Thoughts
A fairly common result, and a slightly unsupported extension by SOAH.
In this hearing we have a taxpayer who is relying on the fact they did not get assessed tax in the prior audit on SEO, it would hold further, a policy did not come into effect until Tax Policy published a letter.
To the first point, the below should dissuade anyone from the notion that prior audit results do have this power.
Regardless, since the early 1980s, the Comptroller has included a standard disclaimer in the notification of audit results that cautions taxpayers that an audit result cannot be relied on as an approval of the taxpayer’s reporting system. See Comptroller’s Decision No. 116,111 (2022). It is well settled that a taxpayer who receives the standard disclaimer cannot use the audit result to assert detrimental reliance in future audits. Id.; see also, Comptroller’s Decision Nos. 104,832 (2011), 31,985 (1995), 30,108 (1994).
Let's walk through a probable scenario that would have resulted in the taxpayer coming to this point:
They go through an audit, the auditor tells the taxpayer SEO is nontaxable.
The auditor documents what items they assessed. They have no requirement to document what they did not assess, nor why. So in order to work efficiently, they do not document it.
The taxpayer gets a new audit.
The auditor types "SEO" into STARS, finds it's taxable and assesses tax.
Taxpayer is now on the hook for taxes they did not believe were owed.
That's why it's important, especially for small business, to have an expert party without a vested interest evaluate your companies tax positions.
To the latter point, about a policy not coming into effect until Tax Policy published a related private letter ruling. I would be curious what the original petition for redetermination said, as this grounds has no basis.
Private letter rulings are binding for the company who requested it. For everyone else, they are there to give a sense of the thoughts of tax policy at that particular time. That's useful, but it's not something you want to be foundational to how you collect and remit taxes.
202507016H
SOAH DOCKET NO. 304-25-07778
CPA HEARING NO. 118,678
RE: ***********
TAXPAYER NO: ***********
AUDIT OFFICE: ***********
AUDIT PERIOD: January 1, 2017 THROUGH May 31, 2020
Sales And Use Tax/RDT
BEFORE THE COMPTROLLER OF PUBLIC ACCOUNTS
OF THE STATE OF TEXAS
KELLY HANCOCK
Acting Texas Comptroller of Public Accounts
ALBERTO CRUZ
Representing Respondent
***********
Representing Petitioner
COMPTROLLER’S DECISION
This decision is considered final on July 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) Kimberly LaFlair 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 July 2025
KELLY HANCOCK
Acting 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. 304-25-07778
Before the State Office of Administrative Hearings
TCPA Hearing No. 118,678
Proposal for Decision
The Tax Division (Staff) of the Texas Comptroller of Public Accounts (Comptroller) audited *********** (Petitioner) for sales and use tax compliance and made an assessment that included tax and accrued interest. Penalty was waived. Petitioner requested redetermination contending that search engine optimization (SEO) services are non-taxable, that SEO services were not explicitly deemed taxable until March of 2019, and that it detrimentally relied on guidance from the Comptroller in not collecting tax on its SEO services. Petitioner also requests waiver of interest. [ENDNOTE 5] Staff disagrees and contends that Petitioner failed to demonstrate the audit is erroneous. In this Proposal for Decision, the Administrative Law Judge (ALJ) finds that Petitioner failed to meet its evidentiary burden to show audit error and recommends the assessment be affirmed.
I. Notice, Jurisdiction, and Procedural History
Staff referred this case to the State Office of Administrative Hearings (SOAH) and, on December 11, 2024, ALJ Kimberly LaFlair issued an order scheduling the hearing on the merits and setting pre-hearing requirements, including the requirements for the Zoom videoconference hearing. The hearing convened via videoconference on April 24, 2025. Alberto Alejandro Cruz represented Staff, and Petitioner was represented by *********** of COMPANY. The record closed on April 25, 2025, after the parties filed admitted exhibits via Texas E-File.
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
Evidence
Staff presented the testimony of Andrea Alvara, Comptroller auditor, and offered the following exhibits for the hearing:
Hearing Request Receipt;
Texas Notification of Audit Results;
Penalty & Interest Waiver Worksheet;
Audit Report; and
Audit Plan.
