      TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN


                                       NO. 03-13-00400-CV



       Glenn Hegar, Comptroller of Public Accounts of the State of Texas, Appellant

                                                  v.

                                       Ryan, LLC, Appellee


     FROM THE DISTRICT COURT OF TRAVIS COUNTY, 200TH JUDICIAL DISTRICT
    NO. D-1-GN-12-002388, HONORABLE AMY CLARK MEACHUM, JUDGE PRESIDING



                             MEMORANDUM OPINION


               Appellant Glenn Hegar, in his official capacity as the Texas Comptroller of Public

Accounts,1 appeals from the trial court’s judgment declaring invalid and illegal subsection (a)(4) of

Comptroller’s rule 3.325, as adopted in 2011, and subsections (a)(4), (b)(10), and (e) of the rule, as

amended in 2013. See 34 Tex. Admin. Code § 3.325 (Comptroller of Public Accounts, Refunds and

Payments under Protest) (effective January 7, 2013) (“2013 rule”); 36 Tex. Reg. 4570 (adopting new

§ 3.325 and repealing existing § 3.325, effective July 19, 2011) (Comptroller of Public Accounts)

(“2011 rule”). For the reasons that follow, we affirm the trial court’s judgment in part and reverse

and render in part.




       1
        Glenn Hegar is substituted for Susan Combs, each in their official capacity as the Texas
Comptroller of Public Accounts. See Tex. R. App. P. 7.2(a).
                                            BACKGROUND

               Appellee Ryan, LLC is a tax services firm. As part of its business, it files and pursues

sales and use tax refund claims on behalf of its clients. See Tex. Tax Code § 111.104(b) (authorizing

tax refund claim to be filed by “person who directly paid the tax to this state or by the person’s

attorney, assignee, or other successor”).

               In 2012, Ryan sued the Comptroller, seeking declaratory relief pursuant to section

2001.038 of the Administrative Procedure Act (APA). See Tex. Gov’t Code § 2001.038. Ryan

sought a declaration from the court that subsection (a)(4) of the 2011 rule was facially illegal and

invalid. That subsection provided:


       (a)     Requirements for refund claims.

       ...

       (4)     A person who requests a refund from the comptroller must:

       (A)     submit a claim in writing that identifies the period during which the claimed
               overpayment was made and must state fully and in detail the specific grounds
               upon which the claim is based, including, at a minimum, each of the
               following about each transaction upon which a refund is requested:

               (i)      purchaser or seller’s name, as appropriate;
               (ii)     invoice number, if applicable;
               (iii)    date of transaction;
               (iv)     description of the item(s) purchased or sold;
               (v)      specific reason for the refund, such as applicable statutory authority;
               (vi)     purchase or sale amount subject to refund;
               (vii)    total amount of tax refund requested;
               (viii)   identification of all local jurisdictions to which tax was remitted; and
               (ix)     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 to identify the seller’s sales
                        tax permit number;

                                                   2
       (B)     submit the claim within the applicable limitations period as provided by
               subsection (b) of this section; and

       (C)     submit supporting documents required by the comptroller to verify any refund
               claims or credits taken.


36 Tex. Reg. 4570 (effective July 19, 2011). Ryan’s complaint concerned the nine categories of

transactional detail subsection (a)(4)(A) of the 2011 rule required to be filed at the time a refund

claim was filed. Ryan urged that this requirement “expressly impose[d] additional burdens,

conditions, and restrictions on refund claims in excess of the provisions of Tax Code

§ 111.104.” See Tex. Tax Code § 111.104;2 Office of Pub. Util. Counsel v. Public Util. Comm’n,

131 S.W.3d 314, 321 (Tex. App.—Austin 2004, pet. denied) (describing facially invalid rules).

               Shortly before the effective date of amendments to the 2011 rule, see

38 Tex. Reg. 148 (2013), Ryan amended its petition to include claims for declaratory relief

challenging subsections (a)(4), (b)(10), and (e) of the 2013 rule. Those subsections provide:


       (a)     Requirements for refund claims.

