Mostly hearings this month, and most of those are denials due to no records. Mostly real property and restaurants this month.
https://star.comptroller.texas.gov/view/202408020H
Real Property Contractor, self represented. No evidence submitted by the taxpayer, so the ALJ found in favor of the Comptroller.
https://star.comptroller.texas.gov/view/202409012H
A legal research and publishing company, represented by an attorney. ALJ found in favor of the Comptroller.
Data processing issue and based on the presentation, my expectation is they intend to take this to trial. It's a good reference for how the ALJ and Comptroller will react currently to data processing issues in the mixed marketing space.
From a praticitioner standpoint - it's nothing new. The permissive language of the data processing in 151.0035 is again being used to say many services in this space are taxable and the digital nature is not de minimis to the transaction.
https://star.comptroller.texas.gov/view/202410027H
Real Property Contractor, represented by a third party. No evidence submitted by the taxpayer, so the ALJ found in favor of the Comptroller.
This is one of the situations where lack of records lead the auditor to assume the sales were taxable. In general practice, most construction in Texas is done lump sum, so this determination can be seen as a shock. There can be some ameliorating facts such as materially sufficient sales records such that an auditor may reasonably judge that all sales were lump sum, but that apparently did not happen in this case.
https://star.comptroller.texas.gov/view/202410033H
Real Property Contractor, self represented. Again - "Petitioner did not submit evidence or argument for the written submission hearing."
https://star.comptroller.texas.gov/view/202410025H
Printing and Advertising business, represented by a third party. For whatever reason, the only argument the ALJ claims the taxpayer is making is one of ignorance, which is flatly found as invalid basis. I think what happened is the taxpayer was seeking additional relief due to hardship, and that not being granted in the earlier phases of the process, are further denied here.
https://star.comptroller.texas.gov/view/202410034H
Cstore, self represented. ALJ found in the Comptroller's favor. The taxpayer was able to lower the cstore estimate about 2,500 dollars through providing records, however was not able to get further relief.
https://star.comptroller.texas.gov/view/202410024H
Athletic club and entertainment center, represented by a third party. Missing records, some of which were provided through the hearing process and lead to a lower tax due.
Interestingly, a significant amount of the assessment is for 'exotic animals' and their supplies that were not taxed. This isn't something that I've looked at, so I did a bit more of a dive into this issue.
Rule 3.296 covers most agricultural related items. This is written in an older code style so (a) isn't definitions - it's the first point in the rule, which covers animals.
(a) Sales tax is not due on the receipts from sales of, and the storage, use or consumption of, the following:
(1) Horses, mules, work animals, and any form of animal life of a kind the products of which ordinarily constitute food for human consumption.
(A) Sales tax is not due on the sale, lease, or rental of horses and mules except when sold, leased, or rented as a part of an amusement service.
(B) The term "work animals" shall include any animal exclusively used in the following:
(i) The production of food for human consumption or other agricultural products held for sale in the regular course of business. Examples: plow animals or sheep dogs.
(ii) The aiding of handicapped individuals or the performance of protective services, providing that the animal has been professionally trained for that specific purpose.
(C) "Work animals" shall not include animals raised, trained, or held as pets or for sport or show.
It's not exactly clear what the animals did for this taxpayer, but since they were called 'exotic' I would assume they aren't mules, horses or other work animals. That leaves either animals for sport/entertainment or consumption.
Where we do see exotic animals mentioned in STARS is in the small number of exotic ranches, where the animals are either hunted for game or agricultural purposes, and that's not an inclusive 'or.'
As seen in https://star.comptroller.texas.gov/view/200903344L
You also asked whether hunting is considered agricultural production on ranches in West Texas. For Texas sales and use tax purposes, hunting and other activities related to wildlife management are not agricultural production, even though these activities may occur on farm or ranch land. Wild game is not considered livestock for agricultural production.
Exotic animals purchased for hunting would not receive an agricultural exemption. They may have been able to purchase the animals tax free if they were for human consumption, though given the dollar amounts involved, these would have been very expensive meals and unlikely.
https://star.comptroller.texas.gov/view/202410029H
"Staff contends Petitioner acquired Predecessor’s business or the assets of the business through a fraudulent transfer or sham transaction."
Beyond that scope of my review, but a bit of an interesting drama certain professionals may avail themselves on a particularly slow day.
https://star.comptroller.texas.gov/view/202410032H
Advertising Company, third party represented. No additional records, audit upheld.
https://star.comptroller.texas.gov/view/202410030H
ATV park represented by a third party. Second go around by this taxpayer, where it appears the Comptroller believes the taxpayer's 'campground fees' also include amusement services, and should be taxed.
This is a technical tax issue and likely could not be resolved to the taxpayer's favor in the administrative appeals process, because the terms need to be interpreted in the taxpayer's favor at the detriment of the Comptroller, and just beyond the scope of something the ALJ does. They will apply a Comptroller interpretation, but not re-evaluate one.
https://star.comptroller.texas.gov/view/202410026H
Landscaping, self represented. No additional records, audit upheld.
https://star.comptroller.texas.gov/view/202411009H
Landscaping and new construction contractor, self represented. "Petitioner did not offer evidence to support its contentions and therefore failed to establish audit error."
https://star.comptroller.texas.gov/view/202411003H
Resturaunt, self represented. Technical practice and procedure insolvency issue. I'm not too familiar as this gets beyond tax law, however the cited failure to comply with record requirements comes from https://comptroller.texas.gov/taxes/publications/96-145.pdf
https://star.comptroller.texas.gov/view/202411011L
Hosting services for crypto mining. To be expanded upon in a separate article as it's relatively robust.
https://star.comptroller.texas.gov/view/202411007H
Resturaunt, represented by third party. "Petitioner did not submit evidence or argument for the written submission hearing."
https://star.comptroller.texas.gov/view/202411005H
Pest control, represented by third party. Technical ownership hearing, beyond the scope of interest.
https://star.comptroller.texas.gov/view/202411010L
Cloud services were not found to be for resale for a company provided a SaaS. Nothing out of the ordinary in this letter from prior Comptroller positions.
