TITLE 34. PUBLIC FINANCE

PART 1. COMPTROLLER OF PUBLIC ACCOUNTS

CHAPTER 1. CENTRAL ADMINISTRATION

SUBCHAPTER A. PRACTICE AND PROCEDURES

DIVISION 1. PRACTICE AND PROCEDURES

34 TAC §1.4

The Comptroller of Public Accounts adopts amendments to §1.4, concerning representation and participation, with changes to the proposed text as published in the April 21, 2017, issue of the Texas Register (42 TexReg 2149). The amendment provides guidance for parties participating in the contested case process and divides the existing language into subparagraphs by related topics.

New subsection (a)(1) restates deleted language in a gender-neutral form. Additional language requires taxpayers to submit written authorization to the comptroller to designate an authorized representative(s). See Tax Code, §111.023. Paragraph (1) provides guidance to taxpayers who are individuals. Paragraph (2) provides guidance to taxpayers who are entities. Paragraph (3) addresses the timing of a taxpayer's written authorization under this subsection. Paragraph (4) restates deleted language and explains that an authorized representative may be any person of a taxpayer's choice. See Tax Code, §111.023; Government Code, §2003.101(k).

New subsection (b) requires each taxpayer to designate a representative for notice. The law requires a single notice to a party or the party's representative, not a party's employee(s), owner(s), or other individual(s) in addition to the party's representative. Government Code §2001.142, which continues in effect for cases set by SOAH before September 1, 2015, refers to notice to "{a} party or attorney of record." For cases set by SOAH on and after September 1, 2015, Senate Bill 1267, 84th Legislature, 2015, adds the issue of revising a rehearing period based on notice to a "party or the party's attorney" and that person's "actual knowledge" of a signed decision or order. Notice of a contested case decision or order must be administered in light of the "actual knowledge" requirement in SB 1267. Government Code, §2001.142 refers to a single notice. SOAH Rules of Procedure 1 TAC §155.201 (Representation of Parties) refers to a single authorized representative. For consistency throughout the tax hearing, all contested case documents will be sent to a single designated representative for notice, beginning on the effective date of this section. Paragraph (1) explains the procedure for a taxpayer to designate a representative for notice. Paragraph (2) explains that a taxpayer's designated representative for notice is the individual who signs the taxpayer's Statement of Grounds, until changed in accordance with this subsection. Paragraph (3) states the requirement of a single mail address for the representative for notice, and, if a taxpayer chooses, a single email address for the purpose of service of documents under §1.32 of this title (relating to Service of Documents on Parties). Paragraph (4) states how to change a designated representative for notice. Paragraph (5) sets out the policy for attorneys licensed in Texas who appear for the first time on behalf of a taxpayer in a motion for rehearing.

New subsection (c) combines the last two sentences of the existing language in §1.4 into one subsection. Subsection (c) explains that hearings on contested cases are not open to the public and outside observers and participants must obtain the agreement of all parties.

No comments were received regarding adoption of the amendment. However, upon further review, the comptroller has revised subsection (b) to improve organization. No substantive changes were made.

The amendment is adopted under Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code, §111.002 and §111.0022, which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2, as well as taxes, fees, or other charges which the comptroller administers under other law.

The section implements Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, Tax Code, §§111.023 (Written Authorization), 111.009 (Redetermination), and 111.105 (Tax Refund: Hearing).

§1.4.Representation and Participation.

(a) Authorized representatives.

(1) A taxpayer who is an individual may represent himself or herself at any stage of a contested case. A taxpayer who is an individual may have one or more authorized representatives and must identify an authorized representative, if any, in writing.

(2) A taxpayer that is an entity must have at least one authorized representative. A taxpayer that is an entity must identify its authorized representative(s) in writing.

(3) Unless express written authorization is submitted before a contested case begins, when a representative appears for the first time in a contested case, a pleading submitted on behalf of a taxpayer must be accompanied by the express written authorization of the taxpayer in whose name or on whose behalf it is submitted, in accordance with Tax Code §111.023. For example, a written authorization submitted to an auditor before a determination is issued satisfies this requirement.

(4) An authorized representative may be an attorney, an accountant, or any other person of a taxpayer's choice.

(b) Designated representative for notice.

(1) Although a taxpayer may have more than one authorized representative, the taxpayer shall designate a single representative for notice of contested case documents. The designated representative for notice is responsible for the receipt of contested case documents, such as for the purpose of §1.32 of this title (relating to Service of Documents on Parties), §1.28 of this title (relating to Comptroller's Decisions and Orders), and §1.29 of this title (relating to Motion for Rehearing).

(2) A taxpayer's designated representative for notice shall be the individual signing the original Statement of Grounds, until changed in accordance with this subsection. A taxpayer may continue to use the same representative for matters before a contested case begins by authorizing the same representative to sign the Statement of Grounds.

(3) The designation must include a single person's name and a single mail address. The designation may include a single email address for the purpose of §1.32 of this title.

(4) A taxpayer may change its designated representative for notice by submitting the information required in this subsection to Audit Processing by email to: Audit.Processing@cpa.texas.gov or by contacting the assigned Assistant General Counsel. The effective date will be the date of receipt of the notice.

(5) When an attorney licensed to practice law in Texas files a motion for rehearing in accordance with §1.18 of this title (relating to Filing Documents), the motion is considered to be a taxpayer's express written authorization to change its designated representative for notice to the filing attorney. When more than one attorney appears in a motion for rehearing, the attorney whose signature first appears on the motion shall be the designated representative for notice unless the motion designates another attorney.

(c) Hearings at SOAH on contested cases are not open to the public. Any person desiring to observe or participate at any stage of a contested case who is not a party, not employed by a party, or not called as a witness, must obtain the agreement of all parties.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 23, 2017.

TRD-201702447

Don Neal

Chief Deputy General Counsel

Comptroller of Public Accounts

Effective date: July 13, 2017

Proposal publication date: April 21, 2017

For further information, please call: (512) 475-0387


34 TAC §1.8

The Comptroller of Public Accounts adopts amendments to §1.8, concerning resolution agreements, with changes to the proposed text as published in the April 21, 2017, issue of the Texas Register (42 TexReg 2150).

