Untitled Texas Attorney General Opinion ( 1963 )

Honorable Robert 9. Calved opinion No. C- 29 Comptroller of Fubllo Aooounts Capitol St at ton Re: Whether taxpayers may Austin, Texas pay taxes accruing un- der the Limited Sales, ExOlse and Use Tax Act under protest purwant to the provisiona of Arttiole 1.05, Title 322A, 20A Tax.-Qen. arId At’tloit 7057b, Tltlt 122, 20, V.A.T.S., or mustfollow the pro-, oedurt preaoFlbed in p&ole 20.10, Title Dear Mr. Calverrtc . We quote the foWw%ng axotrpt &om your lettier re- questing our opinion cn the above captloncd eubjeot: "The tW.ta~ $a3ea ltxoise and Uee Tax Aat" ln ArtlcLe 26.10, provides the speoiflo proowluma to Be tolLowed when requsetfng a remna of tree pata ta’the, Comptrcller undbr that Act. That Artl- 010 al80 provides thth spaoiflo methods by which 8; taxpayer inar bring aotlcn against t,he Ooaptmlli~ for the mtnwn ana, rrfuntl of tione pa,4 under the Ltilttd SaWa Tut, 3;ob, “Stveral taxvayem havt paid tht Liaited <S $PCteBt %hX 'UlldtS' ’ in aocordanoe with the term at Article 1.05, Title lMA, an4 Artiole 7057b, Title 1e2 md have faiita to f01L0u glgrooe6uree mt cut $81Artiole . . “Doe6 the taxpayerheve the right’ to pay hie S&lea,,TaX12ablllty ‘under proteetl? Is thd Comptroller justi- fied In dtpositing such Panda aa are paid Wdtr probsrst’ ti the general . Honorable Robert S. Calvert, Page 2 Opinion No. C- 29 revenue fund without waiting for the lapse of the statutory ninety days?” Article 1.05, Title 122A, Ch. 1, 20A, Taxatlon-General, Vernonts Annotated Texas Statutes, Is derived from Acts 1933, 43x-dLeg., Ch. 214, p. 637, end Acts 1939, 46th Leg., p. 643. Article 1.05 is, In fact, Identical with Article 7057b. Title 122, Ch. 1, 20, V.A.T.S., except that certain seotlone have been renumbered, a few words omitted, and Section 5 (granting extensions to prior taxpayers), Section 6 (extending the pro- visions of the act to taxes theretofore paid under protest), Section 7 (providing that the law shall be cumulative of all laws relating to the payment of taxes and fees of undetermined status) and Section 8 (providing a severability clause) have been entirely omitted. Both of these Articles contain the following provl- elan: “Any person, firm or corporatlon~ who may be required to pay to the head of any department of the State Government any oooupatlon, gross receipt, franchise, license or other privilege tax or fee, and who believes or contends that~ the same lb imlawful and that such public offlolal Is not lawfully entitled to demand or collect the same. shall, nevertheleae, be required to pay such amount 86 such pub110 olflolal charged ulth the collection thereof may deem to be due the State, an@ shall be en- titled to aooompany suoh payment with a written plVotest, setting out fully and ln detail ‘each and every ground or reason why it is contended that such demand is unlawful or unauthorized.” Both provide that after suoh protested payment, the taxpayer has ninety days from the date of such payment to file suit In Travis County against the public offlolal oharged with the duty of collecting such taxes or fees, the State Treasurer and the Attorney General. The issues to be determined In such suits are limited to those raised In the written protest. Detalled.provlslons ares made with regard to these suite. Both ArtloleB require that the taxes be held In a eimpense account with the State Treasurer and provlde that if suit is nat brought wlthin the time and manner provided, or Honorable Robert S. Calvcrt, Page 3 Oplnlon No. c- 29 In the event that It be finally determined In any such suit ~that the protested payment or any portion thereof, together with the pro ,rata interest earned thereon, if any, belong8 to the State, then the State Treasurer shall transfer such money from the suapense account to the proper fund In the State Treasury. In the event the taxpayer IS successful In hle suit, the,State Treasurer must then refund the amount of the protested payment, together with the pro rata interest earned thereon, if any. Article 20.10, as amended Acts 1961, 57th Leg., 1st C.S., Ch. 24, Article I, Sec. 1, p. 71, contains specific provisions with regard to overpayments and refunds of taxes collected under the Limited Sales, Excise and Use Tax Aat, commonly known as the Texas Sales Tax Act. We quote the following excerpt from Article 20.10: ,,,;!