200811284H



SOAH DOCKET NO. 304-07-1914-26
CPA HEARING NO. 47,761

RE: **************
TAXPAYER NO.: **************
AUDIT OFFICE: **************
AUDIT PERIOD: January 1, 1999 THROUGH December 31, 2003

Sales Tax/RFD

BEFORE THE COMPTROLLER 
OF PUBLIC ACCOUNTS 
OF THE STATE OF TEXAS

SUSAN COMBS
Texas Comptroller of Public Accounts

STANLEY COPPINGER
Representing Tax Division

**************
Representing Petitioner


COMPTROLLER’S DECISION

************** (Petitioner), requested a refund of the sales tax assessed 
against it by the Texas Comptroller of Public Accounts (TCPA) on the purchase 
of an airplane, and requested a hearing on that request. The Staff of the TCPA 
(Staff) responded that the refund request should be denied. The Administrative 
Law Judge (ALJ) recommends that the refund request be denied.

I. JURISDICTION, NOTICE, AND PROCEDURAL HISTORY 

There are no contested issues of notice, jurisdiction, or venue in this 
proceeding. Therefore, these matters are addressed in the findings of fact and 
conclusions of law without further discussion here. 

On November 30, 2004, the TCPA issued to Petitioner a Notification of Audit 
Results. On July 29, 2005, the TCPA issued Decision No. 45,775, in which the 
reversal of a refund that was scheduled in the audit was not contested. 
Petitioner paid the assessment, and on February 21, 2006, Petitioner requested 
a refund in the amount of the reversed item. In that refund request, Petitioner 
raised one contention.

On March 1, 2007, Staff issued a Notice of Filing [ENDNOTE: (1)] referring this 
case to the State Office of Administrative Hearings (SOAH) for hearing on 
written submission. On March 6, 2007, the ALJ issued a Scheduling Order setting 
the record closing date for March 29, 2007. The record closed on that date.

II. REASONS FOR DECISION

A. Contention

Petitioner contends that the purchase of the airplane qualified as an 
occasional sale and, therefore, was exempt from sales tax.

B. Legal Standards

Tax Code 151.051 (Code) imposes a state sales tax on the sale of a taxable item 
in this state. Code 151.010 includes tangible personal property in the 
definition of “taxable item.” Code 151.304(b)(2) exempts from sales tax the 
“sale of the entire operating assets of a business or a separate division, 
branch, or identifiable segment of a business.” Code 111.104(a) provides that 
the TCPA can refund tax that is found to have been “unlawfully or erroneously 
collected.”

C. Facts Established by Documentary Evidence [ENDNOTE: (2)]

Petitioner rents equipment. Petitioner was audited for sales tax compliance for 
the period of January 1, 1999, through December 31, 2003. The TCPA issued a 
Notification of Audit Results on November 30, 2004, in the amount of 
$**************, including tax and interest. Exam 1 of the audit was the 
reversal of the refund of sales tax paid by Petitioner on the purchase of a 
1996 Cessna airplane. On July 29, 2005, Comptroller Decision No. 45,775 was 
issued on the agreement of the parties amending the liability to 
$**************, based on a waiver of penalty and partial waiver of interest. 
Petitioner paid the revised assessment, and then filed its refund claim for the 
reversed refund amount of $************** sales tax on the purchase price of 
$**************.

************** (COMPANY A) brokered the sale of the Cessna by ************** 
(COMPANY B) to Petitioner. However, the December 3, 1999, aircraft bill of sale 
from COMPANY B showed COMPANY A as the purchaser. On that same date, COMPANY A 
executed an aircraft bill of sale to Petitioner. COMPANY A did not register the 
airplane and was never in possession of it. After being contacted by the 
Business Activity Research Team (BART) of the TCPA on August 2, 2000, 
Petitioner paid sales tax on the purchase of the Cessna based on a sales price 
of $**************. On August 1, 2001, Petitioner filed a refund claim for the 
sales tax paid on the purchase of the Cessna, and included as support thereof 
an Affidavit of Occasional Sale from COMPANY B dated March 30, 2001, certifying 
that the sale of the Cessna consisted of the entire operating assets of a 
separate division, branch, or identifiable segment of a business. On August 6, 
2001, based on the COMPANY B affidavit, the refund was granted. 

