TITLE 34.PUBLIC FINANCE

Part 1. COMPTROLLER OF PUBLIC ACCOUNTS

Chapter 1. CENTRAL ADMINISTRATION

Subchapter A. PRACTICE AND PROCEDURES

1. PRACTICE AND PROCEDURES

34 TAC §1.6

The Comptroller of Public Accounts proposes an amendment to §1.6, concerning extensions of time. The rule is being amended to reflect current job titles that are assigned to attorneys in the comptroller's Administrative Hearings Section.

James LeBas, Chief Revenue Estimator, has determined that for the first five-year period the amendment will be in effect there will be no significant revenue impact on the state or local government.

Mr. LeBas also has determined that for each year of the first five years the amendment is in effect the public benefit anticipated as a result of adopting the amendment will be in clarifying for the public who within the Comptroller's office may approve an extension of time. This amendment is adopted under the Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed amendment.

Comments on the proposal may be submitted to Ken Nordeman, Deputy General Counsel for Administrative Hearings, General Counsel Division, P.O. Box 13528, Austin, Texas 78711.

This amendment is proposed under the 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 the Tax Code, Title 2.

The amendment implements the Tax Code, §111.009 and §111.105.

§1.6.Extensions of Time.

(a)

(No change.)

(b)

A motion for an extension of any other deadline in these sections will not be granted unless good cause is established and the need for the extension is not due to the moving party's neglect, indifference, or lack of diligence. A motion must be made in writing at least seven days prior to the expiration of the time period. In the event of an emergency, a motion may be accepted if it is postmarked, sent by facsimile transmission, or deposited with a private mail or courier service, postage or delivery charges paid, not later than the date of the original deadline. Prior to the setting of a hearing the assistant general counsel [ hearings attorney ] may approve one extension of the time to reply to a position letter of not more than 14 days. Any additional extension may be granted, for good cause shown, only by the general counsel or his designee. After a hearing is set, a motion for an extension of filing deadlines should be addressed to the assigned administrative law judge and will be ruled upon by him. A copy of a motion for extension of a filing deadline must be provided to all parties.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 23, 2001.

TRD-200102893

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: July 8, 2001

For further information, please call: (512) 463-4062


34 TAC §1.9

The Comptroller of Public Accounts proposes an amendment to §1.9, concerning position letters. The rule is being amended to reflect current job titles that are assigned to attorneys in the comptroller's Administrative Hearings Section.

James LeBas, Chief Revenue Estimator, has determined that for the first five-year period the amendment will be in effect there will be no significant revenue impact on the state or local government.

Mr. LeBas also has determined that for each year of the first five years the amendment is in effect the public benefit anticipated as a result of adopting the amendment will be in clarifying for the public whose findings will be included in position letters. This amendment is adopted under the Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed amendment.

Comments on the proposal may be submitted to Ken Nordeman, Deputy General Counsel for Administrative Hearings, General Counsel Division, P.O. Box 13528, Austin, Texas 78711.

This amendment is proposed under the 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 the Tax Code, Title 2.

The amendment implements Tax Code, Chapter 111.

§1.9.Position Letter

(a)

Following receipt of the taxpayer's statement of grounds, documentary evidence, and any additional evidence requested by the assistant general counsel [ hearings attorney ], a position letter will be sent to the taxpayer. The position letter will accept or reject, in whole or in part, each contention of the taxpayer , and [ . The position letter will ] set forth what the assistant general counsel [ hearings attorney ] finds is properly subject to or exempt from taxation.

(b)-(c)

(No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 23, 2001.

TRD-200102902

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: July 8, 2001

For further information, please call: (512) 463-4062


34 TAC §1.10

The Comptroller of Public Accounts proposes an amendment to §1.10, concerning acceptance or rejection of position letter; motion to dismiss petition or set for hearing. The rule is being amended to reflect the current title of the comptroller's Administrative Hearings Section.

James LeBas, Chief Revenue Estimator, has determined that for the first five-year period the amendment will be in effect there will be no significant revenue impact on the state or local government.