       (4)     A person who requests a refund from the comptroller must:

               (A)     submit a claim in writing that states fully and in detail each reason or
                       ground on which the claim is founded;

               (B)     identify the period during which the claimed overpayment was made;




       2
          Subsection 111.104(c) of the Tax Code requires a claim for a refund to “be written” and
“state fully and in detail each reason or ground on which the claim is founded.” Tex. Tax Code
§ 111.104(c)(1), (2). It also requires a claim to be filed “before the expiration of the applicable
limitation period as provided by this code or before the expiration of six months after a jeopardy or
deficiency determination becomes final, whichever period expires later.” Id. § 111.104(c)(3).

                                                  3
      (C)    include, at a minimum, each of the following about each transaction
             upon which a refund is requested: (i) purchaser or seller’s name, as
             appropriate; (ii) invoice number, if applicable; (iii) date of
             transaction; (iv) description of the item(s) purchased or sold;
             (v) specific reason for the refund, such as applicable statutory
             authority; (vi) purchase or sale amount subject to refund; (vii) total
             amount of tax refund requested; (viii) identification of all local
             jurisdictions to which tax was remitted; and (ix) 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 to identify the seller’s sales tax permit number;

      (D)    submit the claim within the applicable limitations period as provided
             by subsection (b) of this section; and

      (E)    submit supporting documentation to verify any refund claimed or
             credit taken, such as copies of invoices, cancelled checks, and
             executed contracts. If the supporting documentation cannot be easily
             mailed or otherwise easily submitted to the agency, the refund claim
             must include a statement that all supporting documentation necessary
             to verify the claim will be made available to the comptroller upon
             request.

(b)   Statute of limitations for refund claims.
...

      (10)   Requirements to toll the statute of limitations.

      (A)    Subject to the other paragraphs of this subsection regarding the statute
             of limitations, a refund claim that is filed with the comptroller will
             toll the statute of limitations if the following requirements are met:

             (i)     the claim states fully and in detail each reason or ground on
                     which the claim is founded, as required by subsection
                     (a)(4)(A) of this section;

             (ii)    the claim identifies the period during which the claimed
                     overpayment was made, as required by subsection (a)(4)(B)
                     of this section;

             (iii)   if the claim is being filed by a non-permitted person who is an
                     assignee of or successor to a refund that may be owed, the

                                        4
                    person submits with the claim for refund the assignment of
                    right to refund; and

             (iv)   if a person other than the person to whom the refund is due is
                    submitting the claim for refund, a power of attorney is
                    submitted with the claim.

      (B)    If the refund claim meets the requirements of subparagraph (A) of this
             paragraph, but does not meet the other requirements under subsection
             (a)(4) of this section, the claim will be denied and the person may
             request a hearing as provided by subsection (e) of this section.

      (C)    If a person does not meet the requirements of subparagraph (A) of
             this paragraph, the statute of limitations will not be tolled.

...

(e)   Denial of refund claim.

      (1)    The comptroller will notify the claimant if the comptroller determines
             that a refund claim cannot be granted in part or in full and will also
             notify the claimant which requirements of subsection (a)(4) of this
             section were not met. The claimant may then request a refund
             hearing within 30 days of the denial.

      (2)    A person may not refile a refund claim for the same transaction or
             item, tax type, period, and ground or reason that was previously
             denied by the comptroller.

      (3)    After receiving a timely request for a refund hearing, the comptroller
             may issue a written demand notice requesting that all documentation
             to enable the comptroller to verify the claim be produced within 180
             days from the date of the demand notice. A person may not introduce
             into evidence at the hearing any documents that were not timely
             produced as requested by the demand notice. This limitation does not
             apply to a judicial proceeding filed in accordance with Tax
             Code, Chapter 112. The ability of the comptroller to demand
             documentation once a claim for a refund hearing is requested does not
             eliminate the requirement that persons provide documentation under
             subsection (a)(4)(E) of this section when the refund is first claimed.




                                       5
34 Tex. Admin. Code § 3.325(a)(4), (b)(10), (e). Ryan challenged the requirements to provide nine

categories of transactional detail in subsection (a)(4)(C) and supporting documentation in subsection

(a)(4)(E) at the time the claim is initially filed. See id. § 3.325(a)(4)(C), (E). Ryan also challenged

the effect of these requirements on the tolling provision in subsection (b)(10) and a taxpayer’s ability

to introduce evidence at an administrative hearing in subsection (e)(3). See id. § 3.325(b)(10), (e)(3).

