TITLE 34. PUBLIC FINANCE

PART 1. COMPTROLLER OF PUBLIC ACCOUNTS

CHAPTER 1. CENTRAL ADMINISTRATION

SUBCHAPTER A. PRACTICE AND PROCEDURES

DIVISION 1. GENERAL PROCEDURAL PROVISIONS

The Comptroller of Public Accounts proposes amendments to §1.12, concerning position letter. The amendments implement Senate Bill 266, 89th Legislature, 2025 and House Bill 1937, 89th Legislature, 2025, effective May 24, 2025.

Senate Bill 226 repealed Tax Code, §111.105(e) (Tax Refund: Hearing), which authorized the comptroller to issue a "notice of demand" that all evidence to support a refund claim be produced by a specific date in the notice, and that any evidence produced after the specified date could not be considered in an administrative hearing. Section 1.12(c), which largely mirrors the statutory language in authorizing the notice of demand for documentation, is deleted to conform with the repeal of Tax Code, §111.105(e). The last sentence of §1.12(e), which refers to calculating the date to respond to the notice of demand in subsection (c), is also deleted to conform with the repeal of Tax Code, §111.105(e).

Subsequent subsections are renumbered accordingly.

Brad Reynolds, Chief Revenue Estimator, has determined that during the first five years that the proposed amendments are in effect, the amended rule: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rule's applicability; and will not positively or adversely affect this state's economy. This proposal amends an existing rule.

Mr. Reynolds also has determined that the proposed amendments would benefit the public by conforming the rule to the current statute. This rule is proposed under Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses or rural communities The proposed rule amendments would have no fiscal impact on the state government, units of local government, or individuals. There would be no anticipated economic cost to the public.

You may submit comments on the proposal or information related to the cost, benefit, or effect of the proposal, including any applicable data, research or analysis, to James D. Arbogast, Chief Counsel for Hearings and Tax Litigation, P.O. Box 13528 Austin, Texas 78711, or to the email address: james.arbogast@cpa.texas.gov. The comptroller must receive your comments or other information no later than 30 days from the date of publication of the proposal in the Texas Register.

The amendments are proposed under Tax Code, §111.002 (Comptroller's Rules, Compliance, Forfeiture), which provides 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 (State Taxation).

This section implements Tax Code, §111.105(e) (Tax Refund: Hearing).

§1.12. Position Letter.

(a) Contents of Position Letter. The Tax Hearings Attorney will review the Statement of Grounds, documentary evidence, and any additional evidence received from the taxpayer and issue a Position Letter to the taxpayer. The Position Letter will accept or reject, in whole or in part, each contention of the taxpayer, and state the AHS's position on all disputed issues raised by the taxpayer, such as taxability, penalty and interest waiver, and whether the taxpayer is an individual or entity liable for the assessment of tax at issue.

(b) Selection form. The Position Letter will include a selection form for the taxpayer to accept or reject the Position Letter. See §1.13 of this title (relating to Taxpayer's Acceptance or Rejection of Position Letter, and Reply to Position Letter).

[(c) Notice of demand. Pursuant to Tax Code, §111.105(e), the Tax Hearings Attorney may issue with the Position Letter a written notice of demand that all documentary evidence to support facts or contentions related to a taxpayer's claim for refund be produced before the expiration of a specified date in the notice. The specified date may not be less than 180 days from the date of the original refund claim, and not less than 60 days from the date of the notice. The deadline to respond to the notice of demand may be extended by the Tax Hearings Attorney. A taxpayer who fails to produce the requested documents by the specified date may not introduce in evidence any of the documents that were not timely produced. The assigned ALJ cannot consider in SOAH proceedings documents that were not timely produced. This section is only applicable to the administrative hearing and has no effect on a judicial proceeding pending under Tax Code, Chapter 112. See Tax Code, §111.105(e). The agency may also issue a notice of demand pursuant to Tax Code, §111.105(e) at other stages of the contested case process before or after the issuance of a Position Letter.]