Mr. LeBas also has determined that for each year of the first five years the amendment is in effect the public benefit anticipated as a result of adopting the amendment will be in providing new information regarding tax responsibilities. This amendment is adopted under the Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed amendment.

Comments on the proposal may be submitted to Ken Nordeman, Deputy General Counsel for Administrative Hearings, General Counsel Division, P.O. Box 13528, Austin, Texas 78711.

This amendment is proposed under the 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 the Tax Code, Title 2.

The amendment implements Tax Code, Chapter 111.

§1.10.Acceptance or Rejection of Position Letter; Motion To Dismiss Petition or Set for Hearing

(a)

The taxpayer must accept or reject, in whole or in part, the position letter within 15 days after the day the position letter is dated; however, note the extension exception in §1.6(b) of this title (relating to Extensions of Time). A form for this purpose will be enclosed with the position letter. Expiration of the 15-day period without the taxpayer filing a motion to set or dismiss will result in the filing of a motion to dismiss the hearing and dispose of the case according to the [ tax division's ] position of the Administrative Hearings Section .

(b)-(e)

(No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 23, 2001.

TRD-200102903

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: July 8, 2001

For further information, please call: (512) 463-4062


34 TAC §1.11

The Comptroller of Public Accounts proposes an amendment to §1.11, concerning modification of the position letter. The rule is being amended to reflect current job titles that are assigned to attorneys in the comptroller's Administrative Hearings Section.

James LeBas, Chief Revenue Estimator, has determined that for the first five-year period the amendment will be in effect there will be no significant revenue impact on the state or local government.

Mr. LeBas also has determined that for each year of the first five years the amendment is in effect the public benefit anticipated as a result of adopting the amendment will be in clarifying for the public who is responsible for reducing to writing any modifications to the position letter. This amendment is adopted under the Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed amendment.

Comments on the proposal may be submitted to Ken Nordeman, Deputy General Counsel for Administrative Hearings, General Counsel Division, P.O. Box 13528, Austin, Texas 78711.

This amendment is proposed under the 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 the Tax Code, Title 2.

The amendment implements Tax Code, Chapter 111.

§1.11.Modification of the Position Letter.

The position letter may be modified. Any modifications to the position letter will be reduced to writing by the assistant general counsel [ hearings attorney ] and sent to the taxpayer. A new 15-day period for acceptance or rejection by the taxpayer begins on the day the modified position letter is dated if it is issued prior to the notice of setting being issued.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 23, 2001.

TRD-200102904

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: July 8, 2001

For further information, please call: (512) 463-4062


34 TAC §1.13

The Comptroller of Public Accounts proposes an amendment to §1.13, concerning initiation of an expedited hearing. The rule is being amended to reflect the current title of the comptroller's Administrative Hearings Section.

James LeBas, Chief Revenue Estimator, has determined that for the first five-year period the amendment will be in effect there will be no significant revenue impact on the state or local government.

Mr. LeBas also has determined that for each year of the first five years the amendment is in effect the public benefit anticipated as a result of adopting the amendment will be in providing new information regarding tax responsibilities. This amendment is adopted under the Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed amendment.

Comments on the proposal may be submitted to Ken Nordeman, Deputy General Counsel for Administrative Hearings, General Counsel Division, P.O. Box 13528, Austin, Texas 78711.

This amendment is proposed under the 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 the Tax Code, Title 2.

The amendment implements Tax Code, Chapter 111.

§1.13.Initiation of an Expedited Hearing.

(a)

A taxpayer may request an expedited hearing at the time a petition for redetermination or written request for refund hearing is filed. An expedited hearing is one conducted under the accelerated pre- hearing and hearing timetable set forth in this section.