Petitioner presented the testimony of its President, INDIVIDUAL, and offered the following exhibits for the hearing:
Petitioner’s Audit for the Period of June 1, 2012, through February 29, 2016;
Search Engine Marketing Packages;
Independent Audit Review Report (IAR) for Prior Audit;
Detrimental Reliance Policy;
Private Letter Ruling dated March 22, 2019;
Petitioner’s Audit for Period of January 1, 2017, through May 31, 2020;
Petition for Redetermination and Statement of Grounds Dated July 29, 2021;
Amendment to Petition for Redetermination and Statement of Grounds Dated November 24, 2021;
Request for Conference with the Hearings Attorney Dated March 2, 2022;
Texas Comptroler Position Letter Dated May 23, 2023;
Response to Position Letter Dated August 9, 2023;
Administrative Hearings Section’s Response Dated November 30, 2023;
Response to Administrative Hearings Section’s Response Dated December 22, 2023;
Administrative Hearings Section’s Supplemental Response Dated January 11, 2024;
Response to Administrative Hearings Section’s Supplemental Response Dated February 8, 2024 – Insolvency;
Petitioner’s Audit for the Period of January 1, 2021, through May 31, 2024; and
Profit and Loss Statement for 2024.
The parties’ exhibits were admitted without objection.
B. Agreed Adjustments
Staff did not agree to adjust the assessment.
C. Material Facts and Issues Presented
Petitioner provides online advertising services, including, but not limited to digital marketing, graphic design, website design, and development services. In December 2020, Staff initiated a sales and use tax compliance audit of Petitioner for the period of January 1, 2017, through May 31, 2020. Petitioner provided federal income tax returns, sales journals, general ledgers, bank statements, resale and exemption certificates, incomplete sales and purchase invoices, a customer balance detail report, and customer contracts.
During the audit period, Petitioner sold online services bundled into packages it designated as bronze, silver, gold, and platinum. The packages included both taxable and nontaxable services. The combined services included SEO, social media advertising, website hosting, building, maintenance, traffic reports, search engine results page enhancements, keyword marketplace research, Google Analytics, and Webmaster Tools implementation.
The auditor determined that Petitioner did not collect tax on its sales of the various packages when tax should have been collected and scheduled related transactions as disallowed deductions in the audit. Due to the volume of transactions, the auditor generated a sales sample for disallowed deductions, resulting in three exams: Exam 100: Disallowed Deductions – Stratum A sampled; Exam 110: Disallowed Deductions – Stratum B sampled; and Exam 120: Disallowed Deductions – Stratum C detailed. The audit also included Exam 300, which scheduled taxable purchases for transactions where invoices were not provided.
On June 1, 2021, Staff issued an audit report and Texas Notification of Audit Results to Petitioner, assessing sales and use tax and accrued interest. Penalty was waived. Petitioner timely requested redetermination, contending that Exams 100, 110, and 120 were overstated, that SEO services are non-taxable, that SEO services were not explicitly deemed taxable until March 2019, that it detrimentally relied on guidance from the Comptroller in not collecting tax on its SEO services, and that Exam 300 was overstated. Petitioner also requested waiver of interest. [ENDNOTE 6]
Staff did not agree to any adjustments and referred the matter to SOAH.
D. 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 and taxable services. Id. § 151.010. When tax is imposed on tangible personal property, the taxing entity’s prima facie burden of proof is easily met because, unless an exemption applies, all sales of tangible personal property in this state are taxable. See, e.g., Comptroller’s Decision No. 116,506 (2020). A taxpayer has the burden to prove by clear and convincing evidence that the taxpayer or a transaction qualifies for an exemption. 34 Tex. Admin. Code § 1.26(c). Clear and convincing evidence demonstrates the thing to be proved is highly probable. See Black’s Law Dictionary (12th ed. 2024); see also Comptroller’s Decision No. 101,773 (2011).
