By: Taylor H.B. No. 2488

A BILL TO BE ENTITLED

AN ACT

relating to the establishment of an independent agency to function as a tax tribunal.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Amending Tax Code, Title 2, to add Chapter 114, to read as follows:

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 114.001. SHORT TITLE. This chapter may be called the Tax Tribunal Act.

Sec. 114.002. DEFINITIONS. As used in this Chapter:

(a) "Authorized representative" means:

(1) an attorney admitted to practice in this State, or any other jurisdiction of the United States, including an attorney who is a partner or member of, or is employed by, an accounting or other professional services firm;

(2) an accountant licensed in this State or any other jurisdiction of the United States;

(3) an enrolled agent authorized to practice before the Internal Revenue Service;

(4) an officer, employee, partner or member of the taxpayer; or

(5) any other person authorized in writing by the taxpayer to represent it before the tribunal.

(b) "Tribunal" means the Tax Tribunal established by this Chapter.

SUBCHAPTER B. ESTABLISHMENT, JUDGES, AND EMPLOYEES

Sec. 114.051. The Tax Tribunal. (a) There is hereby established the Tax Tribunal.

(b) The tribunal is an independent agency.

(c) The tribunal shall officially exist on and after September 1, 2013; however, the tribunal shall have the authority to take any action prior to September 1, 2013 that is necessary for the tribunal to properly exercise its powers on and after September 1, 2013.

Sec. 114.052. JUDGES. (a) The tribunal shall consist of at least one judge. Additional judges may be appointed pursuant to this section.

(b) Judges shall be appointed by the Governor for a term of six years. If the tribunal has more than one judge, the initial terms shall be staggered so that all judges' terms do not expire in the same year. Under no circumstances shall a judge's initial term exceed six years.

(c) Each judge shall receive an annual salary as provided in section 659.012(a)(1) of the Government Code.

(d) Once appointed, each judge shall continue in office until his or her term expires and until a successor has been appointed.

(e) If, for any reason, a judge does not fulfill his or her term, the Governor shall appoint a replacement judge, who will complete the unexpired portion of the term.

(f) The Governor may remove a judge, after notice and an opportunity to be heard, for neglect of duty, inability to perform duties, malfeasance in office, or other good cause.

(g) A judge may disqualify or recuse himself or herself on his or her own motion, or on the motion of any party, in any matter, and shall be disqualified or recused as provided in the Texas Code of Judicial Conduct and rules 18a and 18b of the Texas Rules of Civil Procedure.

Sec. 114.053. QUALIFICATIONS OF JUDGES. (a) Each judge of the tribunal shall:

(1) be a citizen of this State; and

(2) possess substantial knowledge of the tax law and substantial experience representing taxpayers in tax cases.

(b) Each judge is subject to and shall follow the Texas Code of Judicial Conduct.

(c) Each judge shall devote his or her full time during business hours to the duties of his or her office. Each judge shall not engage in any other gainful employment or business, nor hold another office or position of profit in a government of this State, any other State, or the United States. Notwithstanding these prohibitions, a judge may own passive interests in business entities and may earn income from incidental teaching, publishing, or scholarly activities.

Sec. 114.054. CLERK, REPORTERS, AND OTHER EMPLOYEES. (a) The tribunal shall appoint a clerk and a reporter, employ additional personnel, and make such other expenditures, including expenditures for libraries, publications, and equipment, as are necessary to permit it to efficiently execute its functions.

(b) The reporter shall be appointed pursuant, and subject to, the provisions of Section 52.021, Government Code.

(c) No employee of the tribunal shall act as attorney, representative, or accountant for others in any matter involving any tax imposed or levied by this State or political subdivision of this State.

(d) In addition to the services of the official reporter, the tribunal may contract the reporting of its proceedings and, in the contract, fix the terms and conditions under which transcripts will be supplied by the contractor to the tribunal and to other persons and agencies.