As to the 2011 rule, Ryan amended its complaint to include a challenge to the supporting

documentation requirement in subsection (a)(4)(C). See 36 Tex. Reg. 4570.

                The case was tried to the bench in May 2013. Much of the testimony during trial

concerned Ryan’s standing to bring its rule challenge. Ryan’s witnesses testified about Ryan’s tax

service of filing and pursuing refund claims, its fee arrangements with its clients, the practical

applications of the different versions of the rule, and the rule’s impact on Ryan’s business. The

witnesses also described Ryan’s concerns and its attempts to comply with the transactional detail and

supporting documentation requirements in the 2011 and 2013 rules. According to Ryan, these

requirements were burdensome, had harmed its business, and made certain claims “kind of

impossible in most of the cases.” One of Ryan’s witnesses explained, “Understanding and predicting

what documentation is going to be sufficient for each of those transactions is impossible at the time

you file the claim.” An employee for the Comptroller testified on the Comptroller’s behalf about

the verification process for refund claims, the Comptroller’s need for the requested information, and

the Comptroller’s retroactive application of the 2013 rule.

                On May 10, 2013, the trial court rendered judgment that:




                                                   6
       1.      The version of 34 Tex. Admin. Code § 3.325(a)(4) in effect during the period
               July 19, 2011 through January 6, 2013, imposes additional burdens,
               conditions, and restrictions on sales and use tax refund claims in excess of the
               specific provisions of Texas Tax Code § 111.104, and is therefore invalid
               and illegal.

       2.      The version of 34 Tex. Admin. Code § 3.325(a)(4), (b)(10), and (e) in effect
               beginning January 7, 2013, and currently in effect, imposes additional
               burdens, conditions, and restrictions on sales and use tax refund claims in
               excess of the specific provisions of Texas Tax Code § 111.104, and is
               therefore invalid and illegal.


The trial court also entered findings of fact and conclusions of law. This appeal followed.


                                            ANALYSIS

               The Comptroller raises three issues on appeal, contending that: (i) the trial court did

not have subject matter jurisdiction over Ryan’s claims, (ii) the legislature unambiguously authorized

rule 3.325, and (iii) rule 3.325 reasonably construed any ambiguity in the Tax Code.


Did the trial court have jurisdiction over Ryan’s claims?

               In his first issue, the Comptroller raises three jurisdictional arguments. He contends

that the trial court did not have subject matter jurisdiction over Ryan’s claims because Ryan failed

to prove its standing, sovereign immunity bars Ryan’s claims, and Ryan’s challenge to the 2011 rule

was moot. The Comptroller’s jurisdictional arguments are questions of law which we review de

novo. See Texas Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004).




                                                  7
        Standing

                  The Comptroller contends that Ryan failed to prove a cognizable injury. “For

standing, a plaintiff must be personally aggrieved; his alleged injury must be concrete and

particularized, actual or imminent, not hypothetical.”            DaimlerChrysler Corp. v. Inman,

252 S.W.3d 299, 304–05 (Tex. 2008); see also Heckman v. Williamson Cnty., 369 S.W.3d 137, 154

(Tex. 2012) (noting that standing doctrine in Texas requires “concrete injury to the plaintiff and a

real controversy between the parties that will be resolved by the court”). If a plaintiff lacks standing

to assert his claims, the court lacks jurisdiction and must dismiss the claims. Heckman, 369 S.W.3d

at 150–51; see Waco Indep. Sch. Dist. v. Gibson, 22 S.W.3d 849, 850 (Tex. 2000) (noting that

standing is component of subject matter jurisdiction).

