Untitled Texas Attorney General Opinion

Honorable Robert S. Calvert Opinion No. M-1190 Comptroller of Public Accounts State of Texas Re: Legality of refunds or Austin, Texas credits .for taxnver- payment made.prior to July 1, 1967, to .be issued after August.31, 1972, under stated.facts Dear Mr. Calvert: and circumstances? Your request presents two questions both concerning Article 3..045,Title 122A, Taxation-General, V;C.S. The first question hereinafter considered states in part: "Under the provisions of Article 1.045, Title 122A, Revised Civil Statutes of 1925, as amended, the seven-year limitation period on the.issuanae of franchise tax assessments becomes operative on September 1, 1972, on and after which date the Comptroller is proscribed from issuing a franchise tax assessment for delinquent taxeswhich were.due pri.orto.July l.,1967. However, Section .(C)*of. the statute prescribes an exception thereto where- under assessment and collection procedures are authorized after expiration-of the 'I-yearperiod ..if-priorto such expiration the Comptrollzer.(or his.representative) and the taxpayer have,.con- sented in writing to an-assessment after that time. ... *Your official opinion is respectfully reques‘ted wnether, pursuant to a written agreement with eachstaxpayer for extension of the time within which an assessmentmay be issued, a refund or credit may be issued by the Comptroller after August 31;1972 for overpayments made~prior to July 1, 1967, ...* -5810- The Honorable Robert S. Calvert, page 2 (M-1190) -' Section (C), of Article 1.045, provides that the limitation period on assessments and collections may be extended by written consent of the taxpayer and the Comp- troller prior to the expiration of said initial limitation period as follows: "If, before the expiration of the period of time prescribed in this Article for the assessment and collection of any tax imposed by this Title, or before the expiration of any shorter period of time as may be other- wise provided in this Title, the Comptroller, or his representative, and the taxpayer have consented in writing to an assessment after such time, the tax may be assessed and collected, and an action may be commenced in any court to collect the amount delinquent, at any time prior to the expiration of the period agreed upon. The period so agreed upon may be extended by subsequent agree- ments in writing made before the expiration of the period previously agreed upon." Section (G) provides: "Limitation for Refunds and Credits. Notwith- standing any provision of this Title, the period of time during which the Comptroller may refund any werpayment of tax or issue a credit for overpayment of any tax imposed by this Title shall.not expire prior to the expiration of the period of time within which the Comptroller may assess a deficiency with respect to such tax. The Ccmptroller shall not issue any such refund or credit after the time for assessment of a deficiency has expired unless such tax was paid under protest and such refund or credit is made under court order.' The two Sections (C) and (G) taken together allow tax refunds or credits during any period in which a tax deficiency could be assessed for the same tax period for which the refund or credit is sought. . -5811- The Honorable Robert S. Calvert, page 3 (M-1190) Section (A) provides the seven-year limitations period on franchise tax assessments and on claims for refunds or credits by virtue of Section (G). Section (C) provides a method of extending this period at the discretion of the Comptroller and the taxpayer and therefore, a constitutional question arises of whether this provision allows .for an exercise of discretion without any accompanying standards or guidelines which are necessary to the constitutional delegation of such power. of University Park, 278 S.W.Zd 912 (Tex.Civ.App. M- ref. n.r.e.). Article 2, Section 1, Texas Constitution. Section (C) contains 30 standards to-guide the Comp- troller in the exercise of this discretion to enter into agreements affecting an extension of the statutory limitations period. In the Ml4 case, supra, the Court of Civil Appeals sets out the principle*of law as follows: *Applicable to the foregoing grant of authority, by both Legislature and ordinance, are the following rleneralprinciples: (1) On the question of constitutionality or not of the . . delegated power, the inquiry is of whether the legislature has prescribed sufficient standards to guide the discretion conferred. If so, the power is not 'legislative' and its delegation is lawful: Davis, Admiikis- trative law. p. 44; Housing Authority of City of Dallas v. Higginbotham, 135 Tex. 158, 143 S.W.2d 79, 130 A.