Texas Comptroller of Public Accounts STAR System
SOAH DOCKET NO. 304-09-4173.26
CPA HEARING NO. 102,508
TAXPAYER NO.: *************
AUDIT OFFICE: *************
AUDIT PERIOD: March 1, 1998 THROUGH July 31, 2007
Limited Sales, Excise, And Use Tax/RFD
BEFORE THE COMPTROLLER
OF PUBLIC ACCOUNTS
OF THE STATE OF TEXAS
Texas Comptroller of Public Accounts
STANLEY K. COPPINGER
Representing Tax Division
************* (Claimant) seeks from the Texas Comptroller of Public Accounts
(Comptroller) a refund of state and local sales tax that members of the class
paid on purchases made at LOCATION stores operated by ************* (COMPANY).
The class members received a cash rebate on their purchases from COMPANY, but
were not refunded the sales and use tax paid on the rebated portion of the
purchase price. Comptroller Staff (Staff) denied the refund claim primarily on
the grounds that Claimant lacked standing to file the refund claims for the
individual class members. Claimant appealed the denial. Staff rejected the
appeal and referred the matter to the State Office of Administrative Hearings
(SOAH). In his Proposal for Decision (PFD) the Administrative Law Judge (ALJ)
recommends that the denial be upheld.
I. PROCEDURAL HISTORY, NOTICE & JURISDICTION
The case was submitted for hearing based on the written submissions of the
parties. The notice of filing was issued by the Comptroller on May 12, 2009.
The Comptroller was represented by Assistant General Counsel Stanley Coppinger.
Claimant was represented by *************.
The ALJ initially closed the record on May 27, 2009, at the request of the
parties, who expressed a desire to expedite the issuance of a PFD, without the
need to submit any additional pleadings or evidence, beyond that already
included in the administrative record submitted by Staff. The parties waived
the statutory 20-day notice of hearing mandated by TEX. TAX CODE ANN. Section
111.009. The ALJ, however, subsequently discovered that exhibits referenced in
Claimant’s pleadings were missing or omitted from the administrative record.
The ALJ extended the record close date to June 1, 2009, to allow the parties to
either supplement the record and introduce the missing exhibits or elect to
have the hearing proceed without the missing or omitted exhibits. On June 1,
2009, Claimant submitted the missing or omitted exhibits.
There are no issues of notice or jurisdiction in this proceeding. Therefore,
those matters are set out in the Findings of Fact and Conclusions of Law
without further discussion here.
II. REASONS FOR DECISION
A. Background Facts and Issues Presented
COMPANY offered mail-in rebates to its customers on certain items sold in its
LOCATIONS or via the Internet or by telephonic order. Certain of these
customers filed for the advertised retailer rebate from COMPANY. The customers
received their cash rebates from COMPANY, but were not refunded the sales tax
paid on the rebated amount. A lawsuit was filed in 2002 against COMPANY,
seeking both individual relief and to certify a class. [ENDNOTE: (1)] The
district court dismissed the class action claims. An appeal was filed with the
Third Court of Appeals, which held that the appellants could compel an
assignment of a refund claim from the retailers. The district court
provisionally certified the class for purposes of assigning the refund claims,
and for representation of the individual refund claims of the class members.
On April 16, 2008, Claimant filed a single refund claim [ENDNOTE: (2)] on
behalf of the CLAIMANT, asserting that the refund is due for the sales tax that
was paid on the rebated portion of the purchase price that was not refunded by
COMPANY. [ENDNOTE: (3)] The Comptroller’s Audit Processing Section issued a
letter dated July 2, 2008, denying the refund claim primarily on the grounds
that Claimant did not have a perfected right to file the assessed claim and,
alternatively, on the grounds that, even if the claim is ultimately perfected,
the documentation provided is not adequate and some of the individual claims
are barred by the statute of limitations. [ENDNOTE: (4)] Claimant requested a
refund hearing and raised the following contentions:
1. Claimant contends that it has the authority to file the asserted claim and
a valid assignment in accordance with TEX. TAX CODE ANN. Section 111.104
because a district court order authorized Claimant’s representative to pursue
the class members’ refund claims with the Comptroller.