                  The Comptroller urges that there was no evidence that Ryan had filed claims in its

own name that were affected by the rule and that Ryan’s only injury that was supported by evidence

was that the rule could adversely affect Ryan’s “contingent-fee arrangements.” According to the

Comptroller, injury based on this type of arrangement is insufficient as a matter of law to confer

standing. Ryan’s pleadings, however, track the language of section 2001.038 of the APA, and

evidence at trial was sufficient to support the trial court’s conclusions that “the rule or its threatened

application interferes with or impairs, or threatens to interfere with or impair a legal right or privilege

of [Ryan].”3 See Tex. Gov’t Code § 2001.038 (authorizing “declaratory judgment if it is alleged that


        3
             The trial court’s conclusions of law included:

        7.        Plaintiff, as a permitted taxpayer, has a right to file and pursue Texas sales
                  and use tax refund claims for overpayments of Texas sales and use tax.


                                                    8
the rule or its threatened application interferes with or impairs, or threatens to interfere with or

impair, a legal right or privilege of the plaintiff”); Finance Comm’n v. Norwood, 418 S.W.3d 566,

582 n.83 (Tex. 2013) (noting that pleadings tracking section 2001.038 language were sufficient and

that APA “does not purport to set a higher standard than that set by the general doctrine of

standing”).

               Ryan presented evidence that it is a taxpayer, taxpayer representative, and assignee

with the legal right pursuant to the Tax Code to file refund claims in its own name and as an assignee

of its clients’ claims. See Tex. Tax Code § 111.104(b) (authorizing person or person’s assignee to

file tax refund claim); see also 34 Tex. Admin. Code § 1.4 (Comptroller of Pub. Accounts,

Representation and Presentation) (authorizing representative for taxpayer). According to Ryan’s

witnesses, Ryan holds a sales and use tax permit and files “hundreds of claims each year” worth

“tens of millions of dollars.” Ryan’s typical “contingent fee agreement” with its clients “includes

an assignment of a portion of the proceeds from the refund claim to [Ryan] as [its] fees.” Its clients




       8.      Plaintiff has a right to file and pursue a Texas sales and use tax refund claim
               as an assignee of another taxpayer’s Texas sales and use tax refund claim.

       9.      The 2011 Rule and 2013 Rule interferes with and/or impairs Plaintiff’s
               privilege to earn income from filing and pursuing Texas sales and use tax
               refund claims on behalf of its clients.

       10.     The 2011 Rule and 2013 Rule interferes with or impairs Plaintiff’s right as
               a permitted taxpayer, to file and pursue Texas sales and use tax refund claims
               for overpayments of Texas sales and use tax.

       11.     The 2011 Rule and 2013 Rule interferes with or impairs Plaintiff’s right, as
               an assignee of another taxpayer’s Texas sales and use tax refund claim, to file
               and pursue Texas sales and use tax refund claims.

                                                  9
also sign powers of attorney to authorize Ryan to file and pursue refund claims. Therefore, Ryan

invests its own resources to pursue refund claims. Based on our review of the evidence, we agree

with the trial court that Ryan established the requisite injury to bring its rule challenge.4 See Tex.

Gov’t Code § 2001.038; Norwood, 418 S.W.3d at 582 n.83; Stop the Ordinances Please v. City of

New Braunfels, 306 S.W.3d 919, 928 (Tex. App.—Austin 2010, no pet.) (concluding plaintiffs

“demonstrated the required actual, concrete, and particularized infringement of their legally protected

interests necessary for standing” and collecting cases in which court found that providers of goods

and services had standing to challenge government regulations that harmed business opportunities,

market, and customers).

                The Comptroller also urges that Ryan lacked standing because it failed to show that

a favorable judicial decision would redress its alleged injury. “The third element of standing requires

that the plaintiff’s alleged injury be ‘likely to be redressed by the requested relief.’” Heckman,


       4
           The trial court’s findings of fact included:

       38.      The requirements added by the 2011 and 2013 Rules on refund claims impose
                considerable burden and expense on Plaintiff in filing claims. These
                burdensome requirements are stated in § 3.325(a)(4) of the 2011 Rule and
                § 3.325(a)(4), (b)(10), and (e) of the 2013 Rule.

       ...

       40.      The 2011 and 2013 Rules interfere with and impair Plaintiff’s ability to
                market to, and represent, taxpayers with refund claims; increase the costs
                associated with conducting Plaintiff’s tax consulting business; and threaten
                Plaintiff’s ability to conduct its business and reduces the profitability of the
                business.