&R. 1053; Railroad Commis- sion v. Shell Oil Co., 139 Tex. 66, 161 S.W. 2d 1022, also Id., 146 Tex. 286, 206 S.W.2d 235. (2) 'It is fundamental that a legis- lative body may not delegate unlimited legislative powers and functions to an administrative ageny. Whenever the legis- lative body vests any administrative agency, such as a zoning board, with the power to exercise discretion. it must spell out the limits of that discretion by the establish- ment of scme standard to guide the agency. Such a standard may be general and at the same time be valid if it is capable of reasonable application.'" -5812- The Honorable Robert S. Calvert, page 4 (M-1190) The unlimited or unqualified power to exercise discretion granted in Section (Cl to suspend the law of limitation may not be granted by the Legislature. 11 Am.Jur. 947, Consti- tutional Law, See. 334. As such, Section (C) ,is unconsti- tutional and invalid. Article 1.045 contains a~severability clause, and therefore, only the suspension provisions are invalidated. Although Section (C) is invalid for the reasons given, said provision may also be prohibited under Article 1, Section 29, of the Texas Constitution which provides as follows: “Sec. 28. No power of suspending laws in this State shall be exercired except by the Legislature.Y Under former constitutions of the State, the suspension of laws could be exercised by the Legislature, *or Its authority*. The Constitution of 1976 omits the words *or its authority", and the authority of the Legislature to delegate its powers to suspend laws was thereby repealed. See MaDonald v. Uenton, 132 S.W. 023 (19101, error denied 104 Tex. 206 35 8.W. 11481 and Lyle v. State, 193 S.W. 680 tTex.Crim.' 1917)7 11 Am.Jur. 933-944 ConstZtutional L&w, Sea. 230. As Article 2, Section 1, of the State Constitution invalidates Seation (C), we do not reach the question of whether said provision is a grant of power to suspend a law and only hsre note the existence of this question. The second question conaerns the interpretation ot (11, (F) (3) and (F) (4) of Article 1.045 which Sections (Ip) provider "(F) (1) Notwithstanding any provision of any other Article ot #is Title, when any adminis- trative proceeding before any local, state or federal regulatory agency or judiaial proceedinq arising therefrom, results in a tinal determi- nation which attects the amount of tax liability imposed by any Article ot this Title, suah Final determination shall be reported to the Comptroller within sixty (60) days after becoming tinal, with a statemsnt ot the masons for the ditter- ence in tax liability, in such detail as the Comptroller may require." -5813- The Honorable Robert S. Calvert, page 5 (M-1190) "(F)(3; should such report or investigation disclose fan overpayment of such tax liability, the Comptroller shall issue a refund or credit for such.overpayment within the aforementioned one-year,.periodafter receiving such report or discovering such final determination." "(F)(4) No action may be commenced to collect any.deficiency disclosed by such final deter- manation after one year from the date the Comptroller receives such report or discovers such finai determination unless the period prescribed for such an action by this Article or any other Article of this Title has not -expired." Your question.asks if: *...there is any provision for extending the one-year period (in Section (F)(4)] other than [for] that part of the deficiency or overpayment still-covered by the seven years provided in Section (A)..." In view-of.the.tact that the Legislature may not constitutionally empower the Comptroller to extend in his discretion, the statutenf limitations, where there is no standard.or~.guidelineprovided for the exercise of that discretion, there-isnot any method to extend the limitation (4). period in Section.'(F) SUMMARY The Legislature may not constitutionally delegate its power to the Comptroller without any accompanying standards or guidelines. Article 2, Section 1, Texas Constitution. Section (C) of Article 1.045, Title 122A, Taxation-General, V.C.S., therefore, is an invalid delegation of power. Said provision may be invalid as a delegation of power to suspend the law under Article 1, Section 28, of the Texas ey General of Texas -E&14- The Honorable Robert S. Calvert,page 6 [M-1190) Prepared by Wardlow Lane ABBiBt~t Attorney.Generdl APPROVED OPINION COMMITTEE Kerns Taylor, Chairman W. E. Allen, Co-Chairman Herschel Moore Rex White John Reeves Arthur Sandlin SAMUEL D. MCDANIEL St&t Legal ASSiStSIlt ALFRED WALXER EXWJUtiVS ASSiStant NOLA WHITE First ABBiBtallt -5815-