The Legislature has elected to tax only those services that are specifically enumerated in Texas Tax Code § 151.0101. Thus, the Comptroller has long held that, to impose tax on a service, Staff must demonstrate, prima facie, not only that a service was sold but that the service is taxable. See, e.g., Comptroller’s Decision No. 111,530 (2015). If Staff demonstrates, prima facie, that a service is taxable, it becomes the taxpayer’s burden to prove, by a preponderance of the evidence, that the service is not taxable or excluded from taxation, or by clear and convincing evidence that the taxable service was exempt from taxation. 34 Tex. Admin. Code § 1.26; see also, e.g., Comptroller’s Decision No. 117,684 (2023). A preponderance of the evidence is the greater weight of the evidence, or evidence that is sufficient to incline a fair and impartial mind to one side of any issue rather than the other. See Black’s Law Dictionary (12th ed. 2024). A prima facie case is one that allows a fact finder to infer the fact at issue and rule in the party’s favor. See Black’s Law Dictionary (12th ed. 2024); see also Comptroller’s Decision No. 104,533 (2012).
1. SEO Services
Data processing is a taxable service. Tex. Tax Code §§ 151.0035, .0101(a)(12). Twenty percent of the total amount charged for data processing services is exempted from tax. Tex. Tax Code § 151.351; 34 Tex. Admin. Code § 3.330(b). A taxable data processing service “includes word processing, data entry, data retrieval, data search, information compilation, payroll and business accounting data production,…and other computerized data and information storage or manipulation.” Tex. Tax Code §§ 151.0101(a)(12); .0035. The use of the term “includes” in Section 151.0035 demonstrates a legislative intent to define data processing as broader than the enumerated activities stated in the statute. See, e.g., Comptroller’s Decision Nos. 105,009 (2012); 47,246 (2007). The Texas Tax Code also gives the Comptroller exclusive jurisdiction to interpret the scope of taxable services. Tex. Tax Code § 151.0101(b). The Comptroller has adopted an administrative rule to further define and clarify taxable data processing services. 34 Texas Administrative Code § 3.330(a)(1) states, in relevant part, that data processing services include “computerized data and information storage or manipulation.”
In determining the types of activities that constitute taxable data processing, the Comptroller has addressed a variety of services that do not necessarily conform to the specific examples cited in the rule. For example, website design, creation, hosting, repair, and maintenance charges are taxable as data processing, as are online and offline computer data storage, regardless of whether the customer accesses the stored data. See Comptroller’s Decision No. 117,484 (2022). This includes services to develop and maintain social media webpages and landing pages for customers. See State Tax Automated Research (STAR) 202010013L (2020). In addition, SEO services are taxable data processing. See Comptroller’s Decision Nos. 117,891 (2024), 110,022 (2017); STAR Document 201903015L (March 22, 2019). Modifying webpage content is also a taxable data processing service. See STAR 202107003L (2021). Where nontaxable unrelated services and taxable services are sold or purchased for a single charge and the portion relating to taxable services represents more than 5.0% of the total charge, the total charge is presumed to be taxable. 34 Tex. Admin. Code § 3.330(d)(2).
Petitioner argues that SEO services were not explicitly categorized as taxable data processing services until STAR Document 201903015L was issued on March 22, 2019. As discussed above, however, the use of the term “includes” in Texas Tax Code § 151.0035 demonstrates a legislative intent to define data processing as broader than the enumerated activities stated in the statute. Comptroller’s Decision Nos. 117,484 (2022), 105,009 (2012). Additionally, the Tax Code gives the Comptroller exclusive jurisdiction to interpret the scope of taxable services. Tex. Tax Code § 151.0101(b). It is undisputed that Petitioner sells SEO services. A private letter ruling that specifically categorizes SEO as taxable data processing does not infer or indicate that prior to the date of that letter, SEO services were not taxable. This is prima facie evidence that Petitioner sold taxable services. Petitioner failed to provide sufficient documentation or argument to show, by a preponderance of the evidence, that its SEO services are not taxable. See 34. Tex. Admin. Code § 1.26(e).