The amendments update and formalize the procedures by which the parties may fully resolve a contested case by entering into a resolution agreement.

Former §1.8 permits the resolution of a contested case prior to the issuance of a position letter. Based on practices that have evolved over time, whether or not a position letter has been issued does not materially affect the procedure to resolve a contested case by agreement. A resolution agreement between a taxpayer and the agency is an effective and efficient tool to resolve a contested case. The amendments set forth procedures and requirements for effective resolution agreements. The amendments further explain that a resolution agreement ends the contested case without the issuance of an agency decision or order, and acts as a waiver of a hearing that has not yet occurred.

Subsection (a) is amended to provide that if the parties agree to resolve all contentions, the agency may amend the liability, or agree to issue a credit or refund, by entering into a resolution agreement with all parties. The amendment deletes the reference to a position letter to make clear that an agreed resolution is permitted regardless of whether a position letter has been issued. The amendment also deletes the phrase addressing when "the taxpayer's contentions are fully accepted." This scenario is addressed in new §1.39 of this title (relating to Dismissal of Case).

Subsection (b)(1), (2), and (3) is amended to state the requirements of a resolution agreement, which must be in writing and signed by all parties, and must specify any agreed tax adjustments and any penalty and interest waivers. Paragraph (4) requires the resolution agreement to include the taxpayer's withdrawal of hearing request, acknowledgement that the contested case is resolved, and a statement that no Comptroller's Decision will issue. The text in the former subsection (b), addressing the finality of agreed resolutions, is deleted. The reference to Government Code, §2001.142, does not apply to the practice of using a resolution agreement to resolve contested cases because no decision or order is issued following the execution of the resolution agreement. Notification of the finality of the contested case after a resolution agreement is signed, and the due date for any payments due under the agreement, is addressed in new subsection (c).

New subsection (c) sets forth the procedure to resolve a contested case using a resolution agreement. Paragraph (1) provides that the agency will use standard resolution agreement forms, and agency staff will be responsible for adapting these standard resolution agreement forms to draft the resolution agreement. Paragraph (2) provides that the resolution agreement may incorporate one or more exhibits stating the specific agreed adjustments to the taxpayer's account. Paragraph (3) provides that the resolution agreement will be effective and binding on the date it is signed by all parties, unless later amended pursuant to paragraph (7) of this subsection, and provides that the comptroller will delegate authority to the appropriate agency staff to execute the agreements. Paragraph (4) provides that after the resolution agreement is executed, agency staff will process the agreement and make any adjustments to the liability or refund consistent with the agreement. Paragraph (5) provides that after the appropriate adjustments are made, the comptroller will provide all parties with a copy of the executed resolution agreement and a statement of account stating any adjustments. Paragraph (6) provides that the resolution agreement will either provide a specific due date to remit any amounts due from the taxpayer, as required by the agreement, or provide that the remittal due date is no later than 30 days after the date of the statement of account. Paragraph (7) provides that the parties may agree to sign an amendment to the resolution agreement to correct any calculation errors or otherwise conform the agreement to the parties' mutual intent.

New subsection (d) provides that a taxpayer may request potential resolution of a case by the Tax Dispute Division or successor office and a taxpayer may request a case referral to the Tax Dispute Division through the Assistant General Counsel assigned to the case. Further, new subsection (d) provides that the agency has the sole discretion to grant or refuse a request for potential settlement under this subsection and, if a contested case is under review by the tax dispute office, any applicable deadlines prescribed under this chapter are suspended for all parties.

Comments were received on the proposed amendments from the State Bar of Texas Tax Section, which expressed a request for the comptroller to delete the explicit requirement that agency staff begin with an approved form or, in the alternative, delay the adoption of this section until interested parties have had an opportunity to review and comment on the proposed standard resolution form.

The comptroller declines to edit the rule or delay adoption as requested for the following reasons. The comptroller has found that the use of standard resolution agreement terms and conditions promotes consistency and equal treatment in the administration of tax laws and rules. Standard resolution agreement terms and conditions also allow for consistent processing of adjusted liabilities or credits within the agency pursuant to the parties' agreement, while reducing the opportunities for mistakes. However, to preserve the comptroller's ability to make slight changes to the standard agreement as may be appropriate in the future, the comptroller does not want to adopt a form by reference in the rule. As is current practice, taxpayers or their authorized representatives may request a copy of the standard agreement from the Assistant General Counsel assigned to the contested case.

Additional comments received on the proposed amendments from the State Bar of Texas Tax Section expressed a request for the comptroller to add a statement in subsection (c)(7) to clarify that agency staff will draft an amendment to a resolution agreement, as appropriate. The comptroller has revised subsection (c)(7) in response to this comment.

The amendments are adopted under Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code §111.002 and §111.0022, which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2, as well as taxes, fees, or other charges which the comptroller administers under other law.

The amendments implements Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and §2001.056 (Informal Disposition of Contested Case), and Tax Code, §§111.009 (Redetermination), 111.101 (Settlement), 111.103 (Settlement of Penalty and Interest Only), and 111.105 (Tax Refund: Hearing).

§1.8.Resolution Agreements.

(a) If the parties agree on a resolution of all contentions, the agency may agree to sign a resolution agreement.

(b) A resolution agreement is an agreement between all parties to adjust, or compromise and settle, a taxpayer's tax, credit, refund, penalties, interest, or any other issue in a contested case. The resolution agreement:

(1) must be in writing and signed by all parties;

(2) must either specify any agreed tax adjustments, if specific adjustments are agreed, or state the amount of tax due or the amount of refund due as a result of the agreement;

(3) must either specify any waivers of applicable penalty or interest, if specific adjustments are agreed, or state the amount of penalty or interest due as a result of the agreement; and

(4) must include the taxpayer's withdrawal of hearing request, an acknowledgment that the contested case is resolved, and a statement that no Comptroller's Decision will issue.

