Part 1. COMPTROLLER OF PUBLIC ACCOUNTS
Chapter 1. CENTRAL ADMINISTRATION
Subchapter A. PRACTICE AND PROCEDURES
DIVISION 1. PRACTICE AND PROCEDURES
34 TAC §§1.1, 1.4 - 1.7, 1.9 - 1.11, 1.14 - 1.16, 1.18, 1.20, 1.27 - 1.29, 1.33, 1.36, 1.37, 1.39, 1.42
The Comptroller of Public Accounts adopts amendments to §§1.1, 1.4 - 1.7, 1.9 - 1.11, 1.14 - 1.16, 1.18, 1.20, 1.27 - 1.29, 1.33, 1.36, 1.37, 1.39, and 1.42. Section 1.20 is adopted with changes to the proposed text as published in the February 2, 2007, issue of the Texas Register (32 TexReg 441). Sectons 1.1, 1.4 - 1.7, 1.9 - 1.11, 1.14 - 1.16, 1.18, 1.27 - 1.29, 1.33, 1.36, 1.37, 1.39, and 1.42 are adopted without changes and will not be republished.
The Comptroller adopts amendments to §1.1, concerning the intent, scope, and construction of rules (subsections (b) and (c) were added to explain the function of these rules and SOAH's involvement), §1.4, concerning representation and participation (this section was amended to reflect SOAH's involvement in the hearings process), §1.5, concerning initiation of a hearing (the amendments to this section are non-substantive corrections), §1.6, concerning extension of time for initiating hearing process (subsection (b) was deleted to avoid duplication with §1.20), §1.7, concerning content of statement of grounds and preliminary conference (this section was amended to elaborate on the taxpayer's responsibilities when submitting a statement of grounds, and to eliminate provisions no longer necessary), §1.9, concerning the position letter (subsection (b) was deleted because it is covered in §1.28, new subsection (b) was added to address the 180-day requirement previously in §1.15), §1.10, concerning acceptance or rejection of the position letter (this section was amended to address the new procedures required because of the involvement of SOAH), §1.11, concerning modification of the position letter (this section was amended so the it corresponds to the new procedures in §1.10), §1.14, concerning notice of setting for certain cigarette, cigar, and tobacco cases (this section was amended to limit it to certain types of cases), §1.15, concerning reply to the position letter (subsection (b) was moved to §1.14, subsection (d) was moved to §1.9, the remaining amendments to this section are to clarify the new procedures), §1.16, concerning response of the administrative hearings section (this section was amended to reflect the new procedures), §1.18, concerning filing of documents (this section was amended to reflect the change in procedure due to the involvement of SOAH), §1.20, concerning continuances (this section was amended to reflect the change in procedure due to the involvement of SOAH), §1.27, concerning proposal for decision (this section was amended to reflect the change in procedure due to the involvement of SOAH), §1.28, concerning comptroller's decision (this section was amended to reflect the change in procedure due to the involvement of SOAH), §1.29, concerning motions for rehearing (this amendment is non-substantive and reflects the new procedure), §1.33, concerning discovery (this section was amended to denote that SOAH's rules for discovery will be followed; Most of the previous rule was deleted as unnecessary, conflicting, and duplicative), §1.36, concerning interested parties (this section was amended to clarify the procedure for interested parties to be admitted), §1.37, concerning joint hearings and severance (this section was amended due to the transfer of the administrative law judges), §1.39, concerning dismissal of cases (this section was amended to delete unnecessary provisions due to the transfer to SOAH), and §1.42, concerning definitions (this section was amended to add definitions for new terms resulting from the transfer of functions to SOAH).
We received comments from the Texas Association of Business (TAB) and the Texas Taxpayers and Research Association (TTARA). Both groups were concerned that the amendments did not provide for resolution of all procedural disputes by the State Office of Administrative Hearings (SOAH) and that appropriate deadlines were not imposed on the agency. To address that concern, clarifying language was added to §1.20 to provide that a taxpayer could request that a case be referred to SOAH whenever a procedural dispute arose after the issuance of the position letter. SOAH will then set all filing deadlines for both parties.
TTARA requested that §1.5 be amended to include requirements for the agency's determination notices. Because determination notices are issued prior to the hearings process the comptroller has determined that this request is beyond the scope of these rules. However, the comptroller has instructed auditors to more fully describe and explain the reasons for adjustments in audits.
TTARA requested that §1.7(b) and (c) be amended to allow additional time for a taxpayer to raise new issues. The comptroller determined that this request would violate the restrictions of Tax Code, §111.207, which controls the tolling of the statute of limitations.
TTARA requested that §1.7(c) be amended to require that the comptroller submit all cases to SOAH for resolution on any motion to dismiss. The comptroller declined to make this change since it would require matters to be submitted to SOAH about which no disagreement exists.