2. Detrimental Reliance
Petitioner contends that it detrimentally relied on agency advice, specifically, the results of a prior audit, that SEO services are nontaxable. The Comptroller has long held that if the Comptroller’s office “by certain communications or conduct directed to a given taxpayer has induced that taxpayer to act in a particular manner, the Comptroller should not later adopt a contrary position or course of conduct that will cause the taxpayer loss, harm, or detriment as a result of its reliance on the earlier Comptroller action.” See, e.g., Comptroller’s Decision No. 27,506 (1991). Pursuant to the Comptroller’s administrative rule, he will consider giving relief to a taxpayer who was harmed by following erroneous advice given by an agency employee, if the taxpayer provided complete and accurate information to the employee. 34 Tex. Admin. Code § 3.10(c).
The taxpayer’s evidence must demonstrate: (1) the substance of the information or advice and that it was communicated directly to the taxpayer in a private letter ruling; (2) that the taxpayer followed the information or advice; (3) that the taxpayer gave sufficient information to have resulted in correct advice and did not misrepresent information, or withhold or conceal information that would affect the advice; and (4) the taxpayer has suffered, or will suffer, harm based on the erroneous advice unless the Comptroller provides the requested relief. Id. § 3.10(c)(1). Oral communication alone is insufficient to support tax relief based on a claim of detrimental reliance. Id.
Here, Petitioner contends that it relied on the results of a prior audit and an IAR performed during the prior audit. At the hearing, Petitioner’s President testified that he relied on those documents when he did not collect sales tax on the service packages. However, in reviewing those documents, there is no direct statement that SEO services are not taxable. In fact, the prior audit found that the packages sold by Petitioner at that time were nontaxable because “the taxable cost of webhosting and web design is less than 5%.” The IAR agreed with the results of the prior audit and also did not specifically state that SEO services are nontaxable. Regardless, since the early 1980s, the Comptroller has included a standard disclaimer in the notification of audit results that cautions taxpayers that an audit result cannot be relied on as an approval of the taxpayer’s reporting system. See Comptroller’s Decision No. 116,111 (2022). It is well settled that a taxpayer who receives the standard disclaimer cannot use the audit result to assert detrimental reliance in future audits. Id.; see also, Comptroller’s Decision Nos. 104,832 (2011), 31,985 (1995), 30,108 (1994).
The ALJ concludes that the substance of the advice was not communicated in a private letter ruling and that the prior audit and corresponding IAR cannot be relied on as an approval of Petitioner’s reporting system. Therefore, the ALJ finds Petitioner did not establish a basis for detrimental reliance relief. The contention should be denied.
3. Interest Waiver
To determine whether to waive interest the Comptroller considers whether there was (1) undue delay caused by Comptroller personnel, (2) reliance on advice provided by Comptroller’s office which caused penalty and interest to be imposed, and (3) natural disasters. 34 Tex. Admin. Code § 3.5(e). Petitioner identifies no factors or legal grounds for waiver of interest, and the ALJ recommends that the interest waiver be denied.
III. Findings of Fact
*********** (Petitioner) provides online advertising services, including, but not limited to digital marketing, graphic design, website design, and development services.
In December 2020, the Tax Division (Staff) of the Texas Comptroller of Public Accounts (Comptroller) initiated a sales and use tax compliance audit of Petitioner for the period of January 1, 2017, through May 31, 2020.
Petitioner provided federal income tax returns, sales journals, general ledgers, bank statements, certificates, incomplete sales and purchase invoices, customer balance detail report, and customer contracts.
Petitioner sold online services bundled into packages it designated as bronze, silver, gold, and platinum. The packages included both taxable and nontaxable services. The combined services included search engine optimization (SEO), social media advertising, website hosting, building, maintenance, traffic reports, search engine results page enhancements, keyword marketplace research, Google Analytics, and Webmaster Tools implementation.
The auditor determined that Petitioner did not collect tax on its sales of the various packages when tax should have been collected and scheduled related transactions as disallowed deductions in the audit.
Due to the volume of transactions, the auditor generated a sales sample for disallowed deductions, resulting in three exams: Exam 100: Disallowed Deductions – Stratum A sampled; Exam 110: Disallowed Deductions – Stratum B sampled; and Exam 120: Disallowed Deductions – Stratum C detailed. The audit also included Exam 300, which scheduled taxable purchases for transactions where invoices were not provided.