(b)

To obtain an expedited hearing, a taxpayer must do the following at the time the petition for redetermination or written request for refund hearing is filed:

(1)

request in writing the election of the expedited procedure and specify whether an oral hearing or a hearing on written submissions is preferred;

(2)

pre-file its statement of grounds and all evidence (other than resale and exemption certificates) on which it intends to rely at the hearing, including summaries of testimony of witnesses expected to be called at an oral hearing. Contentions and evidence not pre-filed by the taxpayer shall be deemed inadmissible;

(3)

agree to abbreviated discovery timetables in the event the tax division should initiate discovery during the pre-hearing phase;

(4)

request an extended oral hearing, if desired;

(5)

agree to file resale and exemption certificates no later than the date of hearing or by the 60th day from the date of the hearing request, whichever occurs first, and to waive in writing the requirement of written notice and the 60-day period for the presentation of certificates as provided in Tax Code, §151.054(e); and

(6)

waive in writing the issuance of a proposed decision.

(c)

The general counsel or his designee shall, within ten days of his receipt of a request for an expedited hearing, make a determination as to whether the request qualifies for an expedited hearing. If it does not, the taxpayer will be so notified in writing, and advised that either with the filing of additional curative documentation the case can proceed on an expedited basis or that the case will be placed on the agency's regular hearings docket.

(d)

For good cause shown, a request for an expedited hearing may be withdrawn; however, the waiver of the 60-day period pursuant to subsection (b)(5) of this section cannot be withdrawn. A taxpayer's request for continuance, or a request for an extended oral hearing filed after the initial request for an expedited hearing, shall not be granted unless there is a showing of good cause. Withdrawal of the request for an expedited hearing, or the granting of a motion for continuance or an extended oral hearing, shall cause the hearing to be set on the agency's regular hearings docket.

(e)

The Administrative Hearings Section [ tax division ] may petition the Administrative Law Judge for conversion from an expedited to a regular hearing for good cause shown, including, but not limited to, the need for additional policy consideration of issues raised, the need for extended discovery, for reasons of agency policy or court case hold, or for extended examination of records presented by the taxpayer. The Administrative Law Judge shall rule on such motion on the basis of written pleadings submitted by the parties.

(f)

A compliant expedited hearing request shall be set and decided on the following timetable:

(1)

within 20 days of receipt of the request by the general counsel or his designee an oral hearing or written submission closing date not to exceed 60 days from the date of receipt of the request shall be set by the Chief Administrative Law Judge;

(2)

a date, not to exceed 50 days from the date of receipt of the request by the general counsel or his designee, shall be set as a deadline for the Tax Division to file a written response to the taxpayer's statement of grounds and pre-filed evidence;

(3)

a final decision shall be issued as follows:

(A)

if no audit amendment is required in order to issue the final decision, within 45 days of the date of the oral hearing or the date the written submission record closes; or

(B)

if an audit amendment is required in order to issue the final decision, within 75 days of the date of the oral hearing or the date the written submission record closes; and

(4)

a motion for rehearing may be filed as provided in §1.29 of this title (relating to Motion for Rehearing).

(g)

Hearings conducted pursuant to the expedited timetable established in this section shall not be subject to the provisions of §§1.9, 1.10, 1.11, 1.14, 1.15, 1.16, 1.20, and 1.27 of this title (relating to Rules of Practice and Procedure).

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 23, 2001.

TRD-200102894

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: July 8, 2001

For further information, please call: (512) 463-4062


34 TAC §1.14

The Comptroller of Public Accounts proposes an amendment to §1.14, concerning notice of setting. The rule is being amended to reflect current job titles that are assigned to attorneys in the comptroller's Administrative Hearings Section.

James LeBas, Chief Revenue Estimator, has determined that for the first five-year period the amendment will be in effect there will be no significant revenue impact on the state or local government.

Mr. LeBas also has determined that for each year of the first five years the amendment is in effect the public benefit anticipated as a result of adopting the amendment will be in clarifying for the public who is responsible for responding to the taxpayer's reply to the position letter. This amendment is adopted under the Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed amendment.

Comments on the proposal may be submitted Ken Nordeman, Deputy General Counsel for Administrative Hearings, General Counsel Division, P.O. Box 13528, Austin, Texas 78711.

This amendment is proposed under the 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 the Tax Code, Title 2.

The amendment implements Tax Code, Chapter 111.

§1.14.Notice of Setting.