SUBCHAPTER C. JURISDICTION AND VENUE

Sec. 114.101. JURISDICTION. (a) The tribunal shall hear all cases in relation to the collection, receipt, administration, and enforcement of:

(1) a tax imposed under this title; and

(2) any other tax, fee, or other amount that the comptroller is required to collect, receive, administer, or enforce under a law not included in this title.

(b) Payment of the tax, penalty, or interest identified in a deficiency determination under section 111.008 of the Tax Code is not required to initiate a proceeding with the tribunal.

(c) The tribunal shall not have the power to determine the constitutionality of the tax statutes or rules of this State.

Sec. 114.102. VENUE. (a) All hearings conducted by the tribunal shall be at its offices in Austin, Texas.

Sec. 114.103. COMMENCEMENT OF PROCEEDINGS. (a) A taxpayer may initiate a proceeding before the tribunal by filing a petition on or before the expiration of 60 days following the date of the comptroller's:

(1) deficiency determination issued pursuant to section 111.008 of the Tax Code;

(2) denial of a refund claim filed pursuant to section 111.104 of the Tax Code; or

(3) other notice or demand assessing a tax, fee, penalty, interest, or other amount administered by the comptroller.

(b) A petition filed under subsection (a) of this section shall name the comptroller as respondent in his or her official capacity, and be served on the comptroller in a manner prescribed by rule 21a of the Texas Rules of Civil Procedure.

(c) The comptroller shall file its answer with the tribunal no later than 30 days after service of the petition, and serve a copy on the taxpayer and its representative, if any, in a manner prescribed by rule 21a of the Texas Rules of Civil Procedure.

(d) The petition shall be in a form as prescribed by the tribunal.

Sec. 114.104. NO ELECTION OF REMEDIES. (a) Filing a petition under Tax Code section 114.103 does not prejudice a taxpayer's right to file suit pursuant to the provisions of Chapter 112 of the Tax Code.

SUBCHAPTER D. DISCOVERY AND HEARINGS

Sec. 114.151. APPLICATION OF THE TEXAS RULES OF CIVIL PROCEDURE. (a) Unless otherwise provided in this Act, the provisions of the Texas Rules of Civil Procedure shall apply to all aspects of proceedings before the tribunal; provided, however, that the tribunal may, by rule or by order in a particular proceeding, modify the Texas Rules of Civil Procedure to fairly and efficiently resolve disputes between the parties.

Sec. 114.152. DISCOVERY; SUBPOENAS. (a) The parties to a proceeding are entitled to the forms of discovery provided in rules 190 through 215 of the Texas Rules of Civil Procedure; however, the parties to a proceeding shall make every effort to conduct discovery by informal consultation or communication.

(b) A judge of the tribunal shall have the power to rule on discovery matters presented by the parties to a proceeding.

(c) A judge or clerk of the tribunal, on the request of any party to the proceeding, shall issue subpoenas requiring the attendance of witnesses and giving of testimony and subpoenas requiring the production of evidence or things.

(d) Any employee of the tribunal designated in writing for such purpose by a tribunal judge may administer oaths.

(e) Any witness who is subpoenaed or whose deposition is taken shall receive the same fees established in section 22.001 of the Civil Practice and Remedies Code.

(f) A judge of the tribunal shall have the power granted to the courts of this State under section 21.002 of the Government Code to enforce compliance with a subpoena issued under this section.

Sec. 114.153. SUMMARY DISPOSITION. (a) Any party to a proceeding may file a motion for summary disposition.

(b) The judge shall grant a motion for summary disposition if the evidence before him or her establishes that there is no genuine issue as to any material fact and that the moving party is entitled to a decision in its favor as a matter of law.

(c) A movant shall file its motion for summary disposition at least 30 days before the date of the hearing on the merits. The motion must include:

(1) a separate statement that sets forth plainly and concisely all material facts that the moving party contends are undisputed;

(2) a clear and specific reference to the evidence supporting the facts that the moving party contends are undisputed; and

(3) copies the evidence supporting the facts that the moving party contends are undisputed.