On June 1, 2021, Staff issued an audit report and Texas Notification of Audit Results to Petitioner, assessing sales and use tax and accrued interest. Penalty was waived.
Petitioner timely requested redetermination.
Staff did not agree to any adjustments and referred the matter to the State Office of Administrative Hearings (SOAH).
On December 11, 2024, Administrative Law Judge (ALJ) Kimberly LaFlair issued an order scheduling the hearing on the merits and setting pre-hearing requirements, including the requirements for the videoconference hearing.
On December 12, 2024, Staff issued Petitioner a Notice of Hearing. The notice contained a statement of the date, time, and location of the hearing, 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.
The hearing was conducted via videoconference on April 24, 2025.
The record closed on April 25, 2025, after the parties filed admitted exhibits via Texas E-File.
IV. Conclusions of Law
The Comptroller has jurisdiction over this matter. See Tex. Tax Code ch. 111.
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. See Tex. Gov’t Code ch. 2003.
Staff provided proper and timely notice of the hearing. See Tex. Gov’t Code ch. 2001; Tex. Tax Code § 111.009.
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 and taxable services. Id. § 151.010.
When tax is imposed on tangible personal property, the taxing entity’s prima facie burden of proof is easily met because, unless an exemption applies, all sales of tangible personal property in this state are taxable. See, e.g., Comptroller’s Decision No. 116,506 (2020).
A taxpayer has the burden to prove by clear and convincing evidence that the taxpayer or a transaction qualifies for an exemption. 34 Tex. Admin. Code § 1.26(c).
Clear and convincing evidence demonstrates the thing to be proved is highly probable. See Black’s Law Dictionary (12th ed. 2024); see also Comptroller’s Decision No. 101,773 (2011).
The Legislature has elected to tax only those services that are specifically enumerated in Texas Tax Code § 151.0101.
Thus, the Comptroller has long held that, to impose tax on a service, Staff must demonstrate, prima facie, not only that a service was sold but that the service is taxable. See, e.g., Comptroller’s Decision No. 111,530 (2015).
If Staff demonstrates, prima facie, that a service is taxable, it becomes the taxpayer’s burden to prove, by a preponderance of the evidence, that the service is not taxable or excluded from taxation, or by clear and convincing evidence that the taxable service was exempt from taxation. 34 Tex. Admin. Code § 1.26; see also, e.g., Comptroller’s Decision No. 117,684 (2023).
A preponderance of the evidence is the greater weight of the evidence, or evidence that is sufficient to incline a fair and impartial mind to one side of any issue rather than the other. See Black’s Law Dictionary (12th ed. 2024).
A prima facie case is one that allows a fact finder to infer the fact at issue and rule in the party’s favor. See Black’s Law Dictionary (12th ed. 2024); see also Comptroller’s Decision No. 104,533 (2012).
Data processing is a taxable service. Tex. Tax Code §§ 151.0035, .0101(a)(12).
Twenty percent of the total amount charged for data processing services is exempted from tax. Tex. Tax Code § 151.351; 34 Tex. Admin. Code § 3.330(b).
A taxable data processing service “includes word processing, data entry, data retrieval, data search, information compilation, payroll and business accounting data production,… and other computerized data and information storage or manipulation.” Tex. Tax Code §§ 151.0101(a)(12); .0035.
The use of the term “includes” in Section 151.0035 demonstrates a legislative intent to define data processing as broader than the enumerated activities stated in the statute. See, e.g., Comptroller’s Decision Nos. 105,009 (2012); 47,246 (2007).
The Texas Tax Code also gives the Comptroller exclusive jurisdiction to interpret the scope of taxable services. Tex. Tax Code § 151.0101(b).
The Comptroller has adopted an administrative rule to further define and clarify taxable data processing services. 34 Texas Administrative Code § 3.330(a)(1) states, in relevant part, that data processing services include “computerized data and information storage or manipulation.”