(c) The following procedures will be used to document the resolution agreement and end the contested case.

(1) Based on standard resolution agreement forms approved by the agency, agency staff will draft the resolution agreements to include all agreed terms and provide a copy to all parties for signature.

(2) The resolution agreement may refer to and incorporate one or more exhibits showing the specific adjustments to be made to the taxpayer's account.

(3) The resolution agreement will be effective and binding on the parties on the date it has been signed by all parties, subject to any amendments pursuant to paragraph (7) of this subsection. The comptroller may delegate signature authority to appropriate agency staff for the purpose of signing resolution agreements.

(4) After the resolution agreement is signed by all parties, agency staff will adjust the liability, credit, or refund as required by the resolution agreement.

(5) After adjustments required by the resolution agreement are made, agency staff will provide to all parties a copy of the signed agreement and a statement of account reflecting the adjustments made.

(6) The resolution agreement will either provide a specific due date to remit any amounts due from the taxpayer, as required by the agreement, or provide that the remittal due date is no later than 30 days after the date of the statement of account.

(7) If, after the resolution agreement is signed by all parties, the parties determine and agree that the adjusted tax, credit, refund, penalties, or interest as stated in the resolution agreement was calculated in error or contrary to the parties' intent, the parties may sign an amendment to the resolution agreement. The Assistant General Counsel assigned to the case will prepare an amendment that correctly effectuates the parties' intent and will provide it to the taxpayer for approval and signature.

(d) After a contested case has been assigned a hearing number, a taxpayer may request that the case be referred to the Tax Dispute Division or any successor office for potential resolution. The request should be made to the Assistant General Counsel assigned to the case. The agency retains sole discretion to grant or refuse the request. While a case is under review by the Tax Dispute Division, all deadlines under the comptroller's rules of practice and procedure are suspended.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 23, 2017.

TRD-201702449

Don Neal

Chief Deputy General Counsel

Comptroller of Public Accounts

Effective date: July 13, 2017

Proposal publication date: April 21, 2017

For further information, please call: (512) 475-0387


34 TAC §1.18

The Comptroller of Public Accounts adopts the repeal of §1.18, concerning filing of documents, without changes to the proposed text as published in the April 21, 2017, issue of the Texas Register (42 TexReg 2151). The comptroller is adopting a new §1.18 that will replace the existing section. The repeal of §1.18 will be effective as of the date the new §1.18 takes effect.

No comments were received regarding adoption of the repeal.

The repeal is adopted under APA, Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code, §111.002 and §111.0022, which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2, as well as taxes, fees, or other charges which the comptroller administers under other law.

The repeal implements APA, Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code, §111.009 (Redetermination) and §111.105 (Tax Refund: Hearing).

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 23, 2017.

TRD-201702434

Don Neal

Chief Deputy General Counsel

Comptroller of Public Accounts

Effective date: July 13, 2017

Proposal publication date: April 21, 2017

For further information, please call: (512) 475-0387


34 TAC §1.18

The Comptroller of Public Accounts adopts new §1.18, concerning filing documents, without changes to the proposed text as published in the April 21, 2017, issue of the Texas Register (42 TexReg 2152). Existing §1.18 is adopted for repeal concurrently with this new section. New §1.18 explains where contested case documents must be filed.

Subsection (a) explains that when a contested case is docketed at SOAH, parties must file documents with SOAH in accordance with SOAH Rules of Procedure.

Subsection (b) provides citations to relevant statutory authority to explain the types of documents that must be filed with the comptroller under this subchapter.

Subsection (c) states the contact information to file documents with the comptroller through the Office of Special Counsel for Tax Hearings.

Subsection (d) explains the date a document is considered filed with the comptroller. The date a document is filed with the comptroller is the date it is received. Documents filed electronically are considered received on the time and date recorded on the electronic transmission by the agency's system. Documents filed by mail are considered received on the time and date recorded by the comptroller. The proposed section is consistent with SOAH Rules of Procedure, 1 TAC §155.101, which states that the time and date of documents filed electronically shall be determined by the time and date of receipt recorded by SOAH's electronic case information system, which provides a consistent procedure during the same tax hearing to determine the date a document is filed. See also SOAH Rules of Procedure, 1 TAC §155.51(b), which states that a Request to Docket Case form is considered filed on the date it is received by SOAH.

Subsection (e) explains that a taxpayer may ask for documentation from the comptroller of the actual date the comptroller received a document filed in accordance with this section.

Subsection (f) explains that in the event that the Office of Special Counsel for Tax Hearings has no document demonstrating the date of receipt of a document filed in accordance with this section, then another relevant and reliable document is acceptable proof of the date of receipt. This subsection explains that a certificate of service, which shows a document was served to a party as described in §1.32 of this title (relating to Service of Documents on Parties), is not acceptable as proof that the document was filed or the date it was filed. The new rule provides guidance that was not previously addressed by rule.

Subsection (g) refers to §1.8 of this title (relating to Resolution Agreements) and §1.28 of this title (relating to Comptroller's Decisions and Orders) for guidance regarding the process for resolving a contested case by agreement and, if applicable, guidance on when to file a motion to dismiss after a resolution agreement.

Subsection (h) explains that when a document is filed, service is required. Parties should refer to §1.32 of this title, relating to Service of Documents on Parties.

No comments were received regarding adoption of the new section.

The new section is adopted under Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code, §111.002 and §111.0022, which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2, as well as taxes, fees, or other charges which the comptroller administers under other law.

The new section implements Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code, §111.009 (Redetermination) and §111.105 (Tax Refund: Hearing).

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 23, 2017.

TRD-201702441

Don Neal

Chief Deputy General Counsel

Comptroller of Public Accounts

Effective date: July 13, 2017

Proposal publication date: April 21, 2017

For further information, please call: (512) 475-0387


34 TAC §1.28

The Comptroller of Public Accounts adopts the repeal of §1.28, concerning comptroller's decision, without changes to the proposed text as published in the April 21, 2017, issue of the Texas Register (42 TexReg 2153). The comptroller is adopting a new §1.28 that will replace the existing section. The repeal of §1.28 will be effective as of the date the new §1.28 takes effect.

