SB 266

S.B. No. 266
  AN ACT
  relating to certain tax and fee collection procedures and taxpayer
  suits.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 111.0041(c), Tax Code, is amended to
  read as follows:
         (c)  A taxpayer shall produce sufficient [contemporaneous]
  records and supporting documentation appropriate to the tax or fee
  for the transactions in question to substantiate and enable
  verification of the taxpayer's claim related to the amount of tax,
  penalty, or interest to be assessed, collected, or refunded in an
  administrative or judicial proceeding.  Sufficient
  [Contemporaneous] records and supporting documentation appropriate
  to the tax or fee may include[, for example,] invoices, vouchers,
  checks, shipping records, contracts, or other equivalent records,
  such as electronically stored images of such documents, reflecting
  legal relationships and taxes collected or paid.
         SECTION 2.  Section 111.0081, Tax Code, is amended by
  amending Subsection (c) and adding Subsection (d) to read as
  follows:
         (c)  The amount of a determination made under this code is
  due and payable 20 days after a comptroller's decision in a
  redetermination hearing becomes final.  Except as provided by
  Subsection (d), if [If] the amount of the determination is not paid
  within 20 days after the day the decision became final, a penalty of
  10 percent of the amount of the determination, exclusive of
  penalties and interest, shall be added.
         (d)  The penalty provided by Subsection (c) is abated with
  respect to the disputed amount that is the subject of a timely filed
  suit under Subchapter E, Chapter 112.  If the amount determined to
  be due in a final judgment in the suit is not paid within 20 days
  after the day the judgment became final, a penalty of 10 percent of
  the amount due, exclusive of penalties and interest, shall be
  added.
         SECTION 3.  Subchapter A, Chapter 111, Tax Code, is amended
  by adding Section 111.0091 to read as follows:
         Sec. 111.0091.  DISPUTING RESULTS OF MANAGED AUDITS:  NOTICE
  OF INTENT TO BYPASS REDETERMINATION PROCESS.  (a)  A person who
  conducts a managed audit authorized by Section 151.0231 or 201.3021
  may file with the comptroller a notice of intent to bypass the
  redetermination process under Section 111.009.  The notice of
  intent must:
               (1)  be filed on or before the 60th day after the date
  the comptroller issues a letter notifying the person of the results
  of the managed audit;
               (2)  be in writing;
               (3)  assert the material facts and each specific legal
  basis for disputing the results of the managed audit; and
               (4)  specify the amounts of the disputed underpayments
  or overpayments contained in the report of the managed audit
  results.
         (b)  A person who files a notice of intent under Subsection
  (a) may bypass the redetermination process under Section 111.009
  and bring a suit under Subchapter D, Chapter 112, if:
               (1)  the person participated in a conference under
  Subsection (c), in which case the suit must be filed on or before
  the 60th day after the date the conference concludes or a later date
  agreed to by the comptroller; or
               (2)  the comptroller does not provide notice in the
  time required by Subsection (d) that a conference is required, in
  which case the suit must be filed on or before the 90th day after the
  date the notice of intent was filed.
         (c)  The comptroller may require a conference between a
  person who files a notice of intent under Subsection (a) and a
  designated officer or employee of the comptroller to clarify any
  fact or legal issue in dispute regarding the results of the managed
  audit and to discuss the availability of additional documentation
  that may assist in resolving outstanding issues regarding the
  managed audit.  The person who filed the notice of intent may amend
  a material fact or legal basis described by Subsection (a)(3)
  following the conference if the comptroller agrees in writing to
  the amendment.
         (d)  If the comptroller requires a conference under
  Subsection (c), the comptroller shall notify the person of the
  conference requirement not later than the 30th day after the date
  the notice of intent under Subsection (a) was filed.  The notice of
  the conference requirement must be in writing and include a date and
  time for the conference.  The conference date provided in the notice
  must be not later than the 90th day after the date the notice of
  intent was filed.
         (e)  The person who filed the notice of intent under
  Subsection (a) may request to reschedule the conference date
  provided in the notice under Subsection (d).  The comptroller shall
  make a good faith effort to accommodate the request.  If the
  comptroller and the person who filed the notice of intent do not
  agree on or before the 90th day after the date the notice of intent
  was filed to a rescheduled date for the conference, the person may
  on or before the 120th day after the date the notice of intent was
  filed rescind the notice of intent and petition the comptroller for
  a redetermination under Section 111.009.
         (f)  Except as provided by Subsection (e), a person who files
  a notice of intent under Subsection (a) waives the person's right to
  a redetermination under Section 111.009.
         SECTION 4.  Section 112.052(d), Tax Code, is amended to read
  as follows:
         (d)  A taxpayer shall produce sufficient [contemporaneous]
  records and supporting documentation appropriate to the tax for the
  transactions in question to substantiate and enable verification of
  a taxpayer's claim relating to the amount of the tax, penalty, or
  interest that has been assessed or collected or will be refunded, as
  required by Section 111.0041.
         SECTION 5.  The heading to Subchapter D, Chapter 112, Tax
  Code, is amended to read as follows:
  SUBCHAPTER D.  SUIT FOR TAX REFUND OR TO DISPUTE RESULTS OF MANAGED
  AUDIT
         SECTION 6.  Section 112.151(f), Tax Code, is amended to read
  as follows:
         (f)  A taxpayer shall produce sufficient [contemporaneous]
  records and supporting documentation appropriate to the tax or fee
  for the transactions in question to substantiate and enable
  verification of a taxpayer's claim relating to the amount of the
  tax, penalty, or interest that has been assessed or collected or
  will be refunded, as required by Section 111.0041.
         SECTION 7.  Subchapter D, Chapter 112, Tax Code, is amended
  by adding Section 112.1511 to read as follows:
         Sec. 112.1511.  SUIT TO DISPUTE RESULTS OF MANAGED AUDIT.  