(a)

Upon receipt of a motion to set, the assigned administrative law judge will send a notice to the parties giving:

(1)

the date, time, and place of the oral hearing, the date the record will close in a written submission hearing, or other disposition of the hearing;

(2)

the legal authority and jurisdiction under which the hearing is to be held;

(3)

the date any legal brief or additional facts in reply to the position letter is due; and

(4)

the date any response by the assistant general counsel [ hearings attorney ] to the taxpayer's reply to the position letter is due.

(b)

The notice of setting for hearings pursuant to the Tax Code, §154.1142 or §155.0592, will include:

(1)

the date, time, and place of the oral hearing;

(2)

the legal authority and jurisdiction under which the hearing is to be held;

(3)

the asserted factual basis for the alleged violation(s); and

(4)

the date any legal brief or additional facts in reply to the notice of setting is due.

(c)

All notices of setting issued pursuant to the Tax Code, Chapters 154 or 155, will be sent certified mail, return receipt requested; except for the notices of setting issued pursuant to the Tax Code, §§154.114(c), 154.309(d), 155.059(c) or §155.186(d), which will be sent by first class mail.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 23, 2001.

TRD-200102895

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: July 8, 2001

For further information, please call: (512) 463-4062


34 TAC §1.16

The Comptroller of Public Accounts proposes an amendment to §1.16, concerning response to the administrative hearings section. The rule is being amended to reflect current job titles that are assigned to attorneys in the comptroller's Administrative Hearings Section.

James LeBas, Chief Revenue Estimator, has determined that for the first five-year period the amendment will be in effect there will be no significant revenue impact on the state or local government.

Mr. LeBas also has determined that for each year of the first five years the amendment is in effect the public benefit anticipated as a result of adopting the amendment will be in clarifying for the public who within the Comptroller's office is responsible for the response of the Administrative Hearings Section. This amendment is adopted under the Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed amendment.

Comments on the proposal may be submitted to Ken Nordeman, Deputy General Counsel for Administrative Hearings, General Counsel Division, P.O. Box 13528, Austin, Texas 78711.

This amendment is proposed under the 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 the Tax Code, Title 2.

The amendment implements Tax Code, Chapter 111.

§1.16.Response of the Administrative Hearings Section [ Tax Division ].

(a)

If the taxpayer presents additional facts or legal arguments in a reply to the position letter, the assistant general counsel shall [ hearings attorney should ] file a response by the date specified in the notice of setting. If the taxpayer files a reply to the position letter containing no additional facts or legal arguments, the assistant general counsel [ hearings attorney ] is not required to file a response. Any response filed must state the legal position of the Administrative Hearings Section [ tax division ], and any factual disagreement, on each issue or argument raised by the taxpayer.

(b)

For hearings pursuant to the Tax Code, §154.1142 or §155.0592, the Administrative Hearings Section [ tax division ] is not required to file a response. However, if the permit holder presents additional facts or legal arguments in its reply, the Administrative Hearings Section [ tax division ] may file a response no later than seven calendar days prior to the oral hearing.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 23, 2001.

TRD-200102896

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: July 8, 2001

For further information, please call: (512) 463-4062


34 TAC §1.20

The Comptroller of Public Accounts proposes an amendment to §1.20, concerning continuances (postponement of hearings). The rule is being amended to reflect the current title of the comptroller's Administrative Hearings Section.

James LeBas, Chief Revenue Estimator, has determined that for the first five-year period the amendment will be in effect there will be no significant revenue impact on the state or local government.

Mr. LeBas also has determined that for each year of the first five years the amendment is in effect the public benefit anticipated as a result of adopting the amendment will be in providing new information regarding tax responsibilities. This amendment is adopted under the Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed amendment.

Comments on the proposal may be submitted to Ken Nordeman, Deputy General Counsel for Administrative Hearings, General Counsel Division, P.O. Box 13528, Austin, Texas 78711.

This amendment is proposed under the 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 the Tax Code, Title 2.

The amendment implements Tax Code, Chapter 111.

