34 Tex. Admin. Code § 3.325 - Refunds and Payments Under Protest
(a)
Requirements for refund claims.
(1) Refund
claims by non-permitted purchasers. A person who does not have a sales and use
tax permit and who has paid tax in error to a permitted seller may request a
refund only from the permitted seller to whom the tax was paid. The permitted
seller who refunds tax to a purchaser may claim a refund as provided by
paragraph (2) of this subsection. A permitted seller may assign its right to
refund to the purchaser, who may then request a refund directly from the
comptroller as provided by paragraph (4) of this subsection.
(2) Refund claims by permitted sellers and
third party assignees and successors.
(A)
With one exception relating to the return transactions, no taxes, penalties, or
interest will be refunded by the comptroller to a permitted seller who has
collected tax in error from a purchaser until all such taxes are first refunded
or credited with the purchaser's written consent to the person from whom they
were collected. If the refund claim relates to a return of tangible personal
property, a permitted seller is entitled to claim a credit or request a refund
of sales tax equal to the amount of sales tax refunded to a purchaser when the
purchaser receives a full or partial refund of the sales price of a taxable
item that is returned to the seller.
(B) Before a permitted seller refunds to a
purchaser tax collected in error on the sale of a taxable item, the permitted
seller must obtain from the purchaser a properly completed exemption or resale
certificate that meets all the requirements of §
3.285
of this title (relating to Resale Certificate; Sales for Resale) and §
3.287 of
this title (relating to Exemption Certificates). The permitted seller must
retain the certificate to document the basis for the refund.
(C) After the permitted seller has refunded
or credited the tax to the account of the purchaser, the permitted seller may
then seek reimbursement from the comptroller in accordance with the procedures
that are outlined in paragraph (4) of this subsection or take a credit on a
future sales and use tax return filed by the seller in the amount refunded or
credited to the account of the purchaser.
(D) Refunds on exports. See §
3.323 of this
title (relating to Imports and Exports) for information about amounts a seller
can refund on taxable items that are exported by a purchaser.
(E) A permitted seller's right to a refund
may be assigned to a third party such as a creditor, settlement trustee, or
successor entity. The comptroller will grant or deny a refund claimed by a
third party assignee on the same basis as if it had been claimed by the
original seller. The third party assignee must comply with all requirements of
this section when filing any refund claim, including the requirement to refund
or credit tax paid in error to the purchaser in accordance with subparagraph
(C) of this paragraph.
(3) Refund claims by permitted purchasers.
(A) How to file a refund claim. A permitted
purchaser may amend a return for the period in which an overpayment was made,
file a refund claim with the comptroller according to the requirements of
paragraph (4) of this subsection, or take a credit on a future sales and use
tax return filed by the purchaser for taxes paid in error to a permitted
seller. The permitted purchaser must have been permitted at the time the tax
paid in error was due and payable in order to claim a refund directly from the
comptroller, amend a return for the period in which an overpayment was made, or
to take a credit on a future sales and use tax return. If the permitted
purchaser was not permitted at the time the tax paid in error was due and
payable, the permitted purchaser must be assigned the right to refund by the
permitted seller and must file a refund claim with the comptroller for the
assigned taxes that meets the requirements in paragraph (4) of this
subsection.
(B) Sample and
projection method of calculating refund claims. A permitted purchaser who paid
tax in error to a permitted seller may compute the amount of overpayment by use
of a projection based on a sampling of transactions and on a method that
complies with generally accepted sampling methods as approved by the
comptroller. The purchaser must have been permitted for the entire period
included in the projection. The method by which the projection and computation
were performed must be retained and be made available upon request of the
comptroller.
(C) Credits.
(i) Reports and documentation. A permitted
purchaser who paid tax in error to a permitted seller and who takes credits on
tax returns is required to report the total amount of tax credit being taken
and the earliest date of the tax paid in error on a supplemental sales tax
report prescribed by the comptroller. The permitted purchaser must retain, for
the period required in Tax Code, Chapter 111, all documentation that is
necessary to support the credit claimed.
(ii) Credits allowed on certain purchases.
See §
3.338
of this title (relating to Multistate Tax Credits and Allowance of Credit for
Tax Paid to Suppliers) for additional rules about credits that can be claimed
by permitted purchasers.
