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AN ACT
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relating to the transfer to the State Office of Administrative |
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Hearings of contested cases involving the collection, receipt, |
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administration, and enforcement of state taxes and fees by the |
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comptroller of public accounts. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter A, Chapter 111, Tax Code, is amended |
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by adding Section 111.00455 to read as follows: |
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Sec. 111.00455. CONTESTED CASES CONDUCTED BY TAX DIVISION |
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OF STATE OFFICE OF ADMINISTRATIVE HEARINGS. (a) The tax division |
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of the State Office of Administrative Hearings shall conduct any |
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contested case hearing as provided by Section 2003.101, Government |
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Code, in relation to the collection, receipt, administration, and |
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enforcement of: |
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(1) a tax imposed under this title; and |
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(2) any other tax, fee, or other amount that the |
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comptroller is required to collect, receive, administer, or enforce |
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under a law not included in this title. |
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(b) The following are not contested cases under Subsection |
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(a) and Section 2003.101, Government Code: |
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(1) a show cause hearing or any hearing not related to |
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the collection, receipt, administration, or enforcement of the |
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amount of a tax or fee imposed, or the penalty or interest |
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associated with that amount, except for a hearing under Section |
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151.157(f), 151.1575(c), 151.712(g), 154.1142, or 155.0592; |
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(2) a property value study hearing under Subchapter M, |
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Chapter 403, Government Code; |
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(3) a hearing in which the issue relates to: |
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(A) Chapters 72-75, Property Code; |
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(B) forfeiture of a right to do business; |
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(C) a certificate of authority; |
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(D) articles of incorporation; |
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(E) a penalty imposed under Section 151.7031; |
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(F) the refusal or failure to settle under |
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Section 111.101; or |
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(G) a request for or revocation of an exemption |
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from taxation; and |
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(4) any other hearing not related to the collection, |
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receipt, administration, or enforcement of the amount of a tax or |
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fee imposed, or the penalty or interest associated with that |
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amount. |
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(c) A reference in law to the comptroller that relates to |
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the performance of a contested case hearing described by Subsection |
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(a) means the tax division of the State Office of Administrative |
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Hearings. |
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SECTION 2. Subsection (c), Section 2003.0411, Government |
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Code, is amended to read as follows: |
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(c) Except as provided by Section 2003.101, to [To] be |
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appointed a master administrative law judge, a person must have at |
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least 10 years of general legal experience, must have at least six |
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years of experience presiding over administrative hearings or |
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presiding over hearings as a judge or master of a court, and must |
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meet other requirements as prescribed by the chief administrative |
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law judge. |
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SECTION 3. Chapter 2003, Government Code, is amended by |
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adding Subchapter D to read as follows: |
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SUBCHAPTER D. TAX DIVISION |
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Sec. 2003.101. TAX DIVISION. (a) The office shall |
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establish a tax division to conduct hearings relating to contested |
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cases involving the collection, receipt, administration, and |
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enforcement of taxes, fees, and other amounts as prescribed by |
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Section 111.00455, Tax Code. |
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(b) An administrative law judge in the tax division is |
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classified as a "master administrative law judge II." Section |
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2003.0411 does not apply to this section. |
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(c) If there are no cases in the tax division, and subject to |
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the prior approval of the comptroller, an administrative law judge |
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in the tax division may conduct hearings for other state agencies. |
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Before conducting a hearing for another state agency under this |
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subsection, the tax division must notify the comptroller in |
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writing. The notification must describe the case that will be heard |
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and the administrative law judge who will conduct the hearing and |
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must estimate the amount of time that the judge will spend on the |
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case. The office shall reimburse the comptroller at an appropriate |
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hourly rate for the time spent by the administrative law judge on |
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the case. The comptroller may revoke approval to conduct hearings |
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for other state agencies under this subsection at any time. |
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(d) To be eligible to preside at a tax division hearing, an |
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administrative law judge, including a temporary administrative law |
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judge contracted with under Section 2003.043, must: |
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(1) be a United States citizen; |
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(2) be an attorney in good standing with the State Bar |
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of Texas; |
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(3) have been licensed in this state to practice law |
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for at least seven years; |
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(4) have substantial experience in tax cases in making |
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the record suitable for administrative review or otherwise; and |
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(5) have devoted at least 75 percent of the person's |
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legal practice to Texas state tax law in at least five of the past 10 |
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years before the date on which the person begins employment in the |
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tax division. |
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(e) Notwithstanding Section 2001.058, the comptroller may |
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change a finding of fact or conclusion of law made by the |
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administrative law judge or vacate or modify an order issued by the |