(c) [~~(d)~~] Taxpayer's option to set a Position Letter deadline. After a contested case is assigned, the Tax Hearings Attorney will issue an introductory letter providing contact information and other information concerning the hearings process. If the Tax Hearings Attorney does not issue the Position Letter within 60 days after the date of the introductory letter, the taxpayer may submit a written request to the Tax Hearings Attorney to issue a Position Letter within 45 days of the receipt of the request. The Tax Hearings Attorney will issue a Position Letter within the 45-day deadline, obtain an agreed extension of the deadline to issue the Position Letter, or confer with the taxpayer concerning the docketing of the case at SOAH consistent with §1.20 of this title (relating to Docketing Oral and Written Submission Hearings).

(d) [~~(e)~~] Modification or amendment of the Position Letter. If the Position Letter is modified or amended, the taxpayer must accept or reject the modified or amended Position Letter, in whole or in part, within 45 days after the day the modified or amended Position Letter is dated, unless an extension is granted. [If the Position Letter includes a Notice of Demand consistent with subsection (c) of this section, the date to respond to the Notice of Demand will correspond to the date, including any extension thereof, by which the taxpayer must accept or reject the modified or amended Position Letter.]

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 23, 2026.

TRD-202600266

Jenny Burleson

Director, Tax Policy

Comptroller of Public Accounts

Earliest possible date of adoption: March 8, 2026

For further information, please call: (512) 475-2220

34 TAC §1.22

The Comptroller of Public Accounts proposes amendment to §1.22, concerning discovery. The amendment implements Senate Bill 266, 89th Legislature, 2025 and House Bill 1937, 89th Legislature, 2025, effective May 24, 2025.

Prior to amendment by Senate Bill 266, Tax Code, §111.0041(c) (Records; Burden to Produce and Substantiate Claims), required taxpayers to produce "contemporaneous" records and supporting documentation to substantiate and enable verification of the taxpayer's claim related to the amount of tax, penalty, or interest to be assessed, collected, or refunded in an administrative or judicial proceeding. Senate Bill 266 substituted the word "sufficient" for "contemporaneous" in that section. The amendment to §1.22 likewise substitutes "sufficient" for "contemporaneous" in order to conform the rule to the statute.

Brad Reynolds, Chief Revenue Estimator, has determined that during the first five years that the proposed amendment is in effect, the amended rule: will not create or eliminate a government program; will not require the creation or elimination of employee positions; will not require an increase or decrease in future legislative appropriations to the agency; will not require an increase or decrease in fees paid to the agency; will not increase or decrease the number of individuals subject to the rule's applicability; and will not positively or adversely affect this state's economy. This proposal amends an existing rule.

Mr. Reynolds also has determined that the proposed amendment would benefit the public by conforming the rule to the current statute. This rule is proposed under Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses or rural communities. The proposed rule amendment would have no fiscal impact on the state government, units of local government, or individuals. There would be no anticipated economic cost to the public.

You may submit comments on the proposal or information related to the cost, benefit, or effect of the proposal, including any applicable data, research or analysis, to James D. Arbogast, Chief Counsel for Hearings and Tax Litigation, P.O. Box 13528, Austin, Texas 78711-3528, or james.arbogast@cpa.texas.gov. The comptroller must receive your comments or other information no later than 30 days from the date of publication of the proposal in the Texas Register.

The amendments implement Tax Code, 111.0041(c)(Records; Burden to Produce and Substantiate Claims).

§1.22. Discovery.

(a) Discovery conducted during a contested case does not modify Tax Code recordkeeping or disclosure requirements. The Tax Code requires a taxpayer to maintain and produce sufficient [~~contemporaneous~~] records and supporting documents appropriate to the tax or fee for which the taxpayer is responsible. A taxpayer is required to produce documents and information concerning the transactions in question to substantiate and enable verification of the taxpayer's contentions concerning the amount of tax, penalty, or interest to be assessed, collected, or refunded in a contested case. Nothing in this section modifies any statute or any section of this title requiring a taxpayer to keep records and documentation, or to provide information to the comptroller. General Tax Code sections governing a taxpayer's obligations to maintain or produce records and documents include, but are not limited to, Tax Code, §111.0041 ("Records; Burden to Produce and Substantiate Claims") and Tax Code, §111.105 ("Tax Refund; Hearing"). The Tax Code may also impose a duty to keep records or provide information specific to a certain tax or fee; see, for example, Tax Code, §171.205 ("Additional Information Required by Comptroller," relating to franchise tax) and Tax Code, §151.025 ("Records Required to Be Kept," relating to sales tax).

