200910517H



SOAH DOCKET NO. 304-09-5249.26
CPA HEARING NO. 101,289

RE: **************
TAXPAYER NO.: **************
AUDIT OFFICE: Sales Tax Refunds Verification **************
AUDIT PERIOD: December 1, 2007 THROUGH December 31, 2007

Limited Sales, Excise, And Use Tax/RFD

BEFORE THE COMPTROLLER 
OF PUBLIC ACCOUNTS 
OF THE STATE OF TEXAS

SUSAN COMBS
Texas Comptroller of Public Accounts

DEANNE Z. CUMMINGS-SCOTT
Representing Tax Division

**************
Representing Claimant



COMPTROLLER’S DECISION

************** (“Claimant”) appeals the denial of her sales tax refund claim by 
the Texas Comptroller of Public Accounts (“Comptroller”).  Claimant contends 
she is entitled to a refund of taxes she paid on the purchase of an all-terrain 
vehicle (“ATV”).  Comptroller Staff (“Staff”) contends Claimant does not 
qualify for the agriculture exemption she seeks to utilize, because she does 
not sell an agricultural product in the regular course of business.  In his 
proposal for decision the Administrative Law Judge (“ALJ”) recommends the 
denial of refund be upheld.

I.  PROCEDURAL HISTORY, NOTICE & JURISDICTION

The hearing convened on August 4, 2009, before ALJ Victor John Simonds at the 
William P. Clements Building, 300 West 15th Street, Austin, Texas.  Petitioner 
appeared and was represented by **************.  Staff appeared and was 
represented by Assistant General Counsel DeAnne Cummings-Scott.  The ALJ closed 
the record at the conclusion of the hearing.

There are no issues of notice or jurisdiction in this proceeding.  Therefore, 
these matters are set out in the Findings of Fact and Conclusions of Law 
without further discussion here.

II.  REASONS FOR DECISION

A. Facts Demonstrated by Evidence & Issue Presented

From time to time non-profit and governmental organizations are forced to seize 
abused horses.  On occasion the animals are turned over to responsible 
individuals.  Claimant is such a person.  She has several of these previously 
abused horses living on a 25-acre tract of land she owns in CITY, Texas.  
Claimant’s use of the land allows her to qualify for an agricultural appraisal 
by the ************** County Appraisal District.

On December 15, 2007, Claimant purchased a new Yamaha Rhino ATV.  The 
four-wheel-drive vehicle can carry up to 400 pounds in a rear dump bed, and has 
a towing capacity of over 1,200 pounds.  Claimant uses the vehicle exclusively 
to help her complete various tasks as she cares for the horses.  Claimant 
prefers using the ATV in lieu of her tractor because it requires less physical 
strength to operate, and reduces her “carbon footprint.”  The ATV’s purchase 
price included $************** in sales tax.

On February 20, 2008, Claimant wrote to the Comptroller. [ENDNOTE: (1)] 
Comptroller Staff in the Revenue Accounting Division wrote to Claimant and 
stated that her correspondence could not be considered a refund claim because, 
though it alleged an overpayment of sales tax, it failed to state fully and in 
detail each reason or ground on which the claim was based. [ENDNOTE: (2)] 
Claimant responded several days later with a letter that explained that she had 
purchased an ATV that was used on her 25-acre tract of land. [ENDNOTE: (3)] She 
also provided an End User Signed Statement for Purchasing Tax-Free Dyed Diesel 
Fuel, and the seller’s assignment of right to refund. [ENDNOTE: (4)] 
Approximately three weeks later, the Revenue Accounting Division denied 
Claimant’s refund because she was not eligible for the exemption for 
agricultural items.  Claimant timely asked for a refund hearing. 