Some of the topics addressed in current §1.28 are relocated to and addressed in new or amended sections of this title. For example, new §1.4 of this title (relating to representation and participation) addresses receipt of notice of decisions and orders pursuant to Senate Bill 1267, 84th Legislature, 2015. New §1.29 of this title (relating to motion for rehearing) addresses a motion for rehearing and, related to a motion for rehearing, a motion to revise and motion to extend a rehearing period. New §1.39 of this title (relating to dismissal of case) addresses motions to dismiss. These new sections are concurrently adopted with this repeal of §1.28 and new §1.28, concerning comptroller's decisions and orders.

No comments were received regarding adoption of the repeal.

The repeal is adopted under Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code, §111.002 and §111.0022, which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2, as well as taxes, fees, or other charges which the comptroller administers under other law.

The repeal implements Government Code. §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and §§2001.141 - 2001.147, and Tax Code, §111.009 (Redetermination) and §111.105 (Tax Refund: Hearing).

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 23, 2017.

TRD-201702435

Don Neal

Chief Deputy General Counsel

Comptroller of Public Accounts

Effective date: July 13, 2017

Proposal publication date: April 21, 2017

For further information, please call: (512) 475-0387


34 TAC §1.28

The Comptroller of Public Accounts adopts new §1.28, concerning comptroller's decisions and orders, without changes to the proposed text as published in the April 21, 2017, issue of the Texas Register (42 TexReg 2154). The new section implements Senate Bill 1267, 84th Legislature, 2015 (SB 1267) with respect to notice of a decision and finality of a decision and order.

Subsection (a) states that the comptroller will review a proposal for decision and the associated administrative record, including any exceptions and replies, and issue a decision.

Subsection (b) addresses notice of comptroller's decisions and orders. The subsection explains that the Office of Special Counsel for Tax Hearings sends each decision and order to a taxpayer's designated representative for notice as described in new §1.4 of this title (relating to Representation and Participation). The subsection is consistent with notice of a comptroller's decision or order described by Government Code, §2001.142, including law added by SB 1267 relating to actual knowledge or receipt of notice.

Subsection (c) states when decisions and orders become final. Subsection (c) implements SB 1267.

Subsection (d) states that either party may waive its right to file a motion for rehearing and explains the related filing requirement.

Subsection (e) explains that if the comptroller grants a motion for rehearing, the decision or order is vacated and the comptroller will issue a new decision or order on rehearing.

Comments were received on the proposed amendments from the State Bar of Texas Tax Section, which expressed a request to add a standard timeframe within which the agency is required to issue a comptroller's decision on a proposal for decision.

The comptroller declines to edit the rule as requested to include a deadline by which the comptroller must issue a decision for the following reasons. First, the contested issues in each tax hearing vary in number and in complexity, and this is often reflected in the length of time needed to review each proposal for decision, any exceptions and replies, and the record in contested cases. Second, the time needed to process audit adjustments varies from case to case. Each decision includes an Attachment A, processed by the Audit Division to reflect adjusted or updated tax, penalty, and interest amounts. The comptroller does, however, commit to work with the resources available to move cases through the contested case process as quickly and accurately as possible. In addition, as is current practice, a taxpayer or authorized representative may contact the Assistant General Counsel assigned to the contested case or contact the Office of Special Counsel for Tax Hearings to request a status update when a comptroller's decision is pending.

The new section is adopted under Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code, §111.002 and §111.0022, which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2, as well as taxes, fees, or other charges which the comptroller administers under other law.

The new section implements Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and §§2001.141 - 2001.147 (Contested Cases: Final Decisions and Orders; Motions for Rehearing), and Tax Code, §111.009 (Redetermination) and §111.105 (Tax Refund: Hearing).

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 23, 2017.

TRD-201702442

Don Neal

Chief Deputy General Counsel

Comptroller of Public Accounts

Effective date: July 13, 2017

Proposal publication date: April 21, 2017

For further information, please call: (512) 475-0387


34 TAC §1.29

The Comptroller of Public Accounts adopts the repeal of §1.29, concerning motion for rehearing, without changes to the proposed text as published in the April 21, 2017, issue of the Texas Register (42 TexReg 2153). The comptroller is adopting a new §1.29 that will replace the existing section. The repeal of §1.29 will be effective as of the date the new §1.29 takes effect.

No comments were received regarding adoption of the repeal.

The repeal is adopted under Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code, §111.002 and §111.0022, which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2, as well as taxes, fees, or other charges which the comptroller administers under other law.

The repeal implements Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and §§2001.141 - 2001.147, and Tax Code, §111.009 (Redetermination) and §111.105 (Tax Refund: Hearing).

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 23, 2017.

TRD-201702436

Don Neal

Chief Deputy General Counsel

Comptroller of Public Accounts

Effective date: July 13, 2017

Proposal publication date: April 21, 2017

For further information, please call: (512) 475-0387


34 TAC §1.29

The Comptroller of Public Accounts adopts new §1.29, concerning motion for rehearing, with changes to the proposed text as published in the April 21, 2017, issue of the Texas Register (42 TexReg 2155). Existing §1.29 is adopted for repeal concurrently with this new section. The new section implements Senate Bill 1267, 84th Legislature, 2015 (SB 1267) and provides additional guidance to assist parties to a contested case in filing a motion for rehearing.

Subsection (a) is titled "definition" and provides general guidance and context for the provisions in this section.

Subsection (b) provides citations to relevant statutory authority and explains what a motion for rehearing must contain. See Government Code, §2001.146(g); Tax Code, §111.105(d).

Subsection (c) sets out the deadline for filing a motion for rehearing. It implements SB 1267, which changed the motion for rehearing deadlines for hearings set at SOAH on and after September 1, 2015. The comptroller will state the motion for rehearing filing deadline on the first page of the comptroller's decision. A motion for rehearing will be considered timely, for contested case purposes, if filed by the stated deadline.