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administrative law judge only if the comptroller: |
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(1) determines that the administrative law judge: |
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(A) did not properly apply or interpret |
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applicable law, then existing comptroller rules or policies, or |
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prior administrative decisions; or |
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(B) issued a finding of fact that is not |
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supported by a preponderance of the evidence; or |
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(2) determines that a comptroller policy or a prior |
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administrative decision on which the administrative law judge |
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relied is incorrect. |
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(f) The comptroller shall state in writing the specific |
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reason and legal basis for a determination under Subsection (e). |
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(g) An administrative law judge, on the judge's own motion |
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or on motion of a party and after notice and an opportunity for a |
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hearing, may impose appropriate sanctions as provided by Subsection |
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(h) against a party or its representative for: |
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(1) filing of a motion or pleading that is groundless |
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and brought: |
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(A) in bad faith; |
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(B) for the purpose of harassment; or |
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(C) for any other improper purpose, such as to |
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cause unnecessary delay or needless increase in the cost of the |
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proceeding; |
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(2) abuse of the discovery process in seeking, making, |
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or resisting discovery; or |
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(3) failure to obey an order of the administrative law |
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judge or the comptroller. |
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(h) A sanction imposed under Subsection (g) may include, as |
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appropriate and justified, issuance of an order: |
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(1) disallowing further discovery of any kind or of a |
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particular kind by the offending party; |
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(2) holding that designated facts be deemed admitted |
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for purposes of the proceeding; |
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(3) refusing to allow the offending party to support |
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or oppose a designated claim or defense or prohibiting the party |
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from introducing designated matters in evidence; |
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(4) disallowing in whole or in part requests for |
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relief by the offending party and excluding evidence in support of |
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such requests; and |
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(5) striking pleadings or testimony, or both, wholly |
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or partly, or staying further proceedings until the order is |
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obeyed. |
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(i) For each hearing conducted under this section, an |
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administrative law judge in the tax division shall issue a proposal |
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for decision that includes findings of fact and conclusions of law. |
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In addition, the proposal for decision must include the legal |
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reasoning and other analysis considered by the judge in reaching |
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the decision. Each finding of fact or conclusion of law made by the |
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judge must be: |
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(1) independent and impartial; and |
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(2) based on state law and the evidence presented at |
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the hearing. |
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(j) The comptroller may not attempt to influence the |
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findings of fact or the administrative law judge's application of |
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the law except by evidence and legal argument. An administrative |
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law judge conducting a hearing under this subchapter may not |
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directly or indirectly communicate in connection with an issue of |
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fact or law with a party or its representative, except: |
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(1) on notice and opportunity for each party to |
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participate; or |
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(2) to ask questions that involve ministerial, |
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administrative, or procedural matters that do not address the |
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substance of the issues or positions taken in the case. |
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(k) Appearances in hearings conducted for the comptroller |
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by the office may be by: |
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(1) the taxpayer; |
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(2) an attorney licensed to practice law in this |
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state; |
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(3) a certified public accountant; or |
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(4) any other person designated by the taxpayer who is |
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not otherwise prohibited from appearing in the hearing. |
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(l) The comptroller is represented by an authorized |
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representative in all hearings conducted for the comptroller by the |
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office. |
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Sec. 2003.102. SUNSET PROVISION. (a) The tax division is |
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subject to Chapter 325 (Texas Sunset Act). |
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(b) The Sunset Advisory Commission shall evaluate the tax |
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division and present to the 82nd Legislature a report on that |
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evaluation and the commission's recommendations in relation to the |
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tax division. |
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(c) During the regular legislative session at which the |
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commission presents its report and recommendations, the |
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legislature by law may continue the tax division as provided by that |
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chapter. If the tax division is not continued in existence as |
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provided by that chapter, the tax division is abolished and this |
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subchapter and Section 111.00455, Tax Code, expire on September 1 |
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of the odd-numbered year in which the regular legislative session |
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occurred. |
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Sec. 2003.103. TIMELINESS OF HEARINGS. (a) The tax |
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division shall conduct all hearings under this subchapter in a |
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timely manner. |
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(b) The tax division shall use every reasonable means to |
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expedite a case under this subchapter when the comptroller requests |
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that the division expedite the case. |
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(c) This section is not intended to impair the independence |
