Untitled Texas Attorney General Opinion

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)
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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.

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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.

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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