TTARA requested that we amend §1.9(a) to detail the requirements for a Position Letter. Since the contents of a Position Letter depend on the individual statement of grounds, the comptroller determined that it would be impractical to add more detail to this rule.
TTARA requested that we amend §1.10 to increase the time allowed for a taxpayer to respond to a Position Letter. The comptroller declined to make this change, but will instead change §1.20 to allow a taxpayer to request the assignment of a SOAH administrative law judge if a procedural dispute arises.
TTARA requested that we amend §1.1(c) to allow a taxpayer to directly appeal to SOAH. However, since SOAH will only accept requests to docket cases from an agency, clarifying language was added to §1.22(b) to reflect that, upon a taxpayer's request, we will file the request to docket the case with SOAH.
TTARA requested that we amend §1.9(b) to restrict the application of the 180-day documentation demand letter provided for in Tax Code, §111.105(e). The comptroller believes that §1.9(b) already restricts the application of §111.105(e), and that further restrictions are unnecessary.
TTARA requested that we amend §1.15(b) by deleting the sentence, "All factual allegations should be supported by sworn affidavits, certified business records or otherwise admissible evidence." The comptroller declined to make this change. This provision merely advises taxpayers to support their factual allegations with admissible evidence, and does not in any way restrict their rights under SOAH rules or the Texas Rules of Evidence.
TTARA requested that we provide that a continuance could be filed within 7 days of a deadline, if an emergency existed. The comptroller agreed and has amended §1.20(a) accordingly.
TTARA and TAB requested that we amend §1.41 to eliminate possible confusion. The comptroller agrees that the proposed amendment may cause confusion and it will therefore be withdrawn.
The amendments are adopted under Tax Code, §111.002, 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.
The amendments implement Tax Code §§111.001, 111.009, and 111.105, which provide for the collection of taxes, redetermination and refund hearings.
§1.20.Continuances.
(a) If, prior to the time a contested case is brought under the jurisdiction of SOAH, a taxpayer needs an extension on a deadline he should request a continuance in writing from the assistant general counsel at least seven days prior to the deadline. If an emergency occurs less than seven days prior to the deadline, a motion for continuance may be filed.
(b) The request for continuance must show that there is good cause for the continuance and that the need is not caused by neglect, indifference, or lack of diligence. A copy of the request must be served upon all other parties of record.
(c) If the Tax Division increases the amount of tax deficiency at or before the time of hearing, the taxpayer is entitled to a 30-day continuance to obtain and produce further evidence applicable to the items upon which the increase is based.
(d) After a hearing is set by SOAH, a motion for an extension of filing deadlines must be filed with SOAH in accordance with SOAH's Rules of Practice.
(e) Notwithstanding any other section, if a procedural dispute arises at any time subsequent to the issuance of the Position Letter, at taxpayer's request or on its own motion, the Tax Division shall file a Request to Docket Case form with SOAH. SOAH's Rules of Procedure will apply at that point.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 29, 2007.
TRD-200701218
Martin Cherry
General Counsel
Comptroller of Public Accounts
Effective date: April 18, 2007
Proposal publication date: February 2, 2007
For further information, please call: (512) 475-0387
The Comptroller of Public Accounts adopts new §1.8, concerning resolution prior to the issuance of a position letter and new §1.22, concerning oral and written submission hearings, with changes to the proposed text as published in the February 2, 2007, issue of the Texas Register (32 TexReg 449).
The new rules are being adopted in order to update and formalize procedures for the resolution of cases prior to the issuance of a Position Letter and to facilitate the transfer of cases to the State Office of Administrative Hearings ("SOAH") for oral and written submission hearings.
We received comments from the Texas Taxpayers and Research Association (TTARA). TTARA requested that a rule be included to detail the comptroller's new proposed mediation process. Clarifying language was added to §1.22 to specify that mediation is available at the taxpayer's option. However, the comptroller determined that it was not necessary in these rules to detail the procedures to be employed by outside mediators.
TTARA requested that we amend §1.1(c) to allow a taxpayer to directly appeal to SOAH. However, since SOAH will only accept requests to docket cases from an agency, clarifying language was added to §1.22(b) to reflect that, upon a taxpayer's request, we will file the request to docket the case with SOAH.
The new sections are adopted under Tax Code, §111.002, 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.
The new sections implement Tax Code §§111.001, 111.009, and 111.105, which provide for the collection of taxes, redetermination and refund hearings.
§1.8.Resolution Prior to Issuance of a Position Letter.
(a) If the taxpayer's contentions are fully accepted or if the parties agree on a resolution of all contentions, the agency may elect to amend the determination, to issue an amended billing, or agree to a refund or credit request rather than issue a Position Letter.
