Office of House Bill AnalysisS.B. 1319
By: Ratliff
Ways & Means


Currently, the state's tax record-keeping, tax reporting, and auditing
processes are often long and excessively burdensome for business taxpayers.
S.B. 1319 authorizes certain taxpayers to perform managed audits under the
supervision of the comptroller of public accounts and certain businesses to
assess the taxability of their purchases through a percentage-based
reporting method.  In addition, this bill authorizes holders of sales tax
permits to compute tax refunds due by a sampling method.  


It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the comptroller of public accounts in
SECTIONS 2 and 3 (Sections 151.4171 and 151.430, Tax Code) of this bill. 


SECTION 1.  Amends Subchapter B, Chapter 151, Tax Code, by adding Section
151.0231, as follows: 

Sec.  151.0231.  MANAGED AUDITS.  (a)  Defines "managed audit."  

(b)  Authorizes a managed audit to be limited to certain categories of
liability under this chapter.   

(c)  Authorizes the comptroller of public accounts (comptroller), in a
written agreement, to authorize a taxpayer to conduct a managed audit under
this section.  Sets forth certain requirements for the agreement.   

(d)  Sets forth certain factors the comptroller is authorized to consider
in determining whether to authorize a managed audit.   

(e)  Provides that the decision to authorize or not authorize a managed
audit rests solely with the comptroller.   

(f)  Authorizes the comptroller to examine records and perform reviews that
the comptroller determines are necessary before the audit is finalized to
verify the results of the audit.   

(g)  Prohibits the comptroller from assessing a penalty and authorizes the
comptroller to waive all or part of the interest that would otherwise
accrue on any amount identified to be due in a managed audit, unless the
audit or information reviewed by the comptroller under Subsection (f)
discloses fraud or wilful evasion of the tax.  Provides that this
subsection does not apply to any amount collected by the taxpayer that was
a tax or represented to be a tax but that was not remitted to this state.   

(h)  Entitles the taxpayer to a refund of any tax overpayment disclosed by
a managed audit under this section, except as provided by Section

 SECTION 2.  Amends Subchapter I, Chapter 151, Tax Code, by adding Section
151.4171, as follows: 

"percentage-based reporting method."   

(b)  Authorizes the comptroller to authorize the holder of a direct payment
permit to use a percentage-based reporting method.  Requires the authorized
percentage to be used for a three-year period specified by the comptroller,
unless the authorization is revoked by the comptroller.   

(c)  Authorizes the comptroller to revoke the authorization to report under
this section if the comptroller determines that the percentage being used
is no longer representative because of a change in the law or in the
taxpayer's business operations.   

(d)  Provides that the decision of the comptroller to deny or revoke
authorization under this section is not appealable.   

(e)  Authorizes the comptroller to categorize transactions by dollar
amount, by type of taxable item purchased, by the purpose for which the
taxable item will be used, or by other standards appropriate to the
taxpayer's operations, in deciding whether to authorize reporting under
this section.   

(f)  Authorizes the comptroller, by rule, to specify additional procedures
that must be followed and conditions that must be met before the
comptroller authorizes a taxpayer to report under this section.   

SECTION 3. Amends Subchapter I, Chapter 151, Tax Code, by adding Section
151.430, as follows: 

Sec.  151.430.  DETERMINATION OF OVERPAID AMOUNTS.  (a)  Provides that this
section applies to the tax on purchases paid by a person holding a permit
under this chapter who has purchased taxable items for use in this state
and has remitted tax on those items in error to this state or has paid tax
on those items in error to a retailer holding a permit under this chapter.

(b)  Authorizes a person to whom this section applies to compute the amount
of overpayment by use of a projection based on a sampling of transactions.
Requires the sampling method used to comply with generally accepted
sampling methods as approved by the comptroller.   

(c)  Authorizes the person to obtain reimbursement for amounts determined
to have been overpaid by taking a credit on one or more sales tax returns
or by filing a claim for refund with the comptroller within the limitation
period specified by Subchapter D, Chapter 111.  
(d)  Requires the person to record the method by which the projection and
computation were performed and to make available on request by the
comptroller the records on which the projection and computation were based.

(e)  Authorizes the comptroller to adopt rules specifying additional
procedures that must be followed in connection with claiming a credit under
this section. 

SECTION 4. Effective date: October 1, 1999.
SECTION 5. Emergency clause.