§1.20.Continuances (Postponement of Hearing).

A motion for continuance of a contested case set for oral hearing must be in writing and filed with the assigned administrative law judge at least seven days prior to the date that the matter is to be heard. If an emergency occurs less than seven days prior to the hearing date, a motion for continuance may be filed. The motion 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 motion must be served upon all other parties of record at the time of filing. If the Administrative Hearings Section [ 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.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 23, 2001.

TRD-200102897

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: July 8, 2001

For further information, please call: (512) 463-4062


34 TAC §1.33

The Comptroller of Public Accounts proposes an amendment to §1.33, concerning discovery. The rule is being amended to reflect current job titles that are assigned to attorneys in the comptroller's Administrative Hearings Section.

James LeBas, Chief Revenue Estimator, has determined that for the first five-year period the amendment will be in effect there will be no significant revenue impact on the state or local government.

Mr. LeBas also has determined that for each year of the first five years the amendment is in effect the public benefit anticipated as a result of adopting the amendment will be in clarifying for the public who within the Comptroller's office may be assigned to a contested case. This amendment is adopted under the Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed amendment.

Comments on the proposal may be submitted to Ken Nordeman, Deputy General Counsel for Administrative Hearings, General Counsel Division, P.O. Box 13528, Austin, Texas 78711.

This amendment is proposed under the 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 the Tax Code, Title 2.

The amendment implements Tax Code, Chapter 111.

§1.33.Discovery.

(a)-(e)

(No change.)

(f)

Requests for disclosure. A party may obtain disclosure from another party of the information or material listed herein by serving the other party--at any time after a contested case has been assigned to an assistant general counsel [ a hearings attorney ] but no later than 90 days before the scheduled date of the oral hearing or the date on which the record of a written submission hearing is scheduled to close--the following request: "Pursuant to §1.33(f) of this title (relating to Discovery), you are requested to disclose, within 30 days of service of this request, the information or material described in that section." A party may request disclosure of any or all of the following:

(1)-(5)

(No change.)

(g)

(No change.)

(h)

Interrogatories to parties. Any party may serve upon any other party written interrogatories to inquire about any matter within the scope of discovery except matters covered by subsection (g) of this section. An interrogatory may inquire whether a party makes a specific legal or factual contention and may ask the responding party to state the legal theories and to describe in general the factual bases for the party's claims or defenses, but interrogatories may not be used to require the responding party to marshal all of the available proof or the proof the party intends to offer at hearing. Written interrogatories are to be answered by the party served, or, if the party served is a public or private corporation or partnership or association, by an officer or agent who must furnish such information as is available to the party. Interrogatories may be served at any time after a contested case has been assigned to an assistant general counsel [ a hearings attorney ]. Interrogatories served upon the comptroller may be answered by the comptroller's designee who shall sign and verify the answers as required by subsection (h)(3) of this section.

(1)-(3)

(No change.)

(i)

(No change.)

(j)

Request for admission.

(1)

At any time after a contested case has been assigned to an assistant general counsel [ a hearings attorney ], a party may serve upon any other party a written request for the admission, for purposes of the pending contested case only, of the truth of any matter within the scope of subsection (b) of this section set forth in the request that relates to statements or opinions of fact or the application of law to fact, including the genuineness of any documents described in the request. Copies of the documents shall be served with the request unless they have been or are otherwise furnished or made available for inspection and copying. Whenever a party is represented by an attorney or representative of record, service of a request for admissions shall be made on his attorney or representative. A true copy of any objection to the request together with a copy of the request shall be filed promptly in the administrative law judge clerk's office by the party making the objection. If no objection is filed to a request, the written answer and the request shall be filed with the assigned administrative law judge by the assistant general counsel [ hearings attorney ] no later than seven days prior to the date of the oral hearing or by the closing of the record of a written submission hearing.

(2)-(3)

(No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 23, 2001.

TRD-200102898

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: July 8, 2001

For further information, please call: (512) 463-4062


34 TAC §1.39

The Comptroller of Public Accounts proposes an amendment to §1.39, concerning dismissal of case. The rule is being amended to reflect current job titles that are assigned to attorneys in the comptroller's Administrative Hearings Section.

