Relating to certain tax and fee collection procedures and taxpayer suits.

89(R) SB 266 - Enrolled version - Bill Text

S.B. No. 266

AN ACT

relating to certain tax and fee collection procedures and taxpayer

suits.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 111.0041(c), Tax Code, is amended to

read as follows:

(c) A taxpayer shall 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 in an

administrative or judicial proceeding.
Sufficient

[
Contemporaneous
] records and supporting documentation appropriate

to the tax or fee may include[
, for example,
] invoices, vouchers,

checks, shipping records, contracts, or other equivalent records,

such as electronically stored images of such documents, reflecting

legal relationships and taxes collected or paid.

SECTION 2. Section 111.0081, Tax Code, is amended by

amending Subsection (c) and adding Subsection (d) to read as

follows:

(c) The amount of a determination made under this code is

due and payable 20 days after a comptroller's decision in a

redetermination hearing becomes final.
Except as provided by

Subsection (d), if
[
If
] the amount of the determination is not paid

within 20 days after the day the decision became final, a penalty of

10 percent of the amount of the determination, exclusive of

penalties and interest, shall be added.

(d)

The penalty provided by Subsection (c) is abated with

respect to the disputed amount that is the subject of a timely filed

suit under Subchapter E, Chapter 112. If the amount determined to

be due in a final judgment in the suit is not paid within 20 days

after the day the judgment became final, a penalty of 10 percent of

the amount due, exclusive of penalties and interest, shall be

added.

SECTION 3. Subchapter A, Chapter 111, Tax Code, is amended

by adding Section 111.0091 to read as follows:

Sec.

111.0091.

DISPUTING RESULTS OF MANAGED AUDITS: NOTICE

OF INTENT TO BYPASS REDETERMINATION PROCESS. (a) A person who

conducts a managed audit authorized by Section 151.0231 or 201.3021

may file with the comptroller a notice of intent to bypass the

redetermination process under Section 111.009. The notice of

intent must:

(1)

be filed on or before the 60th day after the date

the comptroller issues a letter notifying the person of the results

of the managed audit;

(2) be in writing;

(3)

assert the material facts and each specific legal

basis for disputing the results of the managed audit; and

(4)

specify the amounts of the disputed underpayments

or overpayments contained in the report of the managed audit

results.

(b)

A person who files a notice of intent under Subsection

(a) may bypass the redetermination process under Section 111.009

and bring a suit under Subchapter D, Chapter 112, if:

(1)

the person participated in a conference under

Subsection (c), in which case the suit must be filed on or before

the 60th day after the date the conference concludes or a later date

agreed to by the comptroller; or

(2)

the comptroller does not provide notice in the

time required by Subsection (d) that a conference is required, in

which case the suit must be filed on or before the 90th day after the

date the notice of intent was filed.

(c)

The comptroller may require a conference between a

person who files a notice of intent under Subsection (a) and a

designated officer or employee of the comptroller to clarify any

fact or legal issue in dispute regarding the results of the managed

audit and to discuss the availability of additional documentation

that may assist in resolving outstanding issues regarding the

managed audit. The person who filed the notice of intent may amend

a material fact or legal basis described by Subsection (a)(3)

following the conference if the comptroller agrees in writing to

the amendment.

(d)

If the comptroller requires a conference under

Subsection (c), the comptroller shall notify the person of the

conference requirement not later than the 30th day after the date

the notice of intent under Subsection (a) was filed. The notice of

the conference requirement must be in writing and include a date and

time for the conference. The conference date provided in the notice

must be not later than the 90th day after the date the notice of

intent was filed.

(e)

The person who filed the notice of intent under

Subsection (a) may request to reschedule the conference date

provided in the notice under Subsection (d). The comptroller shall

make a good faith effort to accommodate the request. If the

comptroller and the person who filed the notice of intent do not

agree on or before the 90th day after the date the notice of intent

was filed to a rescheduled date for the conference, the person may

on or before the 120th day after the date the notice of intent was

filed rescind the notice of intent and petition the comptroller for

a redetermination under Section 111.009.

(f)

Except as provided by Subsection (e), a person who files

a notice of intent under Subsection (a) waives the person's right to

a redetermination under Section 111.009.

SECTION 4. Section 112.052(d), Tax Code, is amended to read

as follows:

(d) A taxpayer shall produce
sufficient
[
contemporaneous
]

records and supporting documentation appropriate to the tax for the

transactions in question to substantiate and enable verification of

a taxpayer's claim relating to the amount of the tax, penalty, or

interest that has been assessed or collected or will be refunded, as

required by Section 111.0041.

SECTION 5. The heading to Subchapter D, Chapter 112, Tax

Code, is amended to read as follows:

SUBCHAPTER D. SUIT FOR TAX REFUND
OR TO DISPUTE RESULTS OF MANAGED

AUDIT

SECTION 6. Section 112.151(f), Tax Code, is amended to read

as follows:

(f) A taxpayer shall produce
sufficient
[
contemporaneous
]

records and supporting documentation appropriate to the tax or fee

for the transactions in question to substantiate and enable

verification of a taxpayer's claim relating to the amount of the

tax, penalty, or interest that has been assessed or collected or

will be refunded, as required by Section 111.0041.

SECTION 7. Subchapter D, Chapter 112, Tax Code, is amended

by adding Section 112.1511 to read as follows:

Sec.