In determining the types of activities that constitute taxable data processing, the Comptroller has addressed a variety of services that do not necessarily conform to the specific examples cited in the rule. For example, website design, creation, hosting, repair, and maintenance charges are taxable as data processing, as are online and offline computer data storage, regardless of whether the customer accesses the stored data. See Comptroller’s Decision No. 117,484 (2022). This includes services to develop and maintain social media webpages and landing pages for customers. See State Tax Automated Research (STAR) 202010013L (2020).
SEO services are taxable data processing. See Comptroller’s Decision Nos. 117,891 (2024), 110,022 (2017); STAR Document 201903015L (March 22, 2019).
Modifying webpage content is also a taxable data processing service. See STAR 202107003L (2021).
Where nontaxable unrelated services and taxable services are sold or purchased for a single charge and the portion relating to taxable services represents more than 5.0% of the total charge, the total charge is presumed to be taxable. 34 Tex. Admin. Code § 3.330(d)(2).
The Tax Code gives the Comptroller exclusive jurisdiction to interpret the scope of taxable services. Tex. Tax Code § 151.0101(b).
There is prima facie evidence that Petitioner sold taxable services.
Petitioner failed to provide sufficient documentation or argument to show, by a preponderance of the evidence, that its SEO services are not taxable. See 34. Tex. Admin. Code § 1.26(e).
The Comptroller has long held that if the Comptroller’s office “by certain communications or conduct directed to a given taxpayer has induced that taxpayer to act in a particular manner, the Comptroller should not later adopt a contrary position or course of conduct that will cause the taxpayer loss, harm, or detriment as a result of its reliance on the earlier Comptroller action.” See, e.g., Comptroller’s Decision No. 27,506 (1991).
Pursuant to the Comptroller’s administrative rule, he will consider giving relief to a taxpayer who was harmed by following erroneous advice given by an agency employee, if the taxpayer provided complete and accurate information to the employee. 34 Tex. Admin. Code § 3.10(c).
The taxpayer’s evidence must demonstrate: (1) the substance of the information or advice and that it was communicated directly to the taxpayer in a private letter ruling; (2) that the taxpayer followed the information or advice; (3) that the taxpayer gave sufficient information to have resulted in correct advice and did not misrepresent information, or withhold or conceal information that would affect the advice; and (4) the taxpayer has suffered, or will suffer, harm based on the erroneous advice unless the Comptroller provides the requested relief. 34 Tex. Admin. Code § 3.10(c)(1).
Oral communication alone is insufficient to support tax relief based on a claim of detrimental reliance. 34 Tex. Admin. Code § 3.10(c)(1).
Since the early 1980s, the Comptroller has included a standard disclaimer in the notification of audit results that cautions taxpayers that an audit result cannot be relied on as an approval of the taxpayer’s reporting system. See Comptroller’s Decision No. 116,111 (2022).
It is well settled that a taxpayer who receives the standard disclaimer cannot use the audit result to assert detrimental reliance in future audits. Comptroller’s Decision No. 116,111 (2022); see also, Comptroller’s Decision Nos. 104,832 (2011), 31,985 (1995), 30,108 (1994).
Petitioner did not establish a basis for detrimental reliance relief. The contention should be denied.
To determine whether to waive interest the Comptroller considers whether there was (1) undue delay caused by Comptroller personnel, (2) reliance on advice provided by Comptroller’s office which caused penalty and interest to be imposed, and (3) natural disasters. 34 Tex. Admin. Code § 3.5(e).
Petitioner identifies no factors or legal grounds for waiver of interest, and the ALJ recommends that the interest waiver be denied.
The ALJ recommends that the assessment be upheld in its entirety.
Signed May 5, 2025.
Kimberly LaFlair
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] Petitioner also originally requested a penalty waiver. However, because penalty was already waived, that contention will not be addressed herein.
[6] At the hearing on the merits, Petitioner stated that it was only contending that SEO services were non-taxable prior to the Private Letter Ruling dated March 22, 2019, that it detrimentally relied on advice from the Comptroller, and that it is entitled to interest waiver. Therefore, those are the only contentions addressed in this PFD.
ACCESSION NUMBER: 202507016H
SUPERSEDED: N
DOCUMENT TYPE: H
DATE: 2025-07-02
TAX TYPE: SALES