2. Claimant contends that the documentation is adequate because (1) it has
actually provided the documentation requested, (2) some of the requested
documentation is immaterial, or (3) it will present testimonial and additional
documentary evidence sufficient to document the claim to the satisfaction of an
independent fact finder.
3. Claimant contends that any class members whose claims arise more than four
years before a refund claim was filed are protected by the due process clauses
of the United States and Texas Constitutions, and complains that the
Comptroller failed to provide “a clear and certain remedy” for taxpayers facing
retailers unwilling to refund sales tax paid in error.
B. Evidence Presented
Staff offered a copy of the certified refund denial letter as well as the
pleadings filed by both parties with the Comptroller. Claimant submitted the
following: copies of petitions filed with and orders issued by the 53rd
District Court in Tara Levy v. OfficeMax, Inc; the CLAIMANT; the CLAIMANT
Assignment of Right to Refund; original and corrected affidavit of INDIVIDUAL
A, employed by COMPANY A., attorneys for COMPANY, attesting to the attached
data disks that contain data from the rebate fulfillment houses and COMPANY he
reformatted; affidavit of INDIVIDUAL B, attesting that, using a data disk
provided by COMPANY, he had prepared a series of subfiles regarding the covered
purchases made at the CLAIMANTS; affidavit of INDIVIDUAL C, attesting that,
using the data disks provided by INDIVIDUAL B, she prepared additional files
eliminating exempt taxpayers and adding taxpayer ID numbers; affidavit of
INDIVIDUAL D, an employee of COMPANY, attesting that he had compiled files
containing data regarding uncashed rebate checks that had been escheated and
uncashed checks that had not been escheated; affidavit of INDIVIDUAL E, an
employee of COMPANY, attesting to his examination of store location data and
his determination that purchases were made in Texas CLAIMANTS; affidavit of
INDIVIDUAL F, an employee of COMPANY B, that provides rebate fulfillment
services to COMPANY, attesting to the data maintained by COMPANY B regarding
the CLAIMANT rebate program; affidavit of INDIVIDUAL H, an employee of COMPANY
C, that provided rebate fulfillment services for COMPANY, attesting to the data
maintained by COMPANY C regarding the COMPANY rebate program; affidavit of
INDIVIDUAL G, an employee of COMPANY, attesting to the data provided to COMPANY
A.; affidavit of INDIVIDUAL J, an employee of COMPANY, attesting to data he
prepared regarding store numbers and store addresses; affidavit of INDIVIDUAL
K, an employee of COMPANY, attesting to mail-in rebate program information he
received from COMPANY C; and affidavit of INDIVIDUAL L, an
employee of COMPANY, attesting to mail-in rebate information she received from
COMPANY C and COMPANY B.
1. Standing and Statutory Authority
The Comptroller initially denied the refund claim on the grounds that the
settlement class lacked the authority to file the refund claim. [ENDNOTE: (5)]
Staff argues that, while there is authority to bring a class action suit for
tax paid under protest in district court under TEX. TAX CODE ANN. Section
112.055, there is no such authority for the Comptroller to grant a refund
directly to a class. Staff concedes that the Comptroller recognizes the
CLAIMANT, insofar as they are assignees of COMPANY. However, as assignees,
they have stepped into the shoes of COMPANY. Therefore, Staff argues, just as
COMPANY, in order to seek a refund, is required under TEX. ADMIN. CODE Section
3.325(b)(1)(B) to first show that it had refunded the tax to its customers, the
settlement class must also show that the refund had already been refunded to
the customers. Staff concludes with the assertion that in order to overcome
this requirement the class would have to acquire a power of attorney from each
and every member of the class for whom a refund is sought. Staff views the
power of attorney granted by the district court as limited to the individual
Claimant posits that it has the authority to seek the refund on behalf of the
members of the class because it has a valid assignment in accordance with TEX.
TAX CODE ANN. Section 111.104, a court order appointing Claimant’s
representative as counsel for the members of the class in pursuing their
individual claims for refund, and, the Third Court of Appeals decision holding
that Taxpayers may file a refund claim with the Comptroller once an assignment
has been procured from the retailers.
There is no statutory authority for a refund to be granted to a class, pursuant
to a class action. (Pursuant to Tax Code Section 111.104, the Comptroller
would consider an individual refund claim filed by a person who directly paid
the tax to the state, or a refund claim filed by an individual who has procured
an assignment of the right to file a refund claim, and who has met all
applicable statutory and rule requirements.) In Tax Code Chapter 112, the
Legislature provided taxpayers with a judicial remedy for taxation disputes.