Subsection (d) explains that parties to a contested case may request additional time to file a motion for rehearing according to the current provisions under Government Code, §2001.146(e) ("A state agency may … extend the time for filing a motion [for rehearing] ….") and Government Code, §2001.142(d) ("To establish a revised period under subsection (c), the adversely affected party must prove, on sworn motion and notice, that the date the party received notice from the state agency or acquired actual knowledge of the signing of the decision or order was after the 14th day after the date the decision or order was signed."). See also, Government Code, §2001.142(c) ("The period may not begin earlier than the 15th day or later than the 90th day after the date the decision or order was signed."); Government Code, §2001.142(g) ("The date specified in the sworn motion shall be considered the date the decision or order was signed.").

Subsection (e) refers to §1.31 of this title, relating to Computation of Time, for guidance on how to calculate the due date for a motion for rehearing.

Subsection (f) refers to §1.18 of this title, relating to Filing Documents, for guidance on how to determine when a document is considered filed with the agency.

Subsection (g) directs readers to §1.18 of this title, relating to Filing Documents, for the contact information for the Office of Special Counsel for Tax Hearings so parties know where to file motions for rehearing and related documents.

Subsection (h) explains that a party that files a motion for rehearing or reply needs to provide a copy to all parties, in accordance with §1.32 of this title, relating to Service of Documents on Parties.

Subsection (i) explains the deadline for filing a reply to a motion for rehearing, should a party choose to file one. This implements Government Code, §2001.146(b).

Subsection (j) explains that the comptroller does not have to respond to a motion for rehearing and can allow the motion to be denied by operation of law. But, if the comptroller chooses to respond to a motion for rehearing, this subsection governs when and how that will occur, in accordance with Government Code, §2001.146(c) and (f).

Subsection (k) explains the finality date of a comptroller's decision.

Comments were received on the proposed amendments from the State Bar of Texas Tax Section, which expressed a request for the comptroller to pre-issue a standard written order in each case providing that, if no action has been taken on a motion for extension after the deadline to file a motion for rehearing, such deadline to file a motion for rehearing is extended by a certain number of days.

The comptroller declines to edit the rule as requested to require the comptroller to pre-issue standard written orders in each case for the following reasons. First, such a process would be inefficient and slow down the overall time it takes to process comptroller 's decisions because the number of cases in which such an order would be relevant is small, representing fewer than 10% of cases. Second, a motion to extend time must be filed with the comptroller, with a copy served on each party to the case. Assuming a motion to extend time is filed as required, the comptroller grants and denies extensions by written order, which means that a taxpayer receives a response from the comptroller. Subsection (d)(1) has been revised to memorialize this current practice. In addition, as is current practice, a taxpayer or authorized representative may contact the Assistant General Counsel assigned to the contested case or contact the Office of Special Counsel for Tax Hearings to request a status update after a motion to extend time has been filed.

The new section is adopted under Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code, §111.002 and §111.0022, which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2, as well as taxes, fees, or other charges which the comptroller administers under other law.

The new section implements Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and §§2001.141 - 2001.147, and Tax Code, §111.009 (Redetermination) and §111.105 (Tax Hearing: Refund).

§1.29.Motion for Rehearing.

(a) Definition. A motion for rehearing is a request to the comptroller from a party in a contested case to reconsider part or all of a decision or order. The motion may or may not result in an additional hearing. A motion for rehearing is a prerequisite for a tax refund lawsuit.

(b) Contents of a motion for rehearing.

(1) Government Code, §2001.146(g) provides that a motion for rehearing must identify with particularity findings of fact or conclusions of law that are the subject of the complaint and any evidentiary or legal ruling claimed to be erroneous.

(2) Government Code, §2001.146(g) further provides that a motion for rehearing must also state the legal and factual basis for the claimed error.

(3) Tax Code, §111.105(d) further provides that a motion for rehearing on a tax refund claim must assert each specific ground of error and state the amount of the refund sought.

(c) Deadline to file a motion for rehearing. A motion for rehearing must be filed no later than 25 days after the comptroller's decision is signed. The comptroller will state the 25-day deadline to file a motion for rehearing on the first page of the comptroller's decision. For contested case purposes, the comptroller will consider a motion for rehearing timely if it is filed by the motion for rehearing deadline stated on the comptroller's decision.

(d) Additional time to file a motion for rehearing.

(1) Motion for extension of time. A motion to extend the time to file a motion for rehearing or reply must be filed with the comptroller in accordance with §1.18 of this title (relating to Filing Documents). Government Code, §2001.146(e) gives the comptroller the authority to act on the motion not later than the 10th day after the original deadline. If a motion is timely and properly filed, the comptroller shall issue an order granting or denying the motion. If the comptroller has not timely acted on the motion, the motion is considered overruled.

(2) Failure to receive notice. Government Code, §2001.142 establishes a procedure to revise the motion for rehearing period if a party did not receive notice or acquire actual knowledge of a signed decision before the 15th day after the date the decision is signed. A party may file a sworn motion to revise the period for filing a motion for rehearing. The motion must be filed with the comptroller in accordance with §1.18 of this title. If the comptroller does not issue an order granting or denying the motion by the 10th day after the motion is received, the motion is considered granted by operation of law.

(e) Calculation of due dates. Refer to §1.31 of this title (relating to Computation of Time) for guidance related to the calculation of due dates.

(f) Determining the date that a document is filed. Refer to §1.18 of this title for guidance related to determining the date a document is filed.

(g) Filing information for the Office of Special Counsel for Tax Hearings. The motions and replies described in this section must be filed with the Office of Special Counsel for Tax Hearings, in accordance with the requirements set out in §1.18 of this title.

(h) Requirement to serve other parties. A copy of the motion or reply must be sent to other parties on the same date the motion or reply is filed with the Office of Special Counsel for Tax Hearings. Refer to §1.32 of this title (relating to Service of Documents on Parties) for additional guidance.

(i) Reply to a motion for rehearing. A party may file a reply to a motion for rehearing, but a reply is not required. The reply must be filed no later than the 40th day after the date the decision is signed.

(j) Action on a motion for rehearing.