$,d~e”c;~;~t~d ;;$$essI``t Comptroller determines that aiy amount, penalty or Interest haa been paid more than once or has been erroneously or Illegally colleoted or computed, the ComptrolJer shall set forth that fact In his records, and the excess amount collected or paid may be credited on any amount then due and payable from the person under thla Chapter. Any balance may be refunded to the person by whomit was paid, or his succeasor.s, administrators or executors. Lti3~B~lo~lalms ‘#or Refund, Credit : . “(1) No refund shall be allowed unless a claim therefor is filed with the Comptroller by the person who overpaid the tax or his attorney, assignee, executor, or admln- letrator, within three (3) yearn from the lrst day of the month following the close of the quarterly~perlod for whlah the ovdrpagrmdhtwas made or within elx (6~ mmtha afier any deterniinaii ion becomes final under p~nsraph (A) . . Honorable Robert S. Calvert, Page 4 Opinion No. C- 29 through (0) of Article 20.06 or within alx (6) month9 from the date of overpayment with reapeot to euch determinations, whichever of these three (3) periods expire8 the later. “(2) No credit shall be allowed after the expiration of the period speak- fled for flllng claims for refund unless a claim for credit Is filed with the Camptroller within such period, or unlees the credit relates to a period for whioh a waiver la given pursuant to paragraph (D) under Artlale 20.06. “(C) Credit or Refund for Uee Tax; Relm- buraement of Retailer for Limited Sales Tax. No credit or refurid of any amount aid pur- suant to paragraphs (A) through (LP of Arti- cle. 20.03 shall be allowed on the ground that the storege, use or other ocneumptlon of the tangible personal property Is exempted under Artlale 20.04 unlese the person who paid the amount ~eimbursee hle retailer fOI, the amount of the llmlted sales tax Imposed upon his vendor wlth respect to the. Bale of the tan- gible personal property and paid by the ven- dor $0 the State. “(D) Claim for Refund, Credit: Form: : Contents. Every ala&n shall be in writing and a&all etate the specific ground8 upon which the claim If founded. Wal;!E) Effect of Failure t6 File Claim: Failure to file a claim within the time pieecrlbed in paragraph (B) of this Article conatitutees a waiver of any demand agalnet the State on aaoount of overpayment. ser;iF! Notice of Disallowance of Claim: Within thirty (39) days after dlsallok.ng any olaim in whole or ln part, the Comptroller shall serve notice of his action on the cla%mant In the manner pre- scribed for servlae of notice of a defl- c lency determlnat ion. ‘1 .+ . . . . Honorable Robert 9. Calvert, Page 5 Opinion No. C- 29 Section (Ii) provides that no suit or proceeding may be maintained for recovery of any tax allegedly Illegally col- lected unless a claim for a refund has been du3y filed. Wlth- In ninety days after the mailing of the Comptroller's notice rejecting a claim filed pursuant "to this Chapter", the claimant must bring an action in a court of competent jurls- dlctlon In Travis County, Texas, against the Comptroller on the grounds set forth ln the claim, or he will be deemed to have waived his claim. The claimant may also file suit If the Comptroller falls to act on a claim within six months after Its filing. The act provides that If judgment Is ren- dered for the plaintiff, It shall be granted as follows: "(a) If the judgment Is for a re- fund of taxes, 1t:shall be credited on any limited sales or use tax or amount of use tax due from the plaln- tiff. "(b) If the judgment la for a re- fund of use taxes, It shall be credited on any use tax or amount of use tax due from the plaintiff underthis Chapter. "(2) The balance of the judgment shall be refunded to the pl&lntlff." Provision Is made for payment of Interest at,the rate of 6s per annumupon amounts found to have been Illegally col- lected from the date of payment to the date of allowance o? aredlt, or to a date preceding the date of the refund warrant but not more than thirty days, the date to be determined by the Comptroller. Further apeclflc provlslons are made for the recovery of erroneous refunds. It la evident that Article 20.10 has created a special method for the taxpayers I recovery of sales taxes, which they deem to have