James LeBas, Chief Revenue Estimator, has determined that for the first five-year period the amendment will be in effect there will be no significant revenue impact on the state or local government.

Mr. LeBas also has determined that for each year of the first five years the amendment is in effect the public benefit anticipated as a result of adopting the amendment will be in clarifying for the public who within the Comptroller's office has the responsibilities related to dismissing a case. This amendment is adopted under the Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed amendment.

Comments on the proposal may be submitted to Ken Nordeman, Deputy General Counsel for Administrative Hearings, General Counsel Division, P.O. Box 13528, Austin, Texas 78711.

This amendment is proposed under the 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 the Tax Code, Title 2.

The amendment implements Tax Code, Chapter 111.

§1.39.Dismissal of Case.

If a motion to dismiss is filed by a taxpayer based upon agreement reached among the parties as reflected in the position letter or any supplement to it, or upon the taxpayer's decision to abandon the case, a decision will be issued which conforms with the position letter or the agreement reached among the parties. The assistant general counsel [ hearings attorney ] may move to dismiss a case based upon agreement reached among the parties, for want of prosecution, or for failure to state a claim upon which relief can be granted as required by §1.7 of this title (relating to Content of Statement of Grounds; Preliminary Conference) and §1.42 of this title (relating to Definitions). The motion must be served on all parties and their authorized representatives at their last known address. If there is no reply from the taxpayer within 15 days to the assistant general counsel's [ hearings attorney's ] motion to dismiss, a decision will be issued either dismissing the case and fixing the deficiency as the amount determined by the Administrative Hearings Section [ tax division ] or otherwise disposing of the case according to the position last taken by the Administrative Hearings Section [ tax division ]. All motions to dismiss that are based upon a representation that both parties have agreed to dismiss a contested case, on the basis that all issues have been settled, shall be in writing and signed by both parties or their authorized representatives.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 23, 2001.

TRD-200102899

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: July 8, 2001

For further information, please call: (512) 463-4062


34 TAC §1.40

The Comptroller of Public Accounts proposes an amendment to §1.40, concerning burden of proof. The rule is being amended to reflect the current title of the comptroller's Administrative Hearings Section.

James LeBas, Chief Revenue Estimator, has determined that for the first five-year period the amendment will be in effect there will be no significant revenue impact on the state or local government.

Mr. LeBas also has determined that for each year of the first five years the amendment is in effect the public benefit anticipated as a result of adopting the amendment will be in providing new information regarding tax responsibilities. This amendment is adopted under the Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed amendment.

Comments on the proposal may be submitted to Ken Nordeman, Deputy General Counsel for Administrative Hearings, General Counsel Division, P.O. Box 13528, Austin, Texas 78711.

This amendment is proposed under the 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 the Tax Code, Title 2.

The amendment implements Tax Code, Chapter 111.

§1.40.Burden of Proof.

In a contested case:

(1)

the burden of proof is on the Administrative Hearings Section [ tax division ]:

(A)

by a preponderance of the evidence, if the issue is whether the suspension or revocation of a license is warranted; or

(B)

by clear and convincing evidence, if the issue is whether the imposition of additional penalty for willful or fraudulent failure to pay tax is warranted;

(2)

the burden of proof is on the taxpayer:

(A)

by clear and convincing evidence, if he claims a transaction is exempt from taxation; or

(B)

by a preponderance of the evidence, if he contends that an action, or proposed action, of the Administrative Hearings Section [ tax division ] is otherwise unwarranted.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 23, 2001.

TRD-200102900

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: July 8, 2001

For further information, please call: (512) 463-4062


34 TAC §1.42

The Comptroller of Public Accounts proposes an amendment to §1.42, concerning definitions. The rule is being amended to reflect current job titles and duties that are assigned to attorneys in the comptroller's Administrative Hearings Section, and to add a reference to the statutory provisions that authorize settlements of contested tax matters.

