Texas – Refund Claim Regulation Amended

SALT Report 2012 – The Texas Comptroller of Public Accounts recently amended section §3.325, the sales and use tax rule regarding refunds and payments under protest.  The amendments include provisions that allow the taxpayer to assign a right to refund to a third party, the types of documentation necessary to support a refund claim, and tolling the statute of limitations.

Assignment of Right to Refund

This section has been amended to reflect that 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 refund claim requirements, including the requirement to refund or credit any taxes paid to the purchaser in error.

Refund Claim Documentation

This section has been amended to reflect that any person requesting a refund must submit documentation to support their claim.  Documentation can include copies of invoices, cancelled checks, or contracts.  If the supporting documentation cannot be mailed or submitted, the refund claim must include a statement that all supporting documentation will be made available to the Comptroller upon request.

If a hearing is requested after a refund claim is denied, the Comptroller may issue a demand notice requesting all supporting documentation to verify the claim. The documentation must be produced within 180 days from the date of the demand notice.  Documents that are not timely produced will not be admitted at the hearing.

Tolling Statute of Limitations

This section has been amended to reflect that refund claims filed with the Comptroller will toll the statute of limitations if the following requirements are met:

  • The claim must state fully and in detail each reason or ground on which the claim is founded,
  • The claim must identify the period during which the claimed overpayment was made,
  • If the claim is being filed by a non-permitted person who is an assignee of or successor to a refund, the person must submit the assignment of right to refund, and
  • If a person other than the person to whom the refund is due is submitting the claim for refund, a power of attorney must be submitted with the claim

The amendments to rule §3.325 are effective January 7, 2013.

For Further Information:

Texas Comptroller of Public Accounts – 34 TAC §3.325