In Subchapter B, Section 112.055, the Legislature authorized taxpayers to bring
class action lawsuits. Chapter 112, Subchapter B, specifically applies to
lawsuits concerning tax assessments, fees, penalty, and interest, which was
paid under protest. It does not apply to refunds. Judicial remedies for
refunds are provided for in Subchapter D of Tax Code Chapter 112. However,
unlike suits on tax assessments, the Legislature did not give taxpayers the
right to file class action refund claims in court. The Legislature has the
authority to establish the jurisdiction of the Texas court system, including
providing for whether class action lawsuits can be filed on various matters.
The Legislature did not provide a judicial remedy for class action lawsuits
concerning refund claims. Nor did the Legislature provide an administrative
remedy for class action refund claims. The lack of language authorizing such
suit indicates that the Texas Legislature, while explicitly granting and
recognizing such a right with regard to redeterminations, did not grant a
comparable right for class action refunds. Absent an explicit provision of
authority in Chapter 111, the lack of a right to seek redress in a court of law
in Chapter 112, as well as Tax Code Section 111.104(b) for administrative
remedies, can only mean that the Texas Legislature did not intend for the
Comptroller to have the authority to administer and grant class action refund
In Levy v. OfficeMax, Inc., 228 S.W.3d 846 (Tex. App. – Austin 2007), the Third
Court of Appeals concludes that the appellants (Tara Levy, et al.) may file a
refund claim with the Comptroller once they procure an assignment from the
retailers. When the court issued its opinion in Levy, the appellants were not
certified as a class. (The district court subsequently provisionally certified
the appellants as a class.) As such, the appellate court’s ruling does not
grant the certified class standing to file a refund claim with the Comptroller.
Having considered the arguments of Claimant and the Tax Division, along with
the applicable tax statutes, it is clear that Claimant does not have standing
to be granted a refund, and the Comptroller does not have the authority to
grant a refund to a class.
2. Refund Verification
The Comptroller has considerable discretion in requiring that the refund claim
be verified. Under 34 TAC Section 3.325(a)(4)(D) a person requesting a refund
from the Comptroller must “submit supporting documentation required by the
Comptroller.” Staff in its initial letter denying the refund claim, in
addition to finding that Claimant lacked standing, also dismissed the refund
claim on the grounds that the documentation provided was not adequate and
asserted that, at a minimum, the following information was required:
1. the customer’s name, address, city, state and zip code,
2. the store identification, address, city, state and zip code,
3. the original purchase date,
4. the rebate designation, amount and date,
5. rebate check and date rebate check cleared,
6. refund amount requested by transaction, and
7. breakdown of refund amounts by jurisdiction (i.e., state, city, MTA, etc.).
Claimant, in its submission dated July 31, 2008, responded to Staff’s
criticisms of the lack of adequate documentation, asserting that it had either
provided the requested documentation, that the documentation was not required,
or that it would provide the requested documentation. The response is fairly
detailed. Claimant contends that much of the information is contained in the
data disks and affidavits submitted into the record, such as the customer name
and full address (including city, state and zip code), the amounts of the
refunds, and the rebate amounts. Claimant states that it has provided the
store indentifying information where it is requesting a refund of the local
sales tax. Claimant promised, if necessary, to provide testimonial or
documentary evidence as to the local tax rates collected and remitted to the
Comptroller. Claimant also insists that the taxpayer identification number is
not required, because the identification number is not needed to determine
whether individual taxpayers owe money to the state. Claimant explains that it
is standing in the shoes of a taxpayer who, when it refunds the tax to its
customers, is not first required to determine whether the permitted customer
owes tax. Alternatively, Claimant offered to provide the taxpayer number in a
supplemental submission. Claimant also indicated it would provide documentary
and testimonial evidence that each assignee’s rebate check cleared.
Staff in its Position Letter again raised evidentiary and verification
objections but the Position Letter is not fully responsive to the answers and
contentions advanced in Claimant’s July 31st submission. For example, Staff
continues to insist that the information identifying the store location is
critical because the correct local tax amount is at issue, even though Claimant
has stated that its refund is limited to the state portion of the sales tax.