(b) Informal exchange of information encouraged. Before SOAH acquires jurisdiction over a contested case (see 1 TAC §155.51), the parties are encouraged to informally request and exchange documents and other information to narrow and define the disputed issues and reach an agreed resolution of the contested case before the case is docketed at SOAH. See §1.31 of this title (relating to Resolution Agreements).

(c) Formal discovery. Discovery in a contested case may begin when SOAH acquires jurisdiction. See 1 TAC §155.251(a) and §1.20 of this title (relating to Docketing Oral and Written Submission Hearings). Discovery shall be conducted under the SOAH Rules of Procedure governing discovery. See 1 TAC §§155.251, 155.253, 155.255, 155.257, and 155.259.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 23, 2026.

TRD-202600267

Jenny Burleson

Director, Tax Policy

Comptroller of Public Accounts

Earliest possible date of adoption: March 8, 2026

For further information, please call: (512) 475-2220

34 TAC §1.26

The Comptroller of Public Accounts proposes amendment to §1.26, concerning burden and standard of proof in contested cases. The amendment implements Senate Bill 266, 89th Legislature, 2025 and House Bill 1937, 89th Legislature, 2025, effective May 24, 2025.

Prior to amendment by Senate Bill 266, Tax Code, §111.0041(c) (Records; Burden to Produce and Substantiate Claims), required taxpayers to produce "contemporaneous" records and supporting documentation to substantiate and enable verification of the taxpayer's claim related to the amount of tax, penalty, or interest to be assessed, collected, or refunded in an administrative or judicial proceeding. Senate Bill 266 substituted the word "sufficient" for "contemporaneous" in that section. The amendment to §1.26 likewise substitutes "sufficient" for "contemporaneous" in order to conform the rule to the statute.

The amendments implement Tax Code, 111.0041(c)(Records; Burden to Produce and Substantiate Claims).

§1.26. Burden and Standard of Proof in Contested Cases.

(a) General rule. Pursuant to Tax Code, §111.0041, the taxpayer must produce sufficient [~~contemporaneous~~] records and supporting documentation appropriate to the tax or fee for the transactions in question to substantiate and enable verification of the taxpayer's claim related to the amount of tax, penalty, or interest to be assessed, collected, or refunded.

(b) The AHS has the burden to prove by clear and convincing evidence:

(1) liability for the additional penalty under Tax Code, §111.061(b); and

(2) personal liability for fraudulent tax evasion under Tax Code, §111.0611.

(c) The taxpayer has the burden to prove by clear and convincing evidence that the taxpayer or a transaction qualifies for an exemption or a deduction tantamount to an exemption.

(d) The AHS has the burden to prove by a preponderance of the evidence that an exclusion from an exemption applies.

(e) In all other cases, the taxpayer has the burden of proof by a preponderance of the evidence.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 23, 2026.

TRD-202600268

Jenny Burleson

Director, Tax Policy

Comptroller of Public Accounts

Earliest possible date of adoption: March 8, 2026

For further information, please call: (512) 475-2220

CHAPTER 20. STATEWIDE PROCUREMENT AND SUPPORT SERVICES

SUBCHAPTER C. PROCUREMENT METHODS AND CONTRACT FORMATION

DIVISION 3. SPECIAL CONTRACTING METHODS

34 TAC §20.231

The Comptroller of Public Accounts proposes amendments to §20.231, concerning multiple awards contracts procedure. The comptroller amends §20.231 to implement Government Code, Chapter 2156, Subchapter E, added by House Bill 4748, 89th Legislature, 2025, effective September 1, 2025. The comptroller amends the title of §20.231 to match the title of the new subchapter, "Multiple Award Purchasing Procedure."