(b) If the determination or billing is amended, or a refund or credit is issued, the action will become final 20 days after notification. An amended billing or determination is payable 20 days after it becomes final unless otherwise specified. Pursuant to APA, Government Code, §2001.142, notification is presumed to occur on the third day after the date of mailing.
§1.22.Oral and Written Submission Hearings.
(a) It is the agency's policy to encourage resolution and early settlement of all contested matters.
(b) If, after reviewing a taxpayer's Reply to the Tax Division's Position Letter, as well as all other available evidence, and conducting any mediation requested by a taxpayer, the parties are unable to resolve or settle all contested matters, the Tax Division will, at a taxpayer's request or on its own motion, file a Request to Docket Case form with SOAH. Such Request to Docket Case form will be filed promptly following taxpayer's request, but in no case shall it be filed more than 30 days after such request, unless the parties agree otherwise.
(c) At the time the Request to Docket Case form is filed with SOAH, the agency shall file with SOAH a copy of all pleadings served on the agency by the taxpayer and on the taxpayer by the agency, including but not limited to the Statement of Grounds, Position Letter, Reply and Response along with any exhibits or attachments thereto in accordance with the provisions of SOAH Rules of Procedure, §155.9.
(d) If the parties are unable to resolve or settle all contested matters, and resolution requires a hearing, then, except as otherwise noted or required, the taxpayer will be given the option of selecting:
(1) A written submission hearing before a SOAH administrative law judge, or
(2) An oral hearing before a SOAH administrative law judge.
(e) If the taxpayer fails to make a selection, the case will be docketed as a written submission hearing, subject to subsection (f) of this section.
(f) A taxpayer may change the selection of oral or written submission hearing made in subsection (d) of this section, by filing a motion with SOAH. Such a motion would be filed according to SOAH Rules of Procedure.
(g) The Tax Division has the option of requesting an oral hearing in any case in which it has the burden of proof.
(h) All hearings held pursuant to Tax Code, §154.1142 or §155.0592, will be oral hearings.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 29, 2007.
TRD-200701215
Martin Cherry
General Counsel
Comptroller of Public Accounts
Effective date: April 18, 2007
Proposal publication date: February 2, 2007
For further information, please call: (512) 475-0387
The Comptroller of Public Accounts adopts the repeals of §1.13, concerning initiation of expedited hearings, §1.21, concerning oral hearings, and §1.34, concerning witness fees, without changes to the proposed text as published in the February 2, 2007, issue of the Texas Register (32 TexReg 450).
The repeals are necessary because of the partial transfer of hearings responsibilities to The State Office of Administrative Hearings ("SOAH"). Repeal of these rules will prevent conflict and duplication with the SOAH Rules of Procedure.
No comments were received regarding adoption of the repeal.
The repeals are adopted under Tax Code, §111.002, 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.
The repeals implement Tax Code §§111.001, 111.009, and 111.105, which provide for the collection of taxes, redetermination and refund hearings.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 29, 2007.
TRD-200701214
Martin Cherry
General Counsel
Comptroller of Public Accounts
Effective date: April 18, 2007
Proposal publication date: February 2, 2007
For further information, please call: (512) 475-0387
The Comptroller of Public Accounts adopts the repeals of §1.31, concerning computation of time and §1.32, concerning service, without changes to the proposal as published in the February 2, 2007, issue of the Texas Register (32 TexReg 450).
Existing §1.31 and §1.32 are being repealed because of the partial transfer of hearings responsibilities to the State Office of Administrative Hearings (''SOAH''). New rules concerning computation of time and service are being proposed to more closely reflect SOAH Rules of Procedure.
No comments were received regarding adoption of the repeals.
The repeals are adopted under Tax Code, §111.002, 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.
The repeals implement Tax Code, §§111.001, 111.009, and 111.105, which provide for the collection of taxes, redetermination and refund hearings.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 29, 2007.
TRD-200701216
Martin Cherry
General Counsel
Comptroller of Public Accounts
Effective date: April 18, 2007
Proposal publication date: February 2, 2007
For further information, please call: (512) 475-0387
The Comptroller of Public Accounts adopts new §1.31, concerning computation of time and §1.32, concerning service, without changes to the proposed text as published in the February 2, 2007, issue of the Texas Register (32 TexReg 450).
The newly adopted rules will make the computation of time and service provisions consistent with SOAH rules regarding computation of time and service as well as to provide explicit guidelines for service regarding new technologies such as electronic mail.
No comments were received regarding adoption of the new rules.
The new rules are adopted under Tax Code, §111.002, 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.
The new rules implement Tax Code §§111.001, 111.009, and 111.105, which provide for the collection of taxes, redetermination and refund hearings.
This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 29, 2007.
TRD-200701217
Martin Cherry
General Counsel
Comptroller of Public Accounts
Effective date: April 18, 2007
Proposal publication date: February 2, 2007
For further information, please call: (512) 475-0387