Staff also complains that Claimant makes the assumption that customers with a
Texas mailing address purchased the items in Texas.
Staff does raise new verification objections to Claimant’s documentation.
Staff contends that the data submitted by Claimant must be reconciled with
COMPANY’s books to verify that the refund sought had originally been reported
by COMPANY. Staff also asserts that the refund claim must be reduced by bad
debts taken by COMPANY and/or its third-party creditors. According to Staff,
the Comptroller has processed very large bad debt refunds on behalf of COMPANY
and, therefore, it would be appropriate that the percentage of bad debts
claimed should also reduce refund claims by that same percentage.
The Comptroller has long taken the position that a bad debt deduction, for an
account written off as worthless, may be claimed by only one entity. However,
if a retailer claims a bad debt deduction the assignee may not subsequently
claim a refund of the tax on the same transaction. State Tax Automated
Research (STAR) Accession Document No. 200106351L (June 1, 2001). Clearly, it
is necessary to reconcile the bad debt deductions claimed by COMPANY before
proceeding to process the refund claims on behalf of the CLAIMANT.
The parties’ positions on this contention are somewhat murky. Claimant elected
not to respond to the additional verification concerns raised by Staff in its
Position Letter. [ENDNOTE: (6)] The result is that the parties’ respective
positions on the documentation needed to verify the refund claims are
disjointed and disconnected, with neither party fully responding to the other’s
position. Consequently, it is not clear whether Staff accepted any of the
responses raised in Claimant’s submission of July 31, 2008, or whether Claimant
rejects the objections raised in Staff’s Position Letter. However, ultimately,
the burden rests on Claimant to prove that it is entitled to the refund claim
and that Staff erred in denying the refund claim. 34 TEX. ADMIN. CODE Section
1.40(2)(b). Claimant has failed to meet this burden. Claimant did not
indicate that it agreed that the bad debt deduction reconciliation was required
or that it would make available the information needed to carry out the
reconciliation. Claimant also failed to indicate whether it agreed that
COMPANY’s books had to be reviewed in order to verify that the refund sought
had actually been reported to the Comptroller. Similarly, Claimant has not
rejected Staff’s complaint that the documentation it provided did not
necessarily establish that the purchases were necessarily made in Texas stores.
In addition, Claimant, in its July 31, 2008, letter, stated that it would
submit the necessary documentary and testimonial evidence to establish the
rebate designation number, that the rebate checks cleared for each assignee,
and the local tax rates collected and remitted to the Comptroller. Claimant,
however, rather than submit the information, elected to truncate the proceeding
and expedite the issuance of a PFD.
The denial of Claimant’s refund claims should be affirmed due to its failure to
provide the documentation needed to verify the claims.
Statute of Limitations
Claimant states that, under the Comptroller’s policy of tolling limitations
only when a refund claim is filed, [ENDNOTE: (7)] many of the class members
will lose their claims for refund because the refund claim was not filed until
April 16, 2008. Claimant argues that this result is unfair and penalizes the
taxpayers. Claimant insists that the lawsuit originally filed in 2002 should
be treated as tantamount to filing a refund claim. Although the lawsuit
seeking refund claims was filed in 2002, it was not until 2008 that COMPANY
issued a refund assignment. Claimant complains that the long delay resulted
from the fact that the Tax Code failed to provide a “clear and certain remedy”
for unpermitted taxpayers. [ENDNOTE: (8)] According to Claimant, the Tax Code
does not make it clear whether an unpermitted taxpayer could sue a retailer to
force an assignment and also made no provision in the event a retailer failed
to provide an assignment. Thus, if the Comptroller adheres to her position and
the limitations are not tolled from when the lawsuit was originally filed in
2002, many of the assignees will lose their refund claims.
The statute of limitations governing the timeliness of refund claims is fairly
straightforward. Unless the limitations period is otherwise tolled, a taxpayer
may request a refund during the same four-year period the Comptroller has to
make an assessment. TEX. TAX CODE ANN. Section 111.107(a) and 111.201. The
four-year limitations period starts running on the date the tax was due and
payable. Tax Code Section 111.201. The original filing of the lawsuit in 2002
did not toll the limitations period under TEX. TAX CODE ANN. Section 111.207.