(1) The comptroller is not required to act on a motion for rehearing. If the comptroller does not timely act to grant the motion for rehearing, the motion for rehearing is overruled by operation of law the 55th day after the decision was signed. If the comptroller grants an extension to file a motion for rehearing and does not timely act to grant the motion for rehearing, the motion for rehearing is overruled by operation of law the 100th day after the decision was signed.

(2) If the comptroller acts on a motion for rehearing, the comptroller will send a written order granting or denying a rehearing to each party's designated representative for notice. An order granting a motion for rehearing may or may not include the comptroller's decision upon rehearing.

(k) Finality. If a motion for rehearing is overruled, whether by order or operation of law, the comptroller's decision is final on the date the motion is overruled.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 23, 2017.

TRD-201702443

Don Neal

Chief Deputy General Counsel

Comptroller of Public Accounts

Effective date: July 13, 2017

Proposal publication date: April 21, 2017

For further information, please call: (512) 475-0387


34 TAC §1.31

The Comptroller of Public Accounts adopts the repeal of §1.31, concerning computation of time, without changes to the proposed text as published in the April 21, 2017, issue of the Texas Register (42 TexReg 2157). The comptroller is adopting a new §1.31 that will replace the existing section. The repeal of §1.31 will be effective as of the date the new §1.31 takes effect.

No comments were received regarding adoption of the repeal.

The repeal is adopted under APA, Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code, §111.002 and §111.0022, which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2, as well as taxes, fees, or other charges which the comptroller administers under other law.

The repeal implements APA, Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code, §111.009 (Redetermination) and §111.105 (Tax Refund: Hearing).

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 23, 2017.

TRD-201702437

Don Neal

Chief Deputy General Counsel

Comptroller of Public Accounts

Effective date: July 13, 2017

Proposal publication date: April 21, 2017

For further information, please call: (512) 475-0387


34 TAC §1.31

The Comptroller of Public Accounts adopts new §1.31, concerning computation of time, without changes to the proposed text as published in the April 21, 2017, issue of the Texas Register (42 TexReg 2157). Existing §1.31 is adopted for repeal concurrently with this new section. The new §1.31 reorganizes information contained in current §1.31 and provides additional guidance intended to assist parties in timely filing documents during a contested case.

Subsection (a) explains the general rules for computing time periods. Paragraph (1) incorporates information included in former §1.31 and the SOAH Rules of Procedure. See 1 TAC §155.7(b) (Computing Time Periods). Paragraph (2) is an example to illustrate the provisions set out in paragraph (1).

Subsection (b) explains that calendar days are used in computing a period of time. See 1 TAC §155.7(c) (Calendar Days).

No comments were received regarding adoption of the new section.

The new section is adopted under Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code, §111.002 and §111.0022, which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2, as well as taxes, fees, or other charges which the comptroller administers under other law.

The new section implements Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code, §111.009 (Redetermination) and §111.105 (Tax Refund: Hearing).

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 23, 2017.

TRD-201702444

Don Neal

Chief Deputy General Counsel

Comptroller of Public Accounts

Effective date: July 13, 2017

Proposal publication date: April 21, 2017

For further information, please call: (512) 475-0387


34 TAC §1.32

The Comptroller of Public Accounts adopts the repeal of §1.32, concerning service, without changes to the proposed text as published in the April 21, 2017, issue of the Texas Register (42 TexReg 2158). The comptroller is adopting a new §1.32 that will replace the existing section. The repeal of §1.32 will be effective as of the date the new §1.32 takes effect.

No comments were received regarding adoption of the repeal.

The repeal is adopted under APA, Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code, §111.002 and §111.0022, which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2, as well as taxes, fees, or other charges which the comptroller administers under other law.

The repeal implements APA, Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and §2001.142 (Notification of Decisions and Orders); Tax Code, §§111.006 (Confidentiality of Information), 111.009 (Redetermination), and 111.105 (Tax Refund: Hearing); and Government Code, §552.137 (Confidentiality of Certain E-mail Addresses).

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 23, 2017.

TRD-201702438

Don Neal

Chief Deputy General Counsel

Comptroller of Public Accounts

Effective date: July 13, 2017

Proposal publication date: April 21, 2017

For further information, please call: (512) 475-0387


34 TAC §1.32

The Comptroller of Public Accounts adopts new §1.32, concerning service of documents on parties, with changes to the proposed text as published in the April 21, 2017, issue of the Texas Register (42 TexReg 2158). Existing §1.32 is adopted for repeal concurrently with this new section. New §1.32 provides guidance intended to assist parties in the requirement to serve documents during a contested case and the methods and timeliness of service.

Subsection (a) explains that a party filing a contested case document shall also serve a copy on each party. This subsection also incorporates language formerly located in subsections (b) and (h)(2).

Subsection (b) describes the available methods of service and incorporates language currently included in subsection (a). See also, Government Code, §2001.142 (Notification of Decisions and Orders). Parties may send documents to the agency via appropriate fax numbers; however, the agency will not send documents via fax to taxpayers or representatives. The agency cannot encrypt faxes to protect confidential information. Contested case documents that contain confidential information that are sent by the agency via email will be encrypted in accordance with applicable law.

Subsection (c) addresses service on interested parties and includes the provision currently located in subsection (c).

Subsection (d) provides guidance for determining when service on the Administrative Hearings Section is complete. These provisions are drawn from current subsection (g), except that service by fax and email is extended to allow additional time, which may assist taxpayers or representatives located in different time zones.

Subsection (e) sets out the requirement to include a certificate of service on contested case documents and incorporates language from former subsection (e) and SOAH Rules of Procedure 1 TAC §155.103(b) (Certificate of Service).

Subsection (f) adopts the language in former subsection (f) without substantive change.

No comments were received regarding adoption of the new section. However, upon further review, the comptroller has revised subsection (c) to improve readability and subsection (d) to substitute "Administrative Hearings Section" for "Tax Division." These changes are non-substantive and intended to provide clarity.

