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Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts
Glenn Hegar
Texas Comptroller of Public Accounts

taxes

DIRECT SALES TAX REFUNDS FOR REPORTING SEVERANCE TAXPAYERS

Most purchasers who are not permitted for collecting, reporting and paying sales or use tax are required to first ask the seller for a sales and/or use tax refund of any tax paid in error. The seller can grant the refund or give the purchaser Form 00-985, Assignment of Right to Refund (PDF), which allows the purchaser to file a refund claim directly with the Comptroller’s office. However, there is an exception to this requirement for taxpayers that report and pay crude oil or natural gas severance taxes.

Effective Sep. 1, 2021, producers and first purchasers (hereafter referred to as claimants) that report and pay crude oil or natural gas severance taxes but do not have a sales or use tax permit can ask the Comptroller’s office directly for a refund of sales and/or use tax paid in error without obtaining Form 00-985 from the seller.

The direct refund option applies to invoices dated on or after Sep. 1, 2021. It does not apply to invoices dated before Sep. 1, 2021.

Claimants must ensure the refund they are requesting is within the statute of limitations.

The Refund Request Process

Who Can Apply for the Refund?

Producers and first purchasers that must report and pay crude oil and/or natural gas severance taxes, but are not permitted for collecting, reporting and paying sales and/or use tax. See Tax Code Section 151.4305, Tax Refunds for Oil or Gas Severance Taxpayers.

Statute of Limitations

Generally, a person or business has four years from the date the tax was due and payable to make a refund claim. The statute of limitations runs until a tolling event occurs. The statute of limitations is tolled (the clock stops running) when the Audit Division accepts a filed refund claim for which all requirements are met.

Meeting Claim Requirements

A refund claim must:

  • Be submitted in writing, fully stating in detail each reason or ground on which the claim is founded;
  • Identify the period during which the claimed overpayment was made;
  • Be submitted within the applicable limitations period, generally within four years from the date the tax was due and payable; and
  • Be accompanied by Form 01-137, Limited Power of Attorney (PDF), if anyone other than the person or entity to whom the refund is due (such as an accountant or attorney) files a refund claim.
Submitting a Refund Claim

Claimants may file:

Check the status of a previously submitted claim by emailing refund.status@cpa.texas.gov.

Refund Claim Review and Supporting Documentation

The Comptroller's office uses supporting documentation to verify refund claims and can request additional information for each transaction during the verification process. Information requested and reviewed can include, but is not limited to:

  • Purchaser or seller's name.
  • Invoice(s). If there are more than 10, please provide them in a schedule format. Use Form 01-911, Sample Schedule to Support Refunds (PDF) as a guide.
  • Date of transaction.
  • Description of the item(s) purchased or sold.
  • Specific reason for the refund, such as statutory authority.
  • Purchase or sale amount.
  • Sales journal.
  • General ledger.
  • Resale, exemption and/or direct pay certificates.
  • Total amount of tax refund requested.
  • Proof of payment.
  • Executed contracts.
  • Utility predominant use studies, if applicable.
  • Identification of all local jurisdictions to which tax was remitted.
  • Canceled checks or credit memo acceptance forms as proof that tax collected in error by a seller was refunded to the customer(s).
  • The following, if requesting a refund for taxes paid in error to a permitted seller: the seller's name, address and sales tax permit number or information that allows the Comptroller's office to identify the seller's sales tax permit number.
Refund Claim Outcomes

There are three possible outcomes to a refund claim: approved, incomplete or denied/partially denied.

Approved Claims

After the Comptroller's office has approved a refund claim, we will mail a refund check to the claimant entitled to the refund. Factors such as penalties, credit interest or an existing liability can affect the refund amount.

We will send a refund check unless the claimant is set up to receive refunds by direct deposit.

If a claimant has not already been set up for direct deposit, they may contact the Revenue Accounting Division at 512-463-4561 to obtain Form 74-221, Tax Refund Direct Deposit Authorization (login required) (PDF) to initiate the process for receiving payments electronically.

Incomplete Claims

The statute of limitations will not be tolled (does not end) until a refund claim includes all of the required elements. The Comptroller's office will notify the claimant of the additional information needed.

Denied or Partially Denied Claims

The Comptroller's office will notify the claimant if the refund cannot be granted in full or in part and will identify the reason(s) for the denial. The claimant can contest the denial by requesting a refund hearing or notice of intent to bypass hearing within 60 days of the denial.

Hearing Requests

To request a hearing, submit a letter with a statement of grounds within 60 days from the date printed on the denial notice. The postmark date, or its equivalent, on a request for hearing will constitute the filing date. The Comptroller will only consider hearing requests that are filed timely. See Rule 1.5, Filing Documents with SOAH or the Office of Special Counsel for Tax Hearings.

If a refund hearing is requested within 60 days of the denial, the Comptroller's office can issue a written demand notice for all evidence to support the claim for refund. The evidence must be submitted within 60 days of the date of the demand notice or within 180 days after the date the refund is claimed, whichever is later. Documents not timely submitted as requested by the demand notice cannot be considered or introduced as evidence in a refund hearing.

Alternative: NOTICE OF INTENT TO BYPASS THE HEARING

If you are a claimant who disagrees with the results of a refund claim, you can waive your right to an administrative tax refund hearing and file suit on your refund claim in district court. When selecting this option, you must file a Notice of Intent to Bypass the Hearing. The notice must:

  • Be received by the Comptroller within 60 days from the date of the refund denial letter;
  • Be titled, "Notice of Intent to Bypass the Hearing";
  • Assert the material facts and each specific legal basis on which the refund is claimed; and
  • Specify the dollar amount of the claim.

The Comptroller’s office may request a conference within 30 days from the date we receive your Notice of Intent to Bypass the Hearing. In this case, the Comptroller will send a written notice of conference that includes a date and time for the conference that is within 90 days from the date the Comptroller’s office received your Notice of Intent to Bypass the Hearing.

You can request that the conference be rescheduled to another date, and the Comptroller’s office will make a good-faith effort to accommodate that request. If a conference date cannot be agreed upon by the 90th day after the date we receive your Notice of Intent to Bypass the Hearing, however, you can rescind the Notice of Intent and request an administrative hearing if the parties cannot timely agree on a reset date, provided you act within 120 days of the Comptroller’s receipt of your Notice of Intent.

The conference provides participants with an opportunity to discuss additional documentation that might be necessary or available, and attempt to clarify or resolve the disputes.

If the Comptroller’s office agrees, the person who submitted the Notice of Intent to Bypass the Hearing may, after the conference, amend a material fact or legal basis included in the Notice of Intent.

The person who filed the Notice of Intent to Bypass the Hearing may file suit in district court:

  • On or before the 90th day after the date the Notice of Intent was received if the Comptroller’s office does not provide a notice of conference within 30 days from the date it receives the Notice of Intent; or
  • Within 60 days after the date the conference concludes, or a later date to which the Comptroller’s office agrees if the refund claim is not resolved after the conference.

Need Help?

For help requesting a refund through our online system, contact us at 512-463-4545 or email refund.request@cpa.texas.gov.

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