112.1511.

SUIT TO DISPUTE RESULTS OF MANAGED AUDIT.

(a)

A person may sue the comptroller to dispute the results of a

managed audit conducted under Section 151.0231 or 201.3021 if the

person:

(1)

has been issued a letter by the comptroller

notifying the person of the results of the managed audit; and

(2)

is authorized to bring the suit under Section

111.0091(b).

(b)

The suit must be brought against both the comptroller

and the attorney general and must be filed in a district court.

(c)

The suit must be filed during the time provided by

Section 111.0091(b) or it is barred.

(d)

The amounts of the disputed underpayments or

overpayments contained in the report of the managed audit results

must be set out in the original petition.

A copy of the notice of

intent filed under Section 111.0091(a) must be attached to the

original petition filed with the court and to the copies of the

original petition served on the comptroller and the attorney

general.

(e) A person may not intervene in the suit.

(f)

A taxpayer shall produce sufficient records and

supporting documentation appropriate to the tax or fee for the

transactions in question to substantiate and enable verification of

a taxpayer's claim relating to the amount of the tax, penalty, or

interest to be assessed, collected, or refunded, as required by

Section 111.0041, including the amounts of the disputed

underpayments or overpayments contained in the report of the

managed audit results.

(g)

After the comptroller has been timely served in a suit

that complies with this section, the comptroller and the attorney

general:

(1)

are enjoined from collecting disputed

underpayments identified in Section 111.0091(a)(4) from the person

bringing the suit during the pendency of the suit; and

(2) are not enjoined from:

(A) asserting tax liens; or

(B)

as an alternative to asserting tax liens,

requiring the person to provide security:

(i)

in an amount sufficient to secure

payment of the entire disputed amount, including penalties and

accrued interest, that is the subject of the suit; and

(ii)

in the form of a cash deposit filed

with the comptroller or paid into the registry of the court, a

surety bond, a letter of credit, or another form of guarantee.

(h)

Damages may be awarded under Chapter 65, Civil Practice

and Remedies Code, if the court determines that all or part of the

enjoined collection amounts under Subsection (g) were disputed

solely for delay.

SECTION 8. Section 112.152, Tax Code, is amended to read as

follows:

Sec. 112.152. ISSUES IN SUIT. (a) The only issues that may

be raised in a suit under this subchapter are, as applicable, the:

(1) grounds of error contained in the motion for

rehearing; or

(2) material facts and legal bases contained in the

notice of intent filed under Section
111.0091(a) or
111.106(a).

(b) The suit applies only to a tax liability period

considered in the comptroller's decision or covered by the notice

of intent filed under Section
111.0091 or
111.106, as applicable.

SECTION 9. Section 112.201, Tax Code, is amended by

amending Subsection (c) and adding Subsections (c-1) and (c-2) to

read as follows:

(c) A person bringing a suit under this subchapter may pay

the disputed amounts as provided by Chapter 111. A disputed amount

that is not paid as provided by Chapter 111 and that is determined

to be due in a final judgment accrues penalties and interest as

provided by Chapter 111.

(c-1)
After the comptroller has been timely served in a suit

that complies with this subchapter, the comptroller and the

attorney general
:

(1)
are enjoined from collecting disputed amounts from

the person bringing the suit during the pendency of the suit
; and

(2)
[
but
] are not enjoined from
:

(A)
asserting tax liens
; or

(B)

as an alternative to asserting tax liens,

requiring the person to provide security:

(i)

in an amount sufficient to secure

payment of the entire disputed amount, including penalties and

accrued interest, that is the subject of the suit; and

(ii)

in the form of a cash deposit filed

with the comptroller or paid into the registry of the court, a

surety bond, a letter of credit, or another form of guarantee
.

(c-2)
Damages may be awarded under Chapter 65, Civil

Practice and Remedies Code, if the court determines that all or part

of the enjoined collection amounts
under Subsection (c-1)
were

disputed solely for delay.

SECTION 10. Section 112.202, Tax Code, is amended to read as

follows:

Sec. 112.202. RECORDS. A person shall produce, in

connection with a suit under this subchapter,
sufficient

[
contemporaneous
] records and supporting documentation appropriate

to the tax for the transactions in question to substantiate and

enable verification of the person's claim relating to the amount of

the tax, penalty, or interest that has been assessed or collected,

as required by Section 111.0041.

SECTION 11. Section 111.105(e), Tax Code, is repealed.

SECTION 12. This Act applies to a managed audit that is in

progress and an administrative or judicial proceeding that is

pending or filed on or after the effective date of this Act, without

regard to whether the taxes that are the subject of the managed

audit or proceeding were due before, on, or after that date.

SECTION 13. This Act takes effect immediately if it

receives a vote of two-thirds of all the members elected to each

house, as provided by Section 39, Article III, Texas Constitution.

If this Act does not receive the vote necessary for immediate

effect, this Act takes effect September 1, 2025.

______________________________

______________________________

President of the Senate

Speaker of the House

I hereby certify that S.B. No. 266 passed the Senate on

April 10, 2025, by the following vote: Yeas 30, Nays 0.

______________________________

Secretary of the Senate

I hereby certify that S.B. No. 266 passed the House on

May 10, 2025, by the following vote: Yeas 129, Nays 0, three

present not voting.

______________________________

Chief Clerk of the House

Approved:

______________________________

Date

______________________________

Governor