The new section is adopted under Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code, §111.002 and §111.0022, which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2, as well as taxes, fees, or other charges which the comptroller administers under other law.

The new section implements Tax Code, §111.006 (Confidentiality of Information), §111.009 (Redetermination), and §111.105 (Tax Refund: Hearing); Government Code, §552.137 (Confidentiality of Certain E-mail Addresses); and Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions) and §2001.142 (Notification of Decisions and Orders).

§1.32.Service of Documents on Parties.

(a) Service required. A party filing a contested case document shall also serve a copy on each party in accordance with §1.4 of this title (relating to Representation and Participation). When SOAH has jurisdiction, a party shall follow the SOAH Rules of Procedure. A party filing a document that is required to be served must include a certificate of service as described in this section. The sender has the burden of proving the date and time of service of a document.

(b) Methods of service. Service generally means sending or delivering a contested case document in order to charge a party with receipt of it and subject a party to its legal effect. Service may be made by the following methods:

(1) hand-delivery;

(2) regular (United States Postal Service or private mail service), certified, or registered mail;

(3) email, upon agreement of the parties; or

(4) if sent by a taxpayer or representative, fax.

(c) Service on interested parties. Interested parties admitted to a contested case pursuant to §1.36 of this title (relating to Interested Parties) shall also be served.

(d) Determining when service on the Administrative Hearings Section is complete. Service on the Administrative Hearings Section must be through the assigned Assistant General Counsel in the Administrative Hearings Section. Service may be made as provided in paragraphs (1) and (2) of this subsection.

(1) Hand-delivery. The file stamp affixed by the Administrative Hearings Section will be the date of service for hand-delivered documents. Hand-delivered documents must be addressed to Administrative Hearings Section, Texas Comptroller of Public Accounts, 1700 N. Congress Avenue, Suite 320, Austin, Texas 78701.

(2) Delivery by methods other than hand-delivery. The postmark, shipping, or transmission date indicated on documents is presumed to be the date of service, but this is a rebuttable presumption. Documents served by fax or email are considered served on a date when they are received at any time during the 24-hour period from 12:00 a.m. (midnight) through 11:59 p.m. on that date, and documents received on a day on which the agency is closed are considered filed on the next calendar day on which the agency is open.

(e) Certificate of service. A party filing a document that must be served shall include a signed certificate of service with the filed document that certifies compliance with this section. A form for a certificate of service shall be sufficient if it substantially complies with the following example: "Certificate of Service: I certify that on (date), a true and correct copy of this (name of document) has been sent to (name of taxpayer's designated representative for notice or assigned Assistant General Counsel) by (specify method of delivery and delivery address). (Signature)."

(f) Service of notice of hearing. Unless otherwise required by law, service of notice of hearing shall be made in the manner required by Government Code, Chapter 2001.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 23, 2017.

TRD-201702445

Don Neal

Chief Deputy General Counsel

Comptroller of Public Accounts

Effective date: July 13, 2017

Proposal publication date: April 21, 2017

For further information, please call: (512) 475-0387


34 TAC §1.39

The Comptroller of Public Accounts adopts the repeal of §1.39, concerning dismissal of case, without changes to the proposed text as published in the April 21, 2017, issue of the Texas Register (42 TexReg 2159). The comptroller is adopting a new §1.39 that will replace the existing section. The repeal of §1.39 will be effective as of the date the new §1.39 takes effect.

No comments were received regarding adoption of the repeal.

The repeal is adopted under Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code, §111.002 and §111.0022, which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2, as well as taxes, fees, or other charges which the comptroller administers under other law.

The repeal implements Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and §§2001.141 - 2001.147, and Tax Code, §111.009 (Redetermination) and §111.105 (Tax Refund: Hearing).

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 23, 2017.

TRD-201702439

Don Neal

Chief Deputy General Counsel

Comptroller of Public Accounts

Effective date: July 13, 2017

Proposal publication date: April 21, 2017

For further information, please call: (512) 475-0387


34 TAC §1.39

The Comptroller of Public Accounts adopts new §1.39, concerning dismissal of case, without changes to the proposed text as published in the April 21, 2017, issue of the Texas Register (42 TexReg 2160). Existing §1.39 is adopted for repeal concurrently with this new section.

Subsection (a) provides a non-exhaustive list of the grounds upon which a party may file a motion to dismiss. Paragraph (1) recognizes that a motion to dismiss may be filed after a resolution agreement under §1.8 of this title (relating to Resolution Agreements).

Paragraphs (2) and (3) refer to a motion based on a taxpayer's failure to reply to a Position Letter and a taxpayer's want of prosecution. Paragraphs (2) and (3) state existing language concurrently repealed in §1.28 of this title.

Paragraph (4) states existing language, with change, concurrently repealed in §1.28 of this title: "failure to state a claim upon which relief can be brought." Paragraph (4) refers to "failure to state a contested case issue for which relief can be granted." When there is no contested case issue to decide because no contested case issue is raised, then a case may be dismissed. Paragraph (4) addresses a jurisdictional issue; it is not a subjective determination of the sufficiency of a contested case issue that is actually raised.

Paragraph (5) refers to a situation when there is no contested case issue to decide because the comptroller has granted the relief requested. Paragraph (5) encompasses the concept from existing language, with change, that is concurrently deleted in an amendment to §1.8 of this title: "If the taxpayer's contentions are fully accepted … the agency may elect to amend the determination, to issue an amended billing, or agree to a refund or credit request …," and to remove a limitation to resolve a case prior to the issuance of a position letter.

Paragraph (6) addresses situations when a taxpayer's claims are moot because a bankruptcy court has issued a judgment or order disposing of the claims. This reflects current agency practice.

Paragraph (7) addresses situations when a taxpayer's claims for the same tax and the same period are pending in a court. Paragraph (7) addresses a jurisdictional issue; it is not a subjective determination of the sufficiency of a contested case issue.

Subsection (b) explains the procedures to file a motion to dismiss, depending on whether SOAH or the comptroller has jurisdiction of the contested case at the time the motion is filed.

Subsection (c) explains the procedure to file a reply to a motion to dismiss.