been Illegally collected, and that this Article constitutes, ln effect, an exception to Articles 7057b and 1.05. We think that this fact Is clear evidence of the legle- latlve intent that the epecfflc provisions embodied In Artl- cle 20.10 constitute an exclusive remedy and must be followed by taxpayers requesting a refund of taxes paid under the Sale8 Tax Act. We pass to a consideration of what action the Comptroller should take with regard to such funds a8 have been paid under Articles 7057b and 1.05 and are presently being held In the suspense account. -125- _. . Honorable Robert S. Calvert, Page 6 Opinion No. C- 29 Artlale 20.13 reads as follows: “All fees, taxes, Interest and penal- ties imposed, and all amounts of tax re- quired to be paid to the State under’thla Chapter shall be paid to the Comptroller in the form of remlttanoes payable to the Comptroller of Public Accounts of Texas. The Comptroller shall remit all fees, taxes, interest and penalties colleated under this Chapter to the State Treasurer to the depoalted In the State Treasury to the credit of the General Revenue Pund. Amended Acts 1961, p. 71, ch, 24, In view of this express pravlston of the Sales Tax Act, the funds which are being held In the suepenae account should be transferred to the Qeneral Revenue Fund. In the State Treasury. We pass now to a ConsideratSon of the proper disposition of the funds 80 traneferred. Senate Bill NO. 1, Chapter 62, p. 203, Acts 57th Leg., First Called Seeslon (196x),being the Qaneral Appropriation Bill, contains, at pages 271 and 272, the appropriations. for the Comptroller of Public Accounts for the years ending August 31, 1962 and August 31, 1963. The appropriation of Line Items 8 and 9 was made contingent upon the enactment of House Bill 20, 57th Leg., 1st C.S. House Bill 20 provides for the Limited Sales, Excise and Use Tax, for Its administration and enforcement, and allocates the revenues derived therefrom. The unexpended balances In Line Items 6 end 9, es of August 31, 1962, are reappropriated for the year beginnlng Septembw 1 1962 with the approval of the Governor. Methods of flnanoing items 8 and 9 are provided. We quote the following exoerpt from page 272: “Ae much of the respeatlve taxes :oollected and administered by the Coarip- troller a8 map be necessary la hereby .* appropriated and set asldf? to pay re- funds as provided by law. Should the Comptroller determine that any of the funds In question have been erroneously or Illegally collected, he Is authorized under the provisions of Artlole 20.10 (A) to set forth that faot in his reoorda and credit the excess amount ealIect.ed on any amount then due and payable from the taxpayer. Any balance may be refUndet¶ to the taxpayer, his successors, admlnletrators or executors. The statute thus specifically i authorizes refunds in suoh cases and an appropriation has been made therefor. -126 . . . &A Honorable Robert 9. Calvert, Page 7 Opinion No. C- 29 As to funds which the Comptroller deems legally col- lected, he may treat protested payments as a "claim" within the meaning of Section (D) of Article 20.10 If the protests are In writing and state the specific grounds upon which the protests are founded. However, thereafter, the procedural steps provided by Article 20.10 muat be followed by the taxpayers and the Comptroller. . ~. SIJMMARY Article 20.10,,Tltle 122A, MA, Tax.- Gen., V.A.T.S., has provided an exclusive reme- dy which must be followed by taxpayers seeking to recover sales taxes which they claim have been Illegally collected. Such funds as have been paid under protest pursuant to Articles 1.05 and 7057b, V.A.T.S., may be treated by the Comptroller a8 a "Claim" within the pro- visions of Section (D) of Article 20.10 if the protests are In writing and state the specific grounds upon which the protests are founded. Thereafter, except as to funds which the Comptroller may deem illegally collected and which could be credited or refunded as provided by Article 20.10, the procedural steps provided by Article 20.10 must be followed by both the Comptroller and the taxpayera. Yours very truly, WAGGONER CARR Attorney General of Texas W/jP Asslatant Att APPROVED: OPINIONCOMMITTEE: W. V. Geppert, Chairman J. C. Davis Mary K. Wall Ii. Grady Chandler 'APPROVED FORTHEATTORNEYGENERAL By: Stanton Stone