34 Tex. Admin. Code § 1.30 - Settlement in a Contested Case Based on Insolvency
(a) Definitions. The following words and
terms, when used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1)
Insolvent--The taxpayer's liabilities exceed the taxpayer's assets or the
taxpayer is unable to pay the taxpayer's debts as they become due.
(2) Insolvency settlement--Settlement based
on Tax Code, §
111.102 made in the
contested case process.
(b) Eligibility for insolvency settlement.
The comptroller may settle a claim for a tax, penalty, or interest imposed by
Tax Code, Title 2, State Taxation, only if the taxpayer proved by a
preponderance of evidence that:
(1)
collection of the total amount due would make the taxpayer insolvent and the
taxpayer has submitted all financial records including income tax reports and
an inventory of all property owned, wherever located; or
(2) the taxpayer has no property that may be
seized by the courts of this or another state or the value of the taxpayer's
property is less than the total amount due and the amount of debts against the
property; and the taxpayer:
(A) is
insolvent;
(B) is in liquidation;
or
(C) has ceased to do
business.
(c)
An insolvency settlement proposal must be submitted in a redetermination
proceeding after a hearing number has been assigned and before a notice of
hearing has been issued.
(d) The
insolvency settlement proposal must specify the basis of eligibility for an
insolvency settlement and propose specific settlement terms, including the
total amount to be paid and the terms of any payment plan.
(e) The insolvency settlement proposal must
include copies of the following documents, which will be treated as
confidential taxpayer information pursuant to Tax Code, §
111.006:
(1) all federal income tax returns from the
year immediately prior to the date of assessment to the most recent federal
income tax return;
(2) financial
statements from the year immediately prior to the date of assessment to the
year of the most recent federal income tax return, and year-to-date financial
statements for the period following the taxpayer's most recent federal income
tax return;
(3) bank statements for
the six months immediately prior to the date of the insolvency settlement
request; and
(4) documentation of
assets (including inventory of all property owned, wherever located),
liabilities, ongoing financial obligations, and proof of any claimed
insolvency, liquidation, or business cessation.
(f) If the comptroller does not accept a
taxpayer's insolvency settlement proposal, the taxpayer may request that the
comptroller refer the matter to SOAH. The comptroller will refer to SOAH only
factual disputes regarding whether the taxpayer met the insolvency requirements
stated in subsection (b) of this section, whether the settlement request met
the specificity of offer requirements of subsection (d) of this section, and
whether the settlement request met the documentation requirements of subsection
(e) of this section. The comptroller will not include the amount, payment
schedule, or other terms of a proposed settlement agreement in a Notice of
Hearing. The parties retain discretion to reach agreement on the specific terms
of a proposed settlement agreement, and discretion to decline to enter into a
proposed settlement agreement, notwithstanding any recommendations on
settlement contained in a proposal for decision.
(g) The comptroller may consider all relevant
factors in determining whether to enter into an insolvency settlement
agreement, including but not limited to:
(1)
whether an additional penalty has been assessed under Tax Code, §
111.061(b);
(2) whether the taxpayer is liable for
outstanding amounts in other periods or in other taxes;
(3) whether the taxpayer has complied with
the terms of previous resolution agreements;
(4) whether the assessment includes tax
collected but not remitted;
(5)
whether the settlement may hinder collection of the amounts owed from other
parties who may also be liable for the amounts owed pursuant to Tax Code,
§§
111.016,
111.0611,
111.020,
111.024, and
171.255, or other
law;
(6) whether the taxpayer is
out of business;
(7) whether the
taxpayer has started a new business; and
(8) whether the taxpayer has previously
entered into an insolvency settlement.
Notes
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