The comptroller amends subsection (a) to align with Government Code, Chapter 2156, Subchapter E. The term "multiple award contract procedure" is replaced with "multiple award purchasing procedure," which is the term used in Government Code, Chapter 2156, Subchapter E. The phrase "in the best interest of the state" is replaced with "necessary to ensure adequate delivery, service, or product compatibility," which is the legal standard used in Government Code, §2156.202. The term "bidder" is replaced with "anticipated respondent," to reflect that Government Code, §2156.204 allows the multiple award purchasing procedure to be used in conjunction with an invitation for bids, request for proposals, or request for offers. Subsection (a), as amended, allows an agency to consider any relevant facts in its determination of whether multiple awards are necessary in accordance with Government Code, §2156.202. It specifies that the need to maintain a continuous supply of essential items is one fact that supports the use of the multiple award purchasing procedure.

The comptroller amends subsection (b) to require that a solicitation disclose the agency's intent to issue multiple awards to and identify the agency's criteria for selection of respondents to award. This amendment implements Government Code, §2156.203, which requires disclosure of intent and criteria for multiple awards in each solicitation for a multiple award contract.

The comptroller amends subsection (c) to allow multiple awards on invitations for bids, requests for proposals, and requests for offers. Government Code, §2156.204 explicitly allows the multiple award purchasing procedure to be used in conjunction with each of these methods. Subsection (c) as amended, no longer addresses documentation of the basis for determining awards. That subject is covered in new subsection (d).

The comptroller adds subsection (d) to provide that each awardee must provide or be capable of providing the best value to the state, in accordance with the applicable statutory standards. This implements Government Code, §2156.204(b). Because of that best value requirement, subsection (d) further provides that agencies shall not award contracts based on minimum qualifications that do not establish best value. Finally, subsection (d) requires agencies to create and retain documentation of their compliance with the best value requirement for multiple contract awards.

The comptroller adds subsection (e) to address small orders under multiple award contracts. Subsection (e) states that agencies must document that such orders obtain best value for the state. However, the amended rule does not require an agency to document the best value determination for each small order. Instead, it is sufficient to document a best value ordering procedure. This subsection achieves compliance with Government Code, §2156.205, while reducing administrative burdens consistent with the policy of Government Code, §2155.132(e)(1).

The comptroller adds subsection (f) to address large orders under multiple award contracts. Subsection (f) states that an agency shall evaluate each contemplated order to determine whether it provides the best value to the state and document its determination in the contract file. This subsection implements Government Code, §2156.205.

The comptroller adds subsection (g) to describe one method of determining best value when ordering under multiple award contracts. Subsection (g) states that an agency may conduct secondary competition under a multiple award contract by notifying qualified contractors of the scope of work to be ordered, and inviting them to submit proposals. Subsection (g) gives agencies discretion to order from the contractor that offers the best value, or to cancel the secondary competition. This subsection implements Government Code, §2156.205, and provides flexibility for agencies to respond to emergent facts and circumstances, such as changes to their budgets or priorities.

Mr. Reynolds also has determined that the proposed rule amendments would have no significant fiscal impact on the state government, units of local government, or individuals. The proposed amendments would benefit the public by improving the clarity and implementation of the section. There would be no anticipated economic cost to the public. The proposed amendments would have no fiscal impact on small businesses or rural communities.

An online public hearing will be held to receive comments on the proposed amendment. There is no physical location for this meeting. The meeting will be held at 10:00 a.m. on Tuesday, February 10, 2026. To access the online public meeting by web browser, please enter the following URL into your browser: https://txcpa.webex.com/txcpa/j.php?MTID=mc5da036d94cb39fac7c45cfeacf72d09. To join the meeting by computer or cell phone using the Webex app, use the access code 24868453987 and password SPDRULES. Persons interested in providing comments at the public hearing may contact Mr. Gerard MacCrossan, Comptroller of Public Accounts, at Gerard.MacCrossan@cpa.texas.gov or by calling (512) 463-4468 by February 9, 2026.

You may submit comments on the proposal or information related to the cost, benefit, or effect of the proposal, including any applicable data, research or analysis, to Gerard MacCrossan, Statewide Procurement Division, P.O. Box 13528 Austin, Texas 78711 or to the email address: Gerard.MacCrossan@cpa.texas.gov. The comptroller must receive your comments or other information no later than 30 days from the date of publication of the proposal in the Texas Register.