(d) The non-moving party may file a response within 14 days of receipt of the motion for summary disposition. The response must:

(1) include a separate statement

(A) addressing each of the material facts that the moving party contends are undisputed; and

(B) indicating whether the non-moving party agrees or disagrees that the facts are undisputed;

(2) plainly and concisely set forth any other material facts that the non-moving party contends are disputed;

(3) clearly and specifically refer to evidence supporting the material facts that the non-moving party contends are disputed; and

(4) object to the form of the motion and to the evidence.

(e) The moving party may file a response within 7 days of receipt of the non-moving party's response. The reply must include objections to the form of the response and to the evidence.

Sec. 114.154. HEARINGS. (a) Hearings before the tribunal shall be de novo.

(b) Hearings are confidential and are not open to the public.

(c) Unless provided otherwise in this Act or in rules promulgated by the tribunal, hearings shall be conducted according to the Texas Rules of Civil Procedure governing nonjury civil cases in the district courts of this State.

(d) The tribunal shall take evidence, conduct hearings, rule on motions, and issue final decisions.

(e) The rules of evidence as applied in a nonjury civil case in a district court of this State shall apply to a proceeding before the tribunal except that evidence inadmissible under those rules may be admitted, at the discretion of the judge, if the evidence is:

(1) necessary to ascertain facts not reasonably susceptible of proof under those rules;

(2) not precluded by statute; and

(3) of a type on which a reasonably prudent person commonly relies in the conduct of the person's affairs.

(f) Testimony may be given only on oath or affirmation.

(g) In the case of an issue of fact:

(1) the burden of proof is on the comptroller:

(A) by a preponderance of the evidence, if the issue is whether the suspension or revocation of a license is warranted; or

(B) by clear and convincing evidence, if the issue is whether the imposition of additional penalty for willful or fraudulent failure to pay tax is warranted;

(2) the burden of proof is on the taxpayer:

(A) by a preponderance of the evidence, if contesting an action, or proposed action, of the comptroller; or

(B) by clear and convincing evidence, if claiming a transaction is exempt from taxation.

SUBCHAPTER E. DECISIONS

Sec. 114.201. AUTHORITY. (a) A decision by a judge of the tribunal shall be deemed to be the decision of the tribunal.

Sec. 114.202. DECISION TO BE IN WRITING. (a) The tribunal shall render its decision in writing, including a concise statement of the facts found and the conclusions of law reached. All decisions shall grant such relief, invoke such remedies, and issue such orders as the tribunal deems appropriate to carry out its orders and decisions. The tribunal shall promptly mail a notice of its decision to the taxpayer and the comptroller.

(b) The tribunal shall render its decision no later than 90 days after the submission of the last brief filed subsequent to the completion of the hearing or, if briefs are not submitted, then no later than 90 days after completion of the hearing. The tribunal may extend the 90 day period, for good cause, up to 30 additional days.

(c) If the tribunal fails to render its decision by the applicable deadlines established in subsection (b) of this section, the tribunal is deemed to have ruled against the taxpayer on all issues.

(d) The tribunal's decision shall finally decide the matters in controversy, unless the taxpayer timely appeals the decision as provided in section 114.251 of this Act.

(e) The tribunal shall adhere to the principle of stare decisis. The tribunal's interpretation of a tax statute subject to contest in one case shall be followed by the tribunal in subsequent cases involving the same statute, and its application of a statute to the facts of one case shall be followed by the tribunal in subsequent cases involving similar facts, unless the tribunal's interpretation or application conflicts with that of a district or appellate court or the tribunal provides satisfactory reasons for departing from prior precedent.

(f) A decision of the tribunal shall become final 45 days after the issuance of a notice of decision or 45 days after the tribunal fails to issue a decision as provided in section 141.202(c).

Sec. 114.203. PUBLICATION OF DECISIONS; CONFIDENTIALITY. (a) A final decision of the tribunal shall be indexed and published in print or electronic form as the tribunal deems best adapted for public convenience.

(b) A published final decision shall comply with the confidentiality provisions of section 114.352 of this Act.