  (a)  A person may sue the comptroller to dispute the results of a
  managed audit conducted under Section 151.0231 or 201.3021 if the
  person:
               (1)  has been issued a letter by the comptroller
  notifying the person of the results of the managed audit; and
               (2)  is authorized to bring the suit under Section
  111.0091(b).
         (b)  The suit must be brought against both the comptroller
  and the attorney general and must be filed in a district court.
         (c)  The suit must be filed during the time provided by
  Section 111.0091(b) or it is barred.
         (d)  The amounts of the disputed underpayments or
  overpayments contained in the report of the managed audit results
  must be set out in the original petition.  A copy of the notice of
  intent filed under Section 111.0091(a) must be attached to the
  original petition filed with the court and to the copies of the
  original petition served on the comptroller and the attorney
  general.
         (e)  A person may not intervene in the suit.
         (f)  A taxpayer shall produce sufficient records and
  supporting documentation appropriate to the tax or fee for the
  transactions in question to substantiate and enable verification of
  a taxpayer's claim relating to the amount of the tax, penalty, or
  interest to be assessed, collected, or refunded, as required by
  Section 111.0041, including the amounts of the disputed
  underpayments or overpayments contained in the report of the
  managed audit results.
         (g)  After the comptroller has been timely served in a suit
  that complies with this section, the comptroller and the attorney
  general:
               (1)  are enjoined from collecting disputed
  underpayments identified in Section 111.0091(a)(4) from the person
  bringing the suit during the pendency of the suit; and
               (2)  are not enjoined from:
                     (A)  asserting tax liens; or
                     (B)  as an alternative to asserting tax liens,
  requiring the person to provide security:
                           (i)  in an amount sufficient to secure
  payment of the entire disputed amount, including penalties and
  accrued interest, that is the subject of the suit; and
                           (ii)  in the form of a cash deposit filed
  with the comptroller or paid into the registry of the court, a
  surety bond, a letter of credit, or another form of guarantee.
         (h)  Damages may be awarded under Chapter 65, Civil Practice
  and Remedies Code, if the court determines that all or part of the
  enjoined collection amounts under Subsection (g) were disputed
  solely for delay.
         SECTION 8.  Section 112.152, Tax Code, is amended to read as
  follows:
         Sec. 112.152.  ISSUES IN SUIT.  (a)  The only issues that may
  be raised in a suit under this subchapter are, as applicable, the:
               (1)  grounds of error contained in the motion for
  rehearing; or
               (2)  material facts and legal bases contained in the
  notice of intent filed under Section 111.0091(a) or 111.106(a).
         (b)  The suit applies only to a tax liability period
  considered in the comptroller's decision or covered by the notice
  of intent filed under Section 111.0091 or 111.106, as applicable.
         SECTION 9.  Section 112.201, Tax Code, is amended by
  amending Subsection (c) and adding Subsections (c-1) and (c-2) to
  read as follows:
         (c)  A person bringing a suit under this subchapter may pay
  the disputed amounts as provided by Chapter 111. A disputed amount
  that is not paid as provided by Chapter 111 and that is determined
  to be due in a final judgment accrues penalties and interest as
  provided by Chapter 111.
         (c-1)  After the comptroller has been timely served in a suit
  that complies with this subchapter, the comptroller and the
  attorney general:
               (1)  are enjoined from collecting disputed amounts from
  the person bringing the suit during the pendency of the suit; and
               (2)  [but] are not enjoined from:
                     (A)  asserting tax liens; or
                     (B)  as an alternative to asserting tax liens,
  requiring the person to provide security:
                           (i)  in an amount sufficient to secure
  payment of the entire disputed amount, including penalties and
  accrued interest, that is the subject of the suit; and
                           (ii)  in the form of a cash deposit filed
  with the comptroller or paid into the registry of the court, a
  surety bond, a letter of credit, or another form of guarantee.
         (c-2)  Damages may be awarded under Chapter 65, Civil
  Practice and Remedies Code, if the court determines that all or part
  of the enjoined collection amounts under Subsection (c-1) were
  disputed solely for delay.
         SECTION 10.  Section 112.202, Tax Code, is amended to read as
  follows:
         Sec. 112.202.  RECORDS.  A person shall produce, in
  connection with a suit under this subchapter, sufficient
  [contemporaneous] records and supporting documentation appropriate
  to the tax for the transactions in question to substantiate and
  enable verification of the person's claim relating to the amount of
  the tax, penalty, or interest that has been assessed or collected,
  as required by Section 111.0041.
         SECTION 11.  Section 111.105(e), Tax Code, is repealed.
         SECTION 12.  This Act applies to a managed audit that is in
  progress and an administrative or judicial proceeding that is
  pending or filed on or after the effective date of this Act, without
  regard to whether the taxes that are the subject of the managed
  audit or proceeding were due before, on, or after that date.
         SECTION 13.  This Act takes effect immediately if it
  receives a vote of two-thirds of all the members elected to each
  house, as provided by Section 39, Article III, Texas Constitution.  
  If this Act does not receive the vote necessary for immediate
  effect, this Act takes effect September 1, 2025.
  ______________________________
  ______________________________
     President of the Senate
  Speaker of the House     
         I hereby certify that S.B. No. 266 passed the Senate on
  April 10, 2025, by the following vote:  Yeas 30, Nays 0.
  ______________________________
  Secretary of the Senate    
         I hereby certify that S.B. No. 266 passed the House on
  May 10, 2025, by the following vote:  Yeas 129, Nays 0, three
  present not voting.
  ______________________________
  Chief Clerk of the House   
  Approved:
  ______________________________ 
              Date
  ______________________________ 
            Governor