The amendments are proposed under Government Code, §2156.0012 (Authority to Adopt Rules), which provides the comptroller with the authority to adopt rules to efficiently and effectively administer Government Code, Chapter 2156 (Purchasing Methods).

The amendments implement Government Code Chapter 2156, Subchapter E, added by House Bill 4748, 89th Legislature, 2025, effective September 1, 2025.

§20.231. Multiple Award Purchasing [~~Contracts~~] Procedure.

(a) The comptroller or a state agency may use the multiple award purchasing [~~contract~~] procedure only after the director or the agency's purchasing director has made a written determination that its use is necessary to ensure adequate delivery, service, or product compatibility [~~in the best interest of the state~~]. In arriving at a determination, the director or the agency may [~~will~~] consider any relevant facts, including [~~the following factors~~]:

(1) the quality, availability, and reliability of the supplies, materials, equipment, or service and their adaptability to the particular use required;

(2) the ability, capacity, and skill of the anticipated respondents [~~bidder~~];

(3) the sufficiency of the anticipated respondents' [~~bidder's~~] financial resources;

(4) the anticipated respondents' [~~bidder's~~] ability to provide maintenance, repair parts, and service;

(5) the compatibility with existing equipment;

(6) the need for flexibility in evaluating new products on a large scale before becoming contractually committed for all use; and

(7) the need to maintain a continuous supply of essential items. [~~any other relevant factors.~~]

(b) When the comptroller or a state agency intends to use the multiple award purchasing procedure, the solicitation shall disclose that intent and identify the criteria it will use to select respondents for award. [When the director or procuring state agency's purchasing director finds that one or more of the above factors is important to the contract and that objective specifications for those factors cannot be prepared, the director or agency's purchasing director may determine that the multiple award contract procedure will serve the best interest of the state.]

(c) A solicitation using the multiple award purchasing procedure must be an invitation for bids [~~Bids on multiple award invitations will be evaluated as are other bids~~] under §20.207 [~~§20.207(b)~~] of this title (relating to Competitive Sealed Bidding), a request for proposals under §20.208 of this title (relating to Competitive Sealed Proposals), or a request for offers under §20.222 of this title (relating to Methods for Procuring Automated Information Systems, including Request for Offers Method). [except that more than one award may be made. The basis for determining awards shall be reasonably related to the factors relied upon in using the multiple award contract procedure and shall be disclosed in the bid invitation.]

(d) The comptroller or a state agency may award multiple contracts under this section only if each awardee provides or is capable of providing the best value to the state, in accordance with standards provided in Government Code, Chapters 2155, 2156, 2157, and 2158, as applicable. A contract award shall not be made to a vendor on the basis of minimum qualifications that do not establish best value. The comptroller or state agency shall document compliance with this requirement in the contract file.

(e) For orders under multiple award contracts that do not exceed the threshold for small purchases in §20.211 of this title (relating to Small Purchases), the comptroller or a state agency shall document how ordering will obtain best value for the state. For example, the comptroller or state agency may describe its way of placing orders in the contract, a memorandum, or a procedure document.

(f) For orders under multiple award contracts that exceed the threshold for small purchases in §20.211 of this title, the comptroller or a state agency shall evaluate each contemplated order to determine whether it provides the best value to the state. The comptroller or state agency shall document its determination and retain the documentation in the contract file.

(g) The comptroller or a state agency may conduct secondary competition under a multiple award contract if necessary to determine which contractor provides the best value to the state. To conduct secondary competition, the comptroller or a state agency shall notify the qualified contractors of the scope of work to be ordered and invite them to submit proposals. The comptroller or state agency shall select the proposal that offers the best value to the state, or else use its discretion to cancel the secondary competition.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on January 23, 2026.

TRD-202600280

Don Neal

General Counsel, Operations and Support Legal Services

Comptroller of Public Accounts

Earliest possible date of adoption: March 8, 2026

For further information, please call: (512) 475-2220