On July 14, 2009, the matter was referred to the State Office of Administrative 
Hearings.  Claimant contends she erroneously paid tax on the ATV purchase 
because the vehicle is used exclusively to help her complete various tasks 
related to caring for abused horses living on her 25-acre tract of land.  
Claimant also contends the Comptroller should grant the refund because it has 
allowed her to reduce her carbon footprint. [ENDNOTE: (5)]

B. Authorities and Analysis

A sales tax is imposed on each sale of a taxable item in this state. [ENDNOTE: 
(6)] A Yamaha ATV is tangible personal property, and its sale is taxable, 
unless an exemption applies. [ENDNOTE: (7)] If tax is paid, but not due, then 
any person, his attorney, assignee, executor, or administrator can request a 
refund of tax that the person remitted to the state. [ENDNOTE: (8)] For 
example, the Tax Code provides an exemption for machinery and equipment used or 
employed on a farm or ranch in the building or maintaining of roads or water 
facilities or in the production of: food for human consumption; grass; feed for 
animal life; or other agricultural products to be sold in the regular course of 
business. [ENDNOTE: (9)]

The work Claimant does to help abused horses is admirable, and if Claimant is 
reducing her carbon footprint by using the ATV instead of her tractor, then she 
is to be commended for that as well.  However, the Comptroller may only refund 
tax if the tax was paid in error. [ENDNOTE: (10)]

Since Claimant is contending tax was paid in error because she is entitled to 
an exemption, she is required to prove she is eligible for the claimed 
exemption by clear and convincing evidence. [ENDNOTE: (11)] This is a rather 
stringent burden, and not easily attained. As stated by the Texas Supreme 
Court, statutory exemptions from taxation are subject to strict construction 
since they are the antithesis of equality and uniformity and because they place 
a greater burden on other taxpaying businesses and individuals. [ENDNOTE: (12)] 
An exemption cannot be raised by implication, but must affirmatively appear, 
and all doubts are resolved in favor of the taxing authority and against 
Claimant.  Simply stated, the burden of proof is on the Claimant to clearly 
show that it comes within the statutory exemption. [ENDNOTE: (13)]

Claimant noted that her land is designated by the local appraisal district for 
special agricultural appraisal. [ENDNOTE: (14)] The Property Code defines 
“agricultural use” to include producing crops for animal feed or raising or 
keeping livestock, provided the land is not used for a residential purpose or a 
purpose inconsistent with agricultural use.  Claimant’s land is used to keep 
horses and produce grass for feed, which fits the Property Code definition.  
Therefore, the land is entitled to an agricultural appraisal.  But the sales 
tax exemption at issue is not triggered by qualifying for the special 
appraisal.

The Tax Code defines “farm or ranch” to include one or more tracts of land 
used, in whole or in part, in the production of crops, livestock, or other 
agricultural products held for sale in the regular course of business. 
[ENDNOTE: (15)] Longstanding Comptroller policy has been that items of 
equipment that are used exclusively on a ranch in the production of horses held 
for sale in the regular course of business or used on mares or stallions used 
as breeding stock is exempt. [ENDNOTE: (16)] However, equipment used at horse 
shows or other non-ranch locations (such as a veterinarians’ office) will not 
qualify for exemption. [ENDNOTE: (17)] For example, stall mats are exempt when 
exclusively used on a farm or ranch in the production of horses held for sale 
in the regular course of business, or for mares or stallions used as breeding 
stock. [ENDNOTE: (18)] The mats are exempt because they are considered 
equipment used in the production of agricultural products, i.e., horses, for 
sale. The exemption is not available for mats used at a location other than a 
farm or ranch, such as a race track, or for a purpose other than producing 
horses for sale or maintaining breeding stock.

Claimant does not sell horses, or any other agricultural product.  Therefore, 
under the Comptroller’s policy, she does not fit within the requirements of the 
exemption she seeks to utilize.  A Comptroller policy that is a reasonable 
interpretation of the statute is entitled to deference. [ENDNOTE: (19)] The 
Comptroller’s interpretation of the agricultural machine and equipment 
exemption is reasonable, because the Legislature repeats the language “sold in 
the regular course of business” throughout the exemption, which indicates its 
intent was to establish an exemption for agricultural businesses.  Though 
Claimant husbands horses, there is no evidence she sells any agricultural 
product.  Therefore, Staff’s denial of Claimant’s refund claim should be 
upheld.

III.  FINDINGS OF FACT

1. On March 28, 2009, ************** (“Claimant”) filed a claim for a refund of 
sales tax that she asserts was erroneously paid.

