waive interest assessments and may exercise his discretion if interest was imposed as a result of undue delay caused by Comptroller personnel, reliance on advice provided by the Comptroller’s office, or natural disaster. Id. § 111.103; 34 Tex. Admin. Code § 3.5(e). To prevail, Petitioner must demonstrate, by a preponderance of the evidence, that interest waiver is warranted. See 34 Tex. Admin. Code § 1.26(e); see also Comptroller’s Decision Nos. 102,268, 109,069 (2014). Petitioner did not demonstrate any of the factors that may warrant interest waiver. The contention should be denied.

 

III. Findings of Fact

1. During the audit period, ************** (Petitioner) operated as an authorized retailer for COMPANY A, and sold phones, accessories, and prepaid wireless services.

2. Petitioner receives a commission from COMPANY A for each new activation, device upgrade, phone finance agreement, and sale of COMPANY A Real Time Replenishment (RTR).

3. Petitioner operated multiple locations during the audit period using a cash basis accounting method.

4. Petitioner collected and remitted sales tax for outright (non-financed) sales of mobile devices, accessories, and set-up fees, but did not collect sales tax on sales of prepaid wireless services and related service fees.

5. In February 2021, The Tax Division (Staff) of the Texas Comptroller of Public Accounts initiated a sales and use tax audit of Petitioner for the period May 1, 2017, through November 30, 2020.

6. Petitioner provided general ledgers, sales journals, sales invoices, federal income tax returns, financial statements, bank statements, chart of accounts, purchase invoices, financials statements, income tax returns, and depreciation schedules.

7. No point-of-sale (POS) sales data was available for May 1, 2017, through November 30, 2017.

8. COMPANY A was owned by COMPANY B until July 1, 2020, when COMPANY C purchased COMPANY A.

9. The auditor assessed sales tax on Petitioner’s nontaxed sales of RTR, payment processing charges, ePay service charges, device set up charges, down payments, and Easy Pay Program or COMPANY A Program installment financed sales of mobile devices.

10. The auditor estimated additional tax due for the periods where no POS sales data was available.

11. The audit assessed additional taxable sales (Exams 100, sample audit, 200, detail audit, and 300, audit estimate), taxable purchases of expense items (Exam 500), and assets (Exam 600).

12. During the audit, Petitioner requested an Independent Audit Review (IAR).

13. The March 8, 2022 IAR Report recommended denial of Petitioner’s contentions.

14. On May 26, 2022, Staff issued a Texas Notification of Audit Results to Petitioner. The assessment included tax, 10% penalty for late filed returns, and interest.

15. Petitioner timely requested a redetermination hearing.

16. Staff referred the matter to the State Office of Administrative Hearings (SOAH)

17. On November 25, 2024, Staff issued a Notice of Hearing by Written Submission. The notice contained a statement of the nature of the hearing; a statement of the legal authority and jurisdiction under which the hearing was to be held; a reference to the particular sections of the statutes and rules involved; and a short, plain statement of the factual matters asserted, or an attachment that incorporated by reference the factual matters asserted in the complaint or petition filed with the state agency.

18. On December 3, 2024, Administrative Law Judge (ALJ) Kathy Pickup issued an Order Setting Written Submission Hearing setting the hearing, establishing filing deadlines for the parties’ evidence lists, evidence exhibits, and argument, and setting the record closing date.

19. Staff did not agree to adjust the audit.

20. Petitioner did not submit argument or evidence for the written submission hearing.

21. The contested case record closed on February 18, 2025.

 

IV. Conclusions of Law

1. The Comptroller has jurisdiction over this matter. Tex. Tax Code ch. 111.

2. SOAH has jurisdiction over matters related to the hearing in this matter, including the authority to issue a proposal for decision with findings of fact and conclusions of law. Tex. Gov’t Code ch. 2003.

3. Staff provided proper and timely notice of the hearing. Tex. Gov’t Code ch. 2001; Tex. Tax Code § 111.009.

4. Texas imposes a tax on each sale of a taxable item in this state. Tex. Tax Code § 151.051.

5. The term “taxable item” includes tangible personal property (TPP) and taxable services. Tex. Tax Code § 151.010.

6. Only those services defined in the Tax Code as taxable services are subject to tax. Tex. Tax Code § 151.0101.

7. When services have been assessed, Staff must establish a prima facie case for the imposition of tax before the burden shifts to the taxpayer to show error in the audit. See, e.g., Comptroller Decision No. 109,052 (2014).