(c) A published final decision shall not include the following types of information:

(1) identity of the taxpayer and its employees;

(2) taxpayer identification numbers;

(3) trade secrets;

(4) intellectual property; or

(5) any other type of information that could possibly identify the taxpayer.

SUBCHAPTER F. APPEALS

Sec. 114.251. DE NOVO APPEAL TO THE DISTRICT COURT. (a) A taxpayer may appeal a final decision of the tribunal to the district courts of Travis County pursuant to Chapter 112 of the Tax Code.

(b) The appeal under this section is de novo.

(c) A taxpayer must appeal a final decision of the tribunal on or before the expiration of 30 days after the date the decision becomes final under section 114.202(f) of this Act.

SUBCHAPTER G. REPRESENTATION

Sec. 114.301. REPRESENTATIVES. (a) The comptroller shall be represented by its general counsel in all proceedings before the tribunal.

(b) A taxpayer may represent itself, or may appear through its authorized representative in all proceedings before the tribunal.

Sec. 114.302. PRACTICE OF LAW. (a) Under no circumstance shall representation of a taxpayer before the tribunal be considered the practice of law.

SUBCHAPTER H. MISCELLANEOUS PROVISIONS

Sec. 114.351. RULES AND FORMS. (a) The tribunal is authorized to promulgate and adopt all reasonable rules and forms as may be necessary or appropriate to carry out the intent and purposes of this Act.

(b) Rules shall be adopted in accordance with the rulemaking procedures of Chapter 2001 of the Government Code.

Sec. 114.352. CONFIDENTIALITY. All information received by the tribunal as a result of a hearing conducted under the provisions of this Act shall be confidential as provided in section 111.006 of the Tax Code, and is not subject to disclosure under Chapter 552 of the Government Code.

SECTION 2. Section 111.00455, Tax Code, is amended to read as follows:

Sec. 111.00455. CONTESTED CASES CONDUCTED BY TAX TRIBUNAL. [TAX DIVISION OF STATE OFFICE OF ADMINISTRATIVE HEARINGS.] (a) The tribunal [tax division of the State Office of Administrative Hearings] shall conduct any contested case hearing as provided by Chapter 114, [2003.101,] Tax [Government] Code, in relation to the collection, receipt, administration, and enforcement of:

(1) a tax imposed under this title; and

(2) any other tax, fee, or other amount that the comptroller is required to collect, receive, administer, or enforce under a law not included in this title.

(b) The following are not contested cases under Subsection (a) and Chapter 114, [Section, 2003.101,] Tax [Government] Code:

(1) a show cause hearing or any hearing not related to the collection, receipt, administration, or enforcement of the amount of a tax or fee imposed, or the penalty or interest associated with that amount, except for a hearing under Section 151.157(f), 151.1575(d), 151.712(g), 154.1142, or 155.0592;

(2) a property value study hearing under Subchapter M, Chapter 403, Government Code;

(3) a hearing in which the issue relates to:

(A) Chapters 72-75, Property Code;

(B) forfeiture of a right to do business;

(C) a certificate of authority;

(D) articles of incorporation;

(E) a penalty imposed under Section 151.703(d);

(F) the refusal or failure to settle under Section 111.101; or

(G) a request for or revocation of an exemption from taxation; and

(4) any other hearing not related to the collection, receipt, administration, or enforcement of the amount of a tax or fee imposed, or the penalty or interest associated with that amount.

(c) A reference in law to the comptroller that relates to the performance of a contested case hearing described by Subsection (a) means the tribunal. [tax division of the State Office of Administrative Hearings.]

SECTION 3. Section 111.105(a), Tax Code, is amended to read as follows:

Sec. 111.105. TAX REFUND: HEARING. (a) A person claiming a refund under Section 111.104 is entitled to a hearing on the claim if the person requests a hearing on or before the 60th [30th] day after the date the comptroller issues a letter denying the claim for refund. The person is entitled to 20 days' notice of the time and place of the hearing.

SECTION 4. Subchapter D, Chapter 2003, Government Code, is repealed.

SECTION 5. This Act takes effect September 1, 2013.