James LeBas, Chief Revenue Estimator, has determined that for the first five-year period the amendment will be in effect there will be no significant revenue impact on the state or local government.

Mr. LeBas also has determined that for each year of the first five years the amendment is in effect the public benefit anticipated as a result of adopting the amendment will be in defining which proceedings will be considered a "contested case" and are under the jurisdiction of an administrative law judge. This amendment is adopted under the Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. There is no significant anticipated economic cost to individuals who are required to comply with the proposed amendment.

Comments on the proposal may be submitted to Ken Nordeman, Deputy General Counsel for Administrative Hearings, General Counsel Division, P.O. Box 13528, Austin, Texas 78711.

This amendment is proposed under the 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 the Tax Code, Title 2.

The amendment implements Tax Code, Chapter 111.

§1.42.Definitions.

The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1)

Administrative law judge--An individual appointed by the comptroller to conduct hearings on matters within the comptroller's jurisdiction and to prepare proposed decisions to properly resolve such matters.

(2)

Agency--The Office of the Comptroller of Public Accounts.

(3)

Applicant--A party seeking a license or permit from the agency, or seeking an exemption.

(4)

Authorized representative--An individual who represents a party in a contested case and may be any individual other than the party.

(5)

Contested case or case--A proceeding in which the legal rights, duties, or privileges of a party are to be determined by the agency after an opportunity for adjudicative hearing. It includes a request for redetermination or refund, as well as actions initiated by the agency to revoke or suspend permits or licenses administered by the agency on grounds other than failure to pay a final tax deficiency or failure to file a tax security. Contested cases are within the jurisdiction of the administrative law judges. Forfeitures of rights to do business, of certificates of authority, of articles of incorporation, penalties imposed under the Tax Code, §151.7031, the refusal or failure to settle under Tax Code, §111.101 or requests for or revocation of exemptions from taxation are not contested cases and are not within the jurisdiction of the administrative law judges.

(6)

Determination--A written notice from the agency that a person is required to pay to the State of Texas a tax, fee, penalty, or interest.

(7)

Assistant General Counsel [ Hearings attorney ]--An attorney from the Administrative Hearings Section who is assigned to present the agency's position [ represent the tax division ] in a contested case.

(8)

Licensing--The agency process respecting the granting, denial, renewal, revocation, suspension, annulment, withdrawal, or amendment of a permit.

(9)

Party--Any person filing a petition or claim with the agency or asked by the agency to respond; the agency, acting through its tax division; and any other person admitted as a party under §1.36 of this title (relating to Interested Parties).

(10)

Permit--The whole or any part of a license, certificate, approval, registration, or similar form of permission, the issuance, renewal, amendment, suspension or revocation of which is within the jurisdiction of the agency.

(11)

Permit holder--Includes a bonded agent, distributor, wholesaler, or retailer required to obtain a permit under the Tax Code, Chapters 154 or 155.

(12)

Person--Any individual, partnership, corporation, association, governmental subdivision, or public or private organization of any character. It may also include an estate, trust, receiver, assignee for benefit of creditors, trustee, trustee in bankruptcy, assignee, or any other group or combination acting as a unit.

(13)

Petition--A request for official action by the agency regarding the rights, duties or privileges accorded to the person making the request under a statute administered or enforced by the agency. If the request is made orally, it must subsequently be reduced to writing.

(14)

Petitioner, claimant, or taxpayer--Any person who files a petition seeking redetermination of a liability, a refund of monies paid, or determination of rights under any license or permit granted by the agency.

(15)

Pleading--Any document filed by a party concerning the position or assertions in a contested case.

(16)

Respondent or taxpayer--Any person to whom a notice of a show cause hearing for the suspension or revocation of a license has been issued.

[(17)

Tax division--The divisions within the agency responsible for the particular action or actions that are the subject of the contested case.]

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on May 25, 2001.

TRD-200102986

Martin Cherry

Deputy General Counsel for Tax Policy and Agency Affairs

Comptroller of Public Accounts

Earliest possible date of adoption: July 8, 2001

For further information, please call: (512) 463-4062