(4) A person who requests a refund from the
comptroller must:
(A) submit a claim in
writing that states fully and in detail each reason or ground on which the
claim is founded;
(B) identify the
period during which the claimed overpayment was made;
(C) include, at a minimum, each of the
following about each transaction upon which a refund is requested:
(i) purchaser or seller's name, as
appropriate;
(ii) invoice number,
if applicable;
(iii) date of
transaction;
(iv) description of
the item(s) purchased or sold;
(v)
specific reason for the refund, such as applicable statutory
authority;
(vi) purchase or sale
amount subject to refund;
(vii)
total amount of tax refund requested;
(viii) identification of all local
jurisdictions to which tax was remitted; and
(ix) if requesting a refund for taxes paid in
error to a permitted seller, the seller's name, address and sales tax permit
number or information that allows the comptroller to identify the seller's
sales tax permit number;
(D) submit the claim within the applicable
limitations period as provided by subsection (b) of this section; and
(E) submit supporting documentation to verify
any refund claimed or credit taken, such as copies of invoices, cancelled
checks, and executed contracts. If the supporting documentation cannot be
easily mailed or otherwise easily submitted to the agency, the refund claim
must include a statement that all supporting documentation necessary to verify
the claim will be made available to the comptroller upon request.
(b) Statute of
limitations for refund claims.
(1) Unless
otherwise indicated by this section, a claim for refund must be made within
four years from the date on which the tax was due and payable as provided by
Tax Code, §
151.401.
(2) A claim for refund for tax paid pursuant
to a deficiency determination must be made by the later of:
(A) four years from the date on which the tax
was due and payable; or
(B) six
months after the date on which the deficiency determination for the periods
becomes final, and is subject to the restriction imposed by paragraph (3) of
this subsection.
(3) A
refund claim filed within six months after the date on which a deficiency
determination becomes final is within the limitations period for all items
included in the deficiency determination. A refund claim for all other items is
subject to the limitations period in paragraph (1) of this
subsection.
(4) Extension of
limitations period. Before the expiration of the statute of limitations, the
comptroller and a taxpayer may agree in writing to extend the limitation period
in accordance with Tax Code, §
111.203.
An extension applies only to the periods specifically mentioned in the
agreement and no single extension agreement may be for a period that exceeds 24
months from the date of the expiration of the limitations period being
extended. Any refund request pertaining to periods for which limitations have
been extended must be made prior to the expiration date of the agreement.
Following expiration of the agreement, the statute of limitations applies to
subsequent refund requests as if no extension had been authorized.
(5) A redetermination or refund proceeding
does not toll the statute of limitations, except for the issues
contested.
(6) Failure to file a
claim within the limitations prescribed by this section constitutes a waiver of
any demand against the state on account of the overpayment.
(7) The informal review of a refund claim by
the comptroller is not a hearing or contested case and does not toll the
limitation period for any subsequent claim for refund on the same period and
type of tax for which the claim was fully or partially denied.
(8) For more information about the statute of
limitations, see §
3.339 of
this title (relating to Statute of Limitations).
(9) Limitations on refunds and credits
claimed by organizations exempt from sales and use tax under Tax Code, §
151.310.
Organizations that are exempt from sales and use tax under Tax Code, §
151.310
should see §
3.322 of
this title (relating to Exempt Organizations) for information about limitations
on refunds and credits that may be claimed depending on whether the
organization qualifies for exemption either before or on or after September 1,
2009.
(10) Requirements to toll the
statute of limitations.
(A) Subject to the
other paragraphs of this subsection regarding the statute of limitations, a
refund claim that is filed with the comptroller will toll the statute of
limitations if the following requirements are met:
(i) the claim states fully and in detail each
reason or ground on which the claim is founded, as required by subsection
(a)(4)(A) of this section;
(ii) the
claim identifies the period during which the claimed overpayment was made, as
required by subsection (a)(4)(B) of this section;
(iii) if the claim is being filed by a
non-permitted person who is an assignee of or successor to a refund that may be
owed, the person submits with the claim for refund the assignment of right to
refund; and
(iv) if a person other
than the person to whom the refund is due is submitting the claim for refund, a
power of attorney is submitted with the claim.