2. The refund claim was denied by the Texas Comptroller of Public Accounts 
(“Comptroller”).

3. Claimant timely requested a hearing.

4. On July 14, 2009, the case was referred to the State Office of 
Administrative Hearings for a proposal for decision, and Staff issued a Notice 
of Hearing to Claimant.

5. 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.

6. The hearing convened August 4, 2009, before Administrative Law Judge Victor 
John Simonds, at the William P. Clements Building, 300 West 15th Street, 
Austin, Texas. Staff appeared and was represented by Assistant General Counsel 
De’Anne Cummings-Scott.  Petitioner appeared and was represented by attorney 
**************.

7. The record closed at the conclusion of the hearing.

8. On December 15, 2007, Claimant purchased a Yamaha Rhino all-terrain vehicle 
(“ATV”).  The purchase price included $************** in sales tax.

9. Claimant obtained an assignment of right to refund from the ATV seller.

10. Claimant uses the ATV exclusively to help her complete various tasks 
related to caring for horses living on a 25-acre tract of land she owns.

11. Claimant does not sell horses, or any other agricultural product.

IV. CONCLUSIONS OF LAW

1. The Comptroller has jurisdiction over this matter pursuant to TEX. TAX CODE 
ch. 111.

2. The State Office of Administrative Hearings has jurisdiction over matters 
related to the hearing in this matter, including the authority to issue a 
proposal for decision with findings of fact and conclusions of law pursuant to 
TEX. GOV’T CODE ch. 2003.

3. The Comptroller provided proper and timely notice of the hearing pursuant to 
TEX. GOV’T CODE ch. 2001.

4. Any person, his attorney, assignee, executor, or administrator may request a 
refund of sales tax that the person remitted to the state if the tax was not 
due.  TEX. TAX CODE Section 111.104.

5. Items of equipment used exclusively on a ranch in the production of horses 
held for sale in the regular course of business are exempt.  TEX. TAX CODE 
Section 151.316(a)(7).  See also State Tax Automated Research Accession No. 
9903288L, March 29, 1999.

6. Claimant’s ATV purchase was not exempt from sales tax.

7. Based upon the above Findings of Fact and Conclusions of Law, Staff’s denial 
of Claimant’s refund should be upheld.


Hearing No. 101,289

ORDER OF THE COMPTROLLER

On August 6, 2009, the State Office of Administrative Hearings’ (SOAH) 
Administrative Law Judge, Victor John Simonds, 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, except for minor changes to correct typographical or clerical 
errors, 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 21st day of October 2009.


SUSAN COMBS
Texas Comptroller of Public Accounts

by: Martin A. Hubert
Deputy Comptroller


ENDNOTE(S):

1. Claimant’s February 20, 2008 letter is not in evidence.
2. Refund Accounting Division letter, March 25, 2008; Claimant Oral Hearing 
Exhibit No. 13.
3. Claimant letter, March 28, 2009; Claimant Oral Hearing Exhibit No. 12.
4. Claimant’s Oral Hearing Exhibit No. 11.
5. Claimant also states that it has taken far too long to reach a resolution in 
this matter, a fact Staff acknowledged and apologized for at the hearing.
6. TEX. TAX CODE Section 151.051.
7. TEX. TAX CODE Section 151.009.
8. TEX. TAX CODE Section 111.104.
9. TEX. TAX CODE Section 151.316(a)(7). See also 34 TEX. ADMIN. CODE Section 
3.296(a)(5).
10. TEX. TAX CODE Section 111.104.
11. 34 TEX. ADMIN. CODE Section 1.40(2)(A).
12. See Bullock v. National BancShares Corp., 584 S.W.2d 268 (Tex., 1979).
13. Id.
14. TEX. CONS’T Art. VIII, SECTION 1-d-1. See also TEX. PROP. TAX CODE Section 
23.51.
15. TEX. TAX CODE Section 151.316(c)(1).
16. State Tax Automated Research Accession No. 9903288L (March 29, 1999).
17. Id.
18. Id.
19. See, e.g., TEX. GOV’T CODE ANN. Section 311.023(6).




ACCESSION NUMBER: 200910517H
SUPERSEDED: N
DOCUMENT TYPE: H
DATE: 10/21/2009
TAX TYPE: SALES