None of the tolling events described in Tax Code Section 111.207 occurred
between the filing of the original lawsuit on April 17, 2002, and the filing of
the request for a refund hearing on July 31, 2008. Consequently, the
limitations period will have run on any claims for taxes that were due and
payable more than four years before the refund claim was filed on April 16,
Claimant’s contention fundamentally involves issues of fairness and equity.
Claimant complains that due to the absence of a method under the Tax Code for
compelling a retailer to issue refund assignments, the non-permitted customers
who had to resort to litigation will have been denied their rightful refunds
due to the expiration of the statute of limitations. However, as a matter of
law, Claimant’s request for equitable relief must be denied. Claimant’s remedy
rests with the Legislature. See S&H Marketing Group v. Sharp, 951 S.W.2d 265
(Tex. App. – Austin 1997, no writ), and COMPTROLLER’S DECISION NO. 41,470
Claimant’s refund claim should be denied. Claimant lacks standing to pursue
its refund claim with the Comptroller. Similarly, the Comptroller also lacks
the statutory authority to grant the refund to Claimant. Claimant has failed
to provide the documentation required to verify the refund claims, and the
statute of limitations bars those claims involving tax due and payable more
than four years before the claim was filed on April 16, 2008.
III. FINDINGS OF FACT
1. Mr. and Mrs. INDIVIDUAL M purchased a taxable item from *************
(COMPANY) and subsequently received a cash mail-in rebate for the purchase, but
were not refunded the sales tax paid on the rebated amount.
2. On April 17, 2002, Mr. and Mrs. INDIVIDUAL M filed a lawsuit against
COMPANY individually and as a class action. INDIVIDUAL N, Mr. and Mrs.
INDIVIDUAL M, individually and on behalf of all others similarly situated v.
OfficeMax, Inc. and Best Buy Co., Inc., Cause No. GN201252 ( 53rd District
Court April 17, 2002).
3. The district court dismissed the class action claims. An appeal was filed
with the Third Court of Appeals, which held that the appellants in the case
could file a refund claim with the Comptroller once an assignment had been
secured from COMPANY.
4. The class was certified by the Travis County 53rd District Court in its
Order Granting Preliminary Approval to the CLAIMANT Proposed Settlement (Order)
issued on April 17, 2008, in Levy v. OfficeMax.
5. The District Court appointed INDIVIDUAL O and INDIVIDUAL P to represent the
CLAIMANT members in the presentation of their individual claims for refund to
the Comptroller and to pursue any and all necessary administrative appeals.
6. The representative members’ counsel was given full power of attorney to
represent CLAIMANT members in their individual claims against the Comptroller.
7. CLAIMANT members consist of Texas customers who redeemed a mail-in retailer
rebate for a taxable purchase made on or after March 1, 1998, and before July
16, 2007, at a Texas ******** store or via Internet or telephonic order shipped
to a Texas address.
8. COMPANY issued to Claimant an Assignment of Right to Refund (Assignment) to
file and to receive the refund for sales tax collected on the rebated portion
of the class members’ purchases.
9. On April 16, 2008, ************* members (Claimant) filed a refund claim
with the Texas Comptroller of Public Accounts (Comptroller) on behalf of the
members of the class.
10. The refund period covers purchases made on or after March 1, 1998, and
before July 16, 2007.
11. The Comptroller’s Audit Processing Section issued a letter dated July 2,
2008, denying the refund claim.
12. Claimant appealed the denial and filed a timely request for a refund
13. On May 12, 2009, the case was referred to the State Office of
Administrative Hearings for a hearing on written submission.
14. The notice of filing dated May 12, 2009, contained a statement of the
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
15. The record closed on June 1, 2009.
16. Claimant failed to provide the taxpayer numbers for the class members;
failed to provide evidence that the rebate checks cleared for each of the class
members; failed to provide evidence establishing the tax rates collected and
remitted to the Comptroller; failed to show that the amounts ought to be
refunded had been reported to the Comptroller; and failed to provide the
documentation reconciling the bad debt deductions taken by COMPANY with the
17. None of the events described in TEX. TAX CODE ANN. Section 111.207
occurred between the filing of the lawsuit on April 17, 2002, and the filing of
Claimant’s request for a refund hearing on July 31, 2008.