(B) If the refund claim meets the
requirements of subparagraph (A) of this paragraph, but does not meet the other
requirements under subsection (a)(4) of this section, the claim will be denied
and the person may request a hearing as provided by subsection (e) of this
section.
(C) If a person does not
meet the requirements of subparagraph (A) of this paragraph, the statute of
limitations will not be tolled.
(c) Interest on Refunds.
(1) Eligibility for Interest. Interest is
earned on refunds except in the following situations:
(A) a refund claim for a period for which a
report is due before January 1, 2000;
(B) credits taken by a taxpayer on a
return;
(C) tax paid on an account
that is later determined to be uncollectable and written off as a bad debt for
federal tax purposes. See §
3.302
of this title (relating to Accounting Methods, Credit Sales, Bad Debt
Deductions, Repossessions, Interest on Sales Tax, and Trade-Ins); and
(D) as otherwise determined by the
comptroller.
(2)
Interest rates.
(A) Refunds claimed before
September 1, 2005. The interest rate for a refund that is claimed before
September 1, 2005 and granted for a period for which a report is due after
December 31, 1999 is the rate set in Tax Code, §
111.060,
as provided in Tax Code, §
111.064.
(B) Refunds claimed on or after September 1,
2005. The interest rate for a refund that is claimed on or after September 1,
2005 and granted for a period for which a report is due after December 31, 1999
is the lesser of the annual rate of interest earned on deposits in the state
treasury during December of the previous calendar year as determined by the
comptroller or the rate set in Tax Code, §
111.060,
as provided in Tax Code, §
111.064.
(3) Calculation of Interest.
Interest accrues on refund claims identified in paragraph (1) of this
subsection at a rate determined by paragraph (2) of this subsection on the net
amount that is found to be erroneously paid:
(A) beginning on the later of 60 days after
the date of payment or the due date of the tax report; and
(B) ending, as determined by the comptroller,
on either:
(i) the date of allowance of
credit that results from either a final decision that the comptroller has
issued or from an audit; or
(ii) a
date that is not more than 10 days before the date of the refund
warrant.
(d) Determining when a refund is claimed.
(1) The postmark date or its equivalent on a
refund request determines when a refund is claimed.
(2) If refund claims or credits are pending
with the comptroller and a person makes additional claims for refund, the date
of each claim controls whether interest is due and the amount applicable to
each separate claim.
(e)
Denial of refund claim.
(1) The comptroller
will notify the claimant if the comptroller determines that a refund claim
cannot be granted in part or in full and will also notify the claimant which
requirements of subsection (a)(4) of this section were not met. The claimant
may then request a refund hearing within 30 days of the denial.
(2) A person may not refile a refund claim
for the same transaction or item, tax type, period, and ground or reason that
was previously denied by the comptroller.
(3) After receiving a timely request for a
refund hearing, the comptroller may issue a written demand notice requesting
that all documentation to enable the comptroller to verify the claim be
produced within 180 days from the date of the demand notice. A person may not
introduce into evidence at the hearing any documents that were not timely
produced as requested by the demand notice. This limitation does not apply to a
judicial proceeding filed in accordance with Tax Code, Chapter 112. The ability
of the comptroller to demand documentation once a claim for a refund hearing is
requested does not eliminate the requirement that persons provide documentation
under subsection (a)(4)(E) of this section when the refund is first
claimed.
(f) Payments
under protest. A person who intends to file suit under Tax Code, Chapter 112,
Subchapter B, must submit to the comptroller a letter of protest with the
payment of the tax that is the subject of the protest. For information about
payments under protest and electronic funds transfer payments, see §
3.9(h)
of this title (relating to Electronic Filing of Returns and Reports; Electronic
Transfer of Certain Payments by Certain Taxpayers). The letter of protest must
state fully and in detail every reason that the taxpayer contends that the
assessment is unlawful or unauthorized and must accompany the payment. If the
payment and letter of protest do not accompany one another, the payment will
not be deemed to have been made under protest. The comptroller will advise the
taxpayer of the amount of payment under protest that the comptroller has
received and the date of the payment.
Notes
State regulations are updated quarterly; we currently have two versions available. Below is a comparison between our most recent version and the prior quarterly release. More comparison features will be added as we have more versions to compare.
No prior version found.