8. Once this initial burden is met, Petitioner bears the burden of proof to establish by a preponderance of the evidence that the service is not taxable or by clear and convincing evidence that, even though the services were taxable, they were exempt from taxation. See 34 Tex. Admin. Code § 1.26; see also Comptroller’s Decision Nos. 102,792 (2010), 100,933 (2009).

9. Telecommunications services are taxable services and are defined broadly as, the electronic or electrical transmission, conveyance, routing, or reception of sounds, signals, data, or information utilizing wires, cable, radio waves, microwaves, satellites, fiber optics, or any other method now in existence or that may be devised, including but not limited to long-distance telephone service. Tex. Tax Code §§ 151.0101(a)(6), .0103(a); 34 Tex. Admin. Code § 3.344(a)(13).

10. The term telecommunications services includes mobile telecommunications services and prepaid telecommunications services. 34 Tex. Admin. Code § 3.344(a)(13).

11. The total amount charged for a taxable telecommunications service, including mobile telecommunications services for which the place of the primary use is Texas, is subject to sales tax. 34 Tex. Admin. Code § 3.344(b)(6).

12. Sellers of taxable items and purchasers who store, use, or consume taxable items in this state shall keep books, papers, and records in the form the Comptroller requires. Tex. Tax Code § 151.025(a); 34 Tex. Admin. Code § 3.281(a)(1).

13. For example, records must reflect total purchases of taxable items and must substantiate any claimed deductions or exclusions authorized by law. Tex. Tax Code § 151.025(a)(3); 34 Tex. Admin. Code § 3.281(b).

14. A taxpayer must produce contemporaneous records and supporting documentation appropriate to the tax or fee for the transactions in question to substantiate and enable verification of the taxpayer’s claim related to the amount of tax, penalty, or interest to be assessed, collected, or refunded. Tex. Tax Code § 111.0041; 34 Tex. Admin. Code § 1.26(a).

15. An audit based on available books and records from Petitioner and conducted pursuant to established audit methodologies it is entitled to the presumption of correctness. See, e.g., Comptroller’s Decision No. 110,187 (2017).

16. The Comptroller has consistently treated missing invoices as 100% taxable. Tex. Tax Code §§ 151.025, .054; Comptroller’s Decision No. 113,163 (2018).

17. Petitioner must produce contemporaneous records and supporting documentation to enable the Comptroller to substantiate and verify Petitioner’s claims. Tex. Tax Code §§ 111.0041(c), 151.025(a); 34 Tex. Admin. Code § 1.26(a).

18. Although a gift card is not generally subject to sales and use tax, a prepaid calling card is expressly defined under Texas Tax Code § 151.009 as TPP.

19. Sales of TPP are defined as sales of taxable items. Tex. Tax Code § 151.010.

20. Prepaid telephone calling cards are taxable. 34 Tex. Administrative Code §§ 3.344(a)(9), (a)(15), and (b)(13).

21. The law requires retailers to keep records that reflect the total gross receipts from sales and the total purchases of taxable items. Tex. Tax Code § 151.025; 34 Tex. Admin. Code § 3.281(b).

22. If a taxpayer fails to keep accurate records of gross receipts, gross purchases, deductions, and exclusions, the Comptroller may take actions that include estimating the person’s tax liability based on any available information. Tex. Tax Code §§ 111.0042(d), .008(a).

23. Staff’s evidence demonstrates, prima facie, that the transactions assessed in Exams 100 and 300 of the audit represent Petitioner’s sales of taxable prepaid telecommunications services for primary use in Texas.

24. The ALJ finds that the best available records were used to estimate additional taxable sales for the audit period May 1, 2017, through November 30, 2017, when no POS sales records were available for review.

25. A seller or retailer is a person engaged in the business of making sales of taxable items, such as taxable telecommunications services, and includes every retailer, wholesaler, distributor, manufacturer, or any other person who sells, leases, rents, or transfers ownership of taxable items for a consideration. See Tex. Tax Code § 151.008(a), 34 Tex. Admin. Code § 3.286(a)(13)(10).