IV. CONCLUSIONS OF LAW
1. The Comptroller has jurisdiction over this matter pursuant to TEX. TAX CODE
ANN. 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 ANN. ch. 2003.
3. The Comptroller provided proper and timely notice of the hearing pursuant
to TEX. GOV’T CODE ANN. ch. 2001.
4. Claimant has the burden to prove by a preponderance of the evidence that
the refund claim was erroneously denied. 34 TEX. ADMIN. CODE SECTION
5. A tax refund claim may be filed with the Comptroller by the person who
directly paid the tax to this state or by the person's assignee. TEX. TAX CODE
ANN. Section 111.104(b).
6. The Tax Code, Chapters 111 and 112, does not authorize a class to file a
refund claim with the Comptroller.
7. The Tax Code, Chapters 111 and 112, does not give the Comptroller the
statutory authority to grant a class action refund.
8. Claimant must submit the supporting documentation required by the
Comptroller to verify the refund claim. 34 TEX. ADMIN. CODE Section
9. The Third Court of Appeals has held that a district court has the
jurisdiction to consider an unpermitted taxpayer’s claims against a retailer to
compel an assignment of refund rights and to consider whether a class should be
certified. Levy v. OfficeMax, Inc., 228 S.W.3d 846 (Tex. App. – Austin 2007).
10. Under TEX. TAX CODE ANN. Section 111.207, the limitations period is tolled
during the following periods: the period following the date of a tax payment
made under protest, the period during which a judicial proceeding is pending in
a court of competent jurisdiction to determine the amount of the tax due, and
the period during which an administrative proceeding is pending before the
Comptroller for a redetermination of the tax liability.
11. Based on Finding of Fact No. 17, and Conclusion of Law No. 10, the
limitations period was not tolled between April 17, 2002, when the lawsuit was
originally filed and July 31, 2008, when the refund hearing was requested.
12. The members of the class had four years from the date the tax became due
and payable within which to file their refund claims. TEX. TAX CODE ANN.
Section 111.201 and 111.107.
13. Based on Findings of Fact Nos. 2, 7, 9, 10, and 17 and Conclusions of Law
Nos. 10, 11, and 12, the statute of limitations expired for claims arising from
tax that was due and payable more than four years before the refund claim was
filed on April 16, 2008.
14. Based on Findings of Fact Nos. 1 - 9 and Conclusions of Law Nos. 6 and 7,
Claimant was not authorized to file a class action refund claim and receive a
single refund on behalf of the class members.
15. Based on Finding of Fact No. 16 and Conclusions of Law Nos. 4 and 8,
Claimant failed to meet its burden of proof that it was entitled to the refund
claim and that the refund claim was denied in error.
16. Based on the foregoing Findings of Fact and Conclusions of Law, the denial
of the refund claim should be affirmed.
Hearing No. 102,508
ORDER OF THE COMPTROLLER
On June 25, 2009, the State Office of Administrative Hearings’ (SOAH)
Administrative Law Judge (ALJ), Peter Brooks, 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.
The Comptroller has determined that the ALJ’s Proposal for Decision should be
adopted with changes in accordance with TEX. GOV’T. CODE ANN. Section
2003.101(e)(1)(a), because the ALJ made findings of fact not supported by a
preponderance of the evidence and did not properly apply applicable law.
Specifically, the ALJ incorrectly found that Claimant has standing and was
authorized to file a class action refund claim and receive a single refund on
behalf of class action members. In addition, the ALJ did not sufficiently
address the Tax Division’s argument that the Comptroller lacks the authority to
grant the refunds to a class, certified or not. Accordingly, the following
Findings of Fact and Conclusions of Law are modified as follows and for the
Finding of Fact No. 3 has been modified to delete the word “class” and replace
it with “appellants in the case” because the appellants were not certified as a
class when the opinion of the Third Court of Appeals was issued, and the ruling
applies to the appellants as individuals, not as a class.
A new Conclusion of Law No. 6 has been added and reads as follows: The Tax
Code, Chapters 111 and 112, does not authorize a class to file a refund claim
with the Comptroller. This additional conclusion of law is necessary, because
the ALJ improperly concluded that the Court of Appeals ruling granted the class
the right to pursue a refund claim with the Comptroller. The Tax Code
establishes the standing of persons to file refund claims and to seek judicial
review in connection with those claims. The Tax Code contains a specific
authorization for a class to seek judicial review in a redetermination case.