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of the office in conducting a hearing under this subchapter. |
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Sec. 2003.104. CONFIDENTIALITY OF TAX DIVISION |
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INFORMATION. (a) The office shall keep information that |
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identifies a taxpayer who participates in a case under this |
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subchapter confidential, including the taxpayer's name and social |
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security number. |
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(b) The provision of information to the office that is |
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confidential under any law, including Section 111.006, 151.027, or |
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171.206, Tax Code, does not affect the confidentiality of the |
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information, and the office shall maintain that confidentiality. |
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(c) A hearing conducted under this subchapter is |
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confidential and not open to the public. |
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Sec. 2003.105. TAX DIVISION HEARINGS FEE. The office shall |
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charge the comptroller a fixed annual fee rather than an hourly rate |
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for services rendered by the office to the comptroller. The office |
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and the comptroller shall negotiate the amount of the fixed fee |
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biennially to coincide with the comptroller's legislative |
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appropriations request. |
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Sec. 2003.106. COMPTROLLER'S PRIORITIES AND PUBLIC POLICY |
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NEEDS. (a) The comptroller shall provide input to the office to |
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assist the office regarding the comptroller's priorities and public |
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policy needs. |
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(b) This section is intended to assist the office in |
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providing efficient service under this subchapter and is not |
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intended to impair the independence of the office in conducting a |
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hearing under this subchapter. |
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Sec. 2003.107. TAX DIVISION REVIEW. On request of the |
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comptroller, the office shall provide the comptroller the following |
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regarding the tax division: |
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(1) a list of the administrative law judges, including |
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temporary administrative law judges, who have heard cases in the |
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division in the past year; |
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(2) the qualifications of the judges; and |
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(3) any other information considered necessary by the |
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comptroller in evaluating the performance of the judges hearing |
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cases in the tax division. |
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Sec. 2003.108. REPORTS. (a) The office shall provide the |
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comptroller a monthly status report that lists pending cases and |
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provides information on any case that exceeds the comptroller's |
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time lines for issuing a proposal for decision or an agreed order. |
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(b) At least quarterly, the office shall review with the |
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comptroller and appropriate staff of the office the status of |
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pending cases under this subchapter. |
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(c) The office shall provide a quarterly report to the |
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comptroller on services performed by the office for the comptroller |
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under this subchapter. |
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Sec. 2003.109. RULES; EARLY REFERRAL. (a) The comptroller |
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may adopt rules to provide for the referral to the tax division of |
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issues related to a case described by Section 111.00455, Tax Code, |
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to resolve a procedural or other preliminary dispute between the |
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comptroller and a party. |
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(b) After a referral under this section, the tax division |
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shall docket the case and assign an administrative law judge under |
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Section 2003.101. If additional proceedings are required after the |
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consideration of the procedural or other preliminary dispute, the |
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tax division shall appoint the same administrative law judge to |
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hear the case. |
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SECTION 4. The changes in law made by this Act that relate |
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to the procedures governing a hearing before the tax division of the |
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State Office of Administrative Hearings apply only to a case that is |
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filed with the State Office of Administrative Hearings on or after |
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the effective date of this Act. Procedures relating to a case filed |
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with the State Office of Administrative Hearings before the |
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effective date of this Act shall continue to be used in a hearing as |
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those procedures existed immediately before the effective date of |
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this Act, or as provided by an interagency cooperation contract |
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entered into between the comptroller and the office in effect |
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immediately before the effective date of this Act, and are |
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continued in effect only for that purpose. |
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SECTION 5. This Act takes effect immediately if it receives |
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a vote of two-thirds of all the members elected to each house, as |
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provided by Section 39, Article III, Texas Constitution. If this |
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Act does not receive the vote necessary for immediate effect, this |
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Act takes effect September 1, 2007. |
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______________________________ |
______________________________ |
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President of the Senate |
Speaker of the House |
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I hereby certify that S.B. No. 242 passed the Senate on |
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April 19, 2007, by the following vote: Yeas 31, Nays 0; and that |
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the Senate concurred in House amendments on May 15, 2007, by the |
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following vote: Yeas 31, Nays 0. |
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______________________________ |
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Secretary of the Senate |
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I hereby certify that S.B. No. 242 passed the House, with |
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amendments, on May 9, 2007, by the following vote: Yeas 141, |
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Nays 0, one present not voting. |
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______________________________ |
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Chief Clerk of the House |
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Approved: |
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______________________________ |
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Date |
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______________________________ |
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Governor |