D. Analysis

The sale of an airplane through a broker was the subject of Comptroller 
Decision No. 36,323 (1997). In that case, working through two brokers, a party 
purchased an airplane from a fourth entity. Three separate bills of sale were 
executed, from the seller to one broker, from that broker to the other broker, 
and from the second broker to the purchaser. The Decision held that, whatever 
the reason for the three separate bills of sale, because the bill of sale to 
the purchaser was signed by the broker, not the original seller, the purchaser 
bought the airplane from the broker. Because the broker was in the business of 
buying and selling airplanes, the purchase did not qualify as an “occasional 
sale” under Code 151.304. 

Petitioner argues that Decision No. 36,323 reflects “tunnel vision” and is not 
a true reflection of the transaction. However, Petitioner provided no 
documentation to show that the payment made by Petitioner for the airplane was 
made to COMPANY B rather than to COMPANY A, or even that COMPANY A merely 
served as a pass-through of the payment. Therefore, the documented seller to 
Petitioner is COMPANY A, not COMPANY B.

III. CONCLUSION

Because the documented seller was COMPANY A, the purchase of the airplane by 
Petitioner does not qualify as an “occasional sale.” As a result, the refund 
claim should be denied.

IV. FINDINGS OF FACT

1. ************** (Petitioner) was audited for sales tax compliance for the 
period of January 1, 1999, through December 31, 2003. Exam 1 of the audit 
reversed the refund of sales tax paid by Petitioner on the purchase of a 1996 
Cessna airplane. 

2. On February 21, 2006, Petitioner filed a refund claim in the amount of 
$************** for the sales tax it paid after the reversal of the refund. 

3. On March 1, 2007, the Texas Comptroller of Public Accounts (TCPA) issued a 
Notice of Filing of this case before the State Office of Administrative 
Hearings (SOAH) for a written submission hearing. Pursuant to a Scheduling 
Order issued by the Administrative Law Judge on March 6, 2007, the record 
closed on March 29, 2007.

4. The Notice of hearing contained a statement of the time, place, and nature 
of the hearing; a statement of the legal authority and jurisdiction under which 
the hearing was to be held; a reference to the particular sections of the 
statutes and rules involved; and a short, plain statement of the matters 
asserted.

5. Petitioner purchased a 1996 Cessna airplane from ************** (COMPANY A) 
on December 3, 1999. COMPANY A is in the business of buying and selling 
airplanes. 

V. CONCLUSIONS OF LAW

1. The Comptroller of Public Accounts of the State of Texas had jurisdiction of 
this matter under TEX. TAX CODE ANN. chs. 111 and 151. 

2. The State Office of Administrative Hearings has jurisdiction over all 
matters relating to conducting a hearing in this proceeding, including the 
preparation of a proposal for decision with findings of fact and conclusions of 
law, pursuant to TEX. GOV’T CODE ANN. 2003.

3. Petitioner received proper and timely notice of the proceedings and hearing, 
pursuant to Tex. Gov’t Code Ann. 2001.051 and 2001.052.

4. The sale of an airplane is the taxable sale of tangible personal property 
pursuant to TEX. TAX CODE ANN. 151.051. 

5. The sale of an airplane by a business that buys and sells airplanes does not 
qualify as an “occasional sale” pursuant to TEX. TAX CODE ANN. 151.304(b)(2). 

6. Based on the foregoing Findings of Fact and Conclusions of Law. Petitioner’s 
refund claim should be denied. 


Hearing No. 47,761

ORDER OF THE COMPTROLLER

On April 6, 2007, the State Office of Administrative Hearings’ (SOAH) 
Administrative Law Judge, Roy G. Scudday, issued a Proposal for Decision in the 
above referenced matter. The parties were given fifteen days from the date of 
the Decision to file exceptions with SOAH. No exceptions were filed, and the 
Comptroller has determined that the Administrative Law Judge’s Proposal for 
Decision should be adopted as written. 

The above decision is approved and adopted in all respects. This decision 
becomes final twenty days after the date Claimant receives notice of this 
decision. If either party desires a rehearing, that party must file a Motion 
for Rehearing, which must state the grounds for rehearing, no later than twenty 
days after the date Claimant receives notice of this decision. Notice of this 
decision is presumed to occur on the third day after the date of this decision.

Signed on this 12th day of November 2008.


SUSAN COMBS
Texas Comptroller of Public Accounts

by: Martin A. Hubert
Deputy Comptroller


ENDNOTE(S):

(1) The Notice of Filing is the same as a Notice of Hearing.

(2) The facts are not in dispute.  These factual matters are taken from the 
Audit, Audit Plan, Refund Claim, Position Letter, and Response to Reply.



ACCESSION NUMBER: 200811284H
SUPERSEDED: N
DOCUMENT TYPE: H
DATE: 11/12/2008
TAX TYPE: SALES