No such authorization exists for a class action refund. Based on this lack of
language authorizing judicial review in the case of a refund claim by a class,
the only reasonable conclusion is that the Texas Legislature did not grant a
class standing to file a refund claim with the Comptroller. Existing
Conclusions of Law have been renumbered accordingly.
A new Conclusion of Law No. 7 has been added and reads as follows: The Tax
Code, Chapters 111 and 112, does not give the Comptroller the statutory
authority to grant a class action refund. This additional conclusion of law is
necessary, because the ALJ improperly concluded that the Court of Appeals
ruling granted the Comptroller the authority to grant a class action refund.
The Tax Code establishes authority of the Comptroller to grant refund claims
and to persons to seek judicial review in connection with those claims. The
Tax Code contains a specific authorization for a class to seek judicial review
in a redetermination case. No such authorization exists for a class action
refund. Based on this lack of language authorizing judicial review in the case
of a refund claim by a class, the only reasonable conclusion is that the Texas
Legislature did not provide the Comptroller with the authority to grant a class
action refund. Existing Conclusions of Law have been renumbered accordingly.
Conclusion of Law No. 12 has been renumbered and modified to add the word “not”
immediately before the word “authorized” because the ALJ did not properly apply
applicable law in concluding that a class has standing to seek a refund claim
from the Comptroller. Additional clarifying modifications have also been
Corresponding provisions in the Analysis section and other sections have been
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 23rd day of March 2010.
Texas Comptroller of Public Accounts
by: Martin A. Hubert
(1) INDIVIDUAL N, Mr. and Mrs. INDIVIDUAL M, individually and on behalf of all
others similarly situated v. OfficeMax, Inc. and Best Buy Co., Inc., Cause No.
GN201252 (53rd District Court, April 17, 2002).
(2) Claimant originally requested a refund in the amount of $*************,
plus interest, but subsequently, in a letter dated April 25, 2008, decreased
the amount to $*************, plus local tax where Claimant has the necessary
records to properly quantify the amount of local tax. See Claimant’s letter of
April 25, 2008.
(3) The covered transactions are limited to the purchases made during the
refund period by persons or entities that were Texas residents at the time and
not previously refunded with retailer rebates. The purchases were made during
the period of March 1, 1998 through July 16, 2007.
(4) Staff does not substantively contest Claimant’s underlying contention that
sales tax was not due on the rebated portion of the purchase price. In fact,
the District Court on April 16, 2004, issued an order granting in part the
Plaintiffs’ motion for partial summary judgment against COMPANY, holding that
the rebate amounts at issue are cash discounts allowed on sale and, therefore,
are not included in the determination of the sales price under TEX. TAX CODE
ANN. SECTION 151.007.
(5) See July 2, 2008 denial letter.
(6) Claimant filed its reply to Staff’s Position Letter via a letter dated
April 8, 2009, in which it limited its reply to a statement adopting its
previous filings as responses to the Position Letter. Staff, in its response
dated April 13, 2009, limited its response to a statement resting on the
arguments previously raised in its Position Letter.
(7) This is a misstatement of current Comptroller policy. Effective June 20,
2003, the statute of limitations is not tolled while a refund claim is being
informally reviewed. See STAR Accession Document No. 200508239L (August 9,
2005) and TEX. TAX CODE ANN. Section 111.1042(d).
(8) Claimant is citing a Supreme Court decision, McKesson Corp. v. Division of
Alcoholic Beverages & Tobacco Dept. of Business Regulation of Florida, 496 U.S.
18 (1990). The full quote used by Claimant reads as follows:
[I]n refund actions, the state must provide taxpayers with a clear and certain
remedy for any erroneous or unlawful tax collection, so as to insure that the
opportunity to contest the tax was a meaningful one Claimant does not offer any
context for citing this decision and does not venture to provide the underlying
facts or legal principles relied on by the Supreme Court from which an informed
conclusion can be made whether the case is actually relevant to the instant
ACCESSION NUMBER: 201003637H
DOCUMENT TYPE: H
TAX TYPE: SALES