No comments were received regarding adoption of the new section.

The new section is adopted under Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code, §111.002 and §111.0022, which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2, as well as taxes, fees, or other charges which the comptroller administers under other law.

The new section implements Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and §§2001.141-2001.147, and Tax Code, §111.009 (Redetermination) and §111.105 (Tax Hearing: Refund).

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 23, 2017.

TRD-201702446

Don Neal

Chief Deputy General Counsel

Comptroller of Public Accounts

Effective date: July 13, 2017

Proposal publication date: April 21, 2017

For further information, please call: (512) 475-0387


34 TAC §1.41

The Comptroller of Public Accounts adopts the repeal of §1.41, concerning ex parte communication, without changes to the proposed text as published in the April 21, 2017, issue of the Texas Register (42 TexReg 2161). The comptroller is adopting a new §1.41 that will replace the existing section. The repeal of §1.41 will be effective as of the date the new §1.41 takes effect.

No comments were received regarding adoption of the repeal.

The repeal is adopted under APA, Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code, §111.002 and §111.0022, which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2, as well as taxes, fees, or other charges which the comptroller administers under other law.

The repeal implements APA, Government Code, §§2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, 2001.061 (Ex Parte Consultations), and 2001.090 (Official Notice; State Agency Evaluation of Evidence).

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 23, 2017.

TRD-201702440

Don Neal

Chief Deputy General Counsel

Comptroller of Public Accounts

Effective date: July 13, 2017

Proposal publication date: April 21, 2017

For further information, please call: (512) 475-0387


34 TAC §1.41

The Comptroller of Public Accounts adopts new §1.41, concerning ex parte communications, with changes to the proposed text as published in the April 21, 2017, issue of the Texas Register (42 TexReg 2161). Existing §1.41 is adopted for repeal concurrently with this new section. The new section provides additional guidance regarding ex parte communications. The substance of the existing section is restated and reorganized into separate subsections to improve readability.

Subsection (a) cites Government Code, §2001.061 and explains the scope of prohibited ex parte communication.

Subsection (b) cites Government Code, §2001.061 and describes ex parte communication permitted under the law.

Subsection (c) sets out the procedure that is followed to cure prohibited ex parte communication. See Government Code, §2001.061(a) (requiring notice and opportunity for each party to participate).

Comments were received on the proposed amendments from the State Bar of Texas Tax Section, which expressed the opinion that subsection (a)(4) is overbroad in comparison to Government Code, §2001.061(a). The comments requested that the only expressly prohibited ex parte communications be those communications with the administrative law judge assigned to the contested case or, in the alternative, that the comptroller and Office of Special Counsel for Tax Hearings staff be removed from the list of parties with whom ex parte communications are prohibited.

The comptroller declines to edit the rule as requested for the following reasons. First, Government Code, §2001.061(a) states: "(a) Unless required for the disposition of an ex parte matter authorized by law, a member or employee of a state agency assigned to render a decision or to make findings of fact and conclusions of law in a contested case may not directly or indirectly communicate in connection with an issue of fact or law with a state agency, person, party, or a representative of those entities, except on notice and opportunity for each party to participate." This provision expressly prohibits ex parte communication with "a member or employee of a state agency assigned to render a decision," which includes indirect communication. In this agency, the employee assigned to render a decision in tax hearings is the Deputy Comptroller, and staff in the Office of Special Counsel for Tax Hearings provides legal advice to the Deputy Comptroller with respect to the proposals for decision. Therefore, in order to ensure this section stays consistent with the law, the comptroller declines to revise the draft rule in response to the comments.

However, upon further review, the comptroller has revised subsection (b) to substitute "Tax Policy Division" for "Tax Division." This change is non-substantive and intended to provide clarity.

The new section is adopted under Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, and Tax Code, §111.002 and §111.0022, which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of Tax Code, Title 2, as well as taxes, fees, or other charges which the comptroller administers under other law.

The new section implements Government Code, §2001.004 (Requirement to Adopt Rules of Practice and Index Rules, Orders, and Decisions), which requires state agencies to adopt rules of practice, §2001.061 (Ex Parte Consultations), and §2001.090 (Official Notice; State Agency Evaluation of Evidence).

§1.41.Ex Parte Communications.

(a) Prohibited ex parte communications.

(1) Government Code, §2001.061(a) states, "Unless required for the disposition of an ex parte matter authorized by law, a member or employee of a state agency assigned to render a decision or to make findings of fact and conclusions of law in a contested case may not directly or indirectly communicate in connection with an issue of fact or law with a state agency, person, party, or a representative of those entities, except on notice and opportunity for each party to participate."

(2) The prohibition on ex parte communications includes oral and written communications.

(3) The prohibition on ex parte communications applies for the duration of a contested case. A contested case generally begins with a request for redetermination of a deficiency or jeopardy determination, or a request for hearing following denial of a request for refund. A contested case generally ends when a decision is final.

(4) The prohibition on ex parte communications includes communications with the following persons who participate in rendering decisions:

(A) the comptroller of public accounts;

(B) the deputy comptroller;

(C) staff of the Office of Special Counsel for Tax Hearings; and

(D) any administrative law judge assigned to the contested case.

(b) Permitted ex parte communications. Government Code, §2001.061(c) allows a decision maker to communicate ex parte with an agency employee who has not participated in a hearing in the case for the purpose of using the special skills or knowledge of the agency and its staff in evaluating evidence. For example, the deputy comptroller may communicate with an employee of the Tax Policy Division who has not participated in the hearing.

(c) The recipient of a prohibited ex parte communication may notify the other parties of the content of the communication and provide an opportunity for the other parties to respond. For purposes of this subsection, a "recipient" is one or more of the individuals identified in subsection (a)(4) of this section.

The agency certifies that legal counsel has reviewed the adoption and found it to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on June 23, 2017.

TRD-201702448

Don Neal

Chief Deputy General Counsel

Comptroller of Public Accounts

Effective date: July 13, 2017

Proposal publication date: April 21, 2017

For further information, please call: (512) 475-0387