26. A seller who makes a sale subject to the sales tax is required to add the amount of the tax to the sales price. See Tex. Tax Code § 151.052(a); 34 Tex. Admin. Code § 3.286(d).

27. The responsibility for collection and remittance of the applicable sales tax falls on Petitioner as the entity collecting the receipts at the point of sale. Comptroller’s Decision Nos. 114,374 (2019), 12,720 (1983).

28. The ALJ concludes that the transactions at issue represent Petitioner’s sales of taxable mobile and prepaid telecommunications services for primary use in Texas and, as such, Petitioner was required to collect and remit the sales tax due on the amount charged for those services.

29. Petitioner’s evidence is insufficient to demonstrate error in the audit and, therefore, its contentions should be denied.

30. The audit assessment should be upheld in its entirety.

31. Late penalties are automatically imposed on delinquent taxes. Tex. Tax Code §§ 111.061.

32. The Comptroller has the discretionary authority to waive late penalties if a taxpayer has exercised reasonable diligence to comply with tax laws. Tex. Tax Code § 111.103.

33. A taxpayer must establish reasonable diligence by a preponderance of evidence. See Comptroller’s Decision No. 102,695 (2010).

34. In making the reasonable diligence determination, the Comptroller considers the following factors: the taxpayer’s audit history, the tax issues involved, whether a change in Comptroller policy occurred during the audit period, whether changes in the law took effect during the audit period, the size and sophistication of the taxpayer, whether tax was collected but not remitted, whether returns were timely filed, the completeness of the taxpayer’s records, the taxpayer’s efforts to comply with the recordkeeping requirements of this state, delinquencies in other taxes, reliance on advice provided by the Comptroller’s office, and the error rate in the current audit. 34 Tex. Admin. Code § 3.5(b)(3), (d).

35. Petitioner did not provide evidence to warrant additional penalty waiver.

36. Delinquent taxes draw interest beginning 60 days after the date due. Tex. Tax Code § 111.060(c).

37. The Comptroller has discretionary authority to waive interest assessments and may exercise his discretion if interest was imposed as a result of undue delay caused by Comptroller personnel, reliance on advice provided by the Comptroller’s office, or natural disaster. Tex. Tax Code § 111.103; 34 Tex. Admin. Code § 3.5(e).

38. To prevail, Petitioner must demonstrate, by a preponderance of the evidence, that interest waiver is warranted. See 34 Tex. Admin. Code § 1.26(e); see also Comptroller’s Decision Nos. 102,268 and 109,069 (2014).

39. Petitioner did not demonstrate any of the factors that warrant interest waiver.

40. Petitioner’s request for interest waiver should be denied.

 

Signed February 19, 2025

 

Kathy Pickup

Presiding Administrative Law Judge

 

 

ENDNOTES

[1] The date calculated is 25 days after this decision is signed. See APA, Tex. Gov’t Code § 2001.146(a); S.B. 1095, Acts 2017, 85th Leg.   For additional guidance, refer to the Frequently Asked Questions Related to Motions for Rehearing, found here: http://comptroller.texas.gov/taxes/publications/96-1789.pdf

[2] See Tex. Gov’t Code § 2003.101(e) and (f).

[3] At present, insufficient information is available to determine which items and amounts are disputed or undisputed for purposes of Tex. Tax Code, Ch. 112. In the absence of this information, the Comptroller will assume the entire amount of the assessment, as it appears in Comptroller’s Decision Attachment A, the Notification of Hearing Results, remains in dispute.

If Petitioner intends to sue the comptroller to dispute an amount of tax, penalty, or interest assessed in a deficiency redetermination or jeopardy determination under Tex. Tax Code, Ch. 111, Petitioner is required to file a motion for rehearing that “states the specific grounds of error and the disputed amounts associated with the grounds of error.” Tex. Tax Code § 112.201(a)(3). Petitioner should refer to Tex. Tax Code, Ch. 112, for further guidance regarding a suit after redetermination.

[4] See Tex. Tax Code § 111.0081(c).

[5] See 44 TexReg 8317 (effective beginning January 1, 2020).

ACCESSION NUMBER: 202504010H
SUPERSEDED: N
DOCUMENT TYPE: H
DATE: 2025-04-02
TAX TYPE: SALES