       41.      These very harmful impacts of the 2011 and 2013 Rules on Plaintiff were
                described in detail in the testimony of the witnesses called by Plaintiff.

                                                  10
369 S.W.3d at 155 (quoting Allen v. Wright, 468 U.S. 737, 751 (1984)). “To satisfy redressability,

the plaintiff need not prove to a mathematical certainty that the requested relief will remedy his

injury—he must simply establish a ‘substantial likelihood that the requested relief will remedy the

alleged injury in fact.’” Id. at 155–56 (quoting Vermont Agency of Natural Res. v. United States ex

rel. Stevens, 529 U.S. 765, 771 (2000)).

               The Comptroller urges that, even if Ryan successfully challenges the rule, its alleged

injury will not be redressed because Ryan did not challenge the transactional detail provision that

has existed in the rule since 2001. See 26 Tex. Reg. 1115, 1116 (proposed Feb. 2, 2001), adopted

26 Tex. Reg. 3823 (May 25, 2001). “[W]hen a court declares an agency rule invalid, the governing

legal standard reverts to the last validly adopted one in effect prior to the rule’s promulgation.”

Texas Health & Human Servs. Comm’n v. El Paso Cnty. Hosp. Dist., 351 S.W.3d 460, 475–77 (Tex.

App.—Austin 2011), aff’d, 400 S.W.3d 72 (Tex. 2013) (citing All Saints Health Sys. v. Texas

Workers’ Comp. Comm’n, 125 S.W.3d 96, 103 (Tex. App.—Austin 2003, pet. denied)). The version

of rule 3.325 in existence at the time the 2011 rule was adopted, however, was repealed. See

36 Tex. Reg. 4570. Further, Ryan’s requested relief was to return to the legal standard set forth in

subsection 111.104(c) of the Tax Code. See Tex. Tax Code § 111.104(c). Reverting to the express

requirements in the Tax Code redresses Ryan’s alleged injury from the challenged transactional

detail and supporting documentation requirements in the rule.5 See Heckman, 369 S.W.3d at


       5
          In any event, even if the appropriate legal standard would be the version of the rule from
2001, the Comptroller does not contend that the 2001 version had a similar supporting
documentation requirement as the 2011 and 2013 rules, and evidence at trial supported a finding that
prior to the adoption of the 2011 rule, the Comptroller did not refuse to file refund claims on the
ground that the initial claim did not include supporting documents or transactional detail.

                                                11
155–56. Thus, we conclude that Ryan satisfied the element of redressability to confer standing to

bring its rule challenge.


       Sovereign Immunity

               The Comptroller also urges that the trial court did not have jurisdiction because Ryan

failed to prove that the State waived sovereign immunity. According to the Comptroller, Ryan did

not allege or prove that the rule threatens any of its legal rights or privileges. See Tex. Gov’t Code

§ 2001.038. Section 2001.038 of the APA, however, is a “limited waiver of sovereign immunity.”

State v. BP Am. Prod. Co., 290 S.W.3d 345, 362–63 (Tex. App.—Austin 2009, pet. denied). Based

on our review of the evidence as described above, we conclude that Ryan’s claims brought under

section 2001.038 are not barred by sovereign immunity. See id.; see also Texas Dep’t of Pub. Safety

v. Salazar, 304 S.W.3d 896, 903 (Tex. App.—Austin 2009, no pet.) (noting that section 2001.038

is “legislative grant of subject-matter jurisdiction, so that valid claims raised pursuant to

that provision are not barred by sovereign immunity”); Combs v. Entertainment Publ’ns, Inc.,

292 S.W.3d 712, 720 (Tex. App.—Austin 2009, no pet.) (collecting cases concluding sovereign

immunity waived in context of rule challenge under the APA).


       Mootness

               The Comptroller urges that the trial court does not have jurisdiction over Ryan’s

challenge to the 2011 rule because it is moot. According to the Comptroller, the 2011 rule can no

longer harm Ryan. “The mootness doctrine dictates that courts avoid rendering advisory opinions

by only deciding cases that present a ‘live’ controversy at the time of the decision.” Texas Health



                                                 12
Care Info. Council v. Seton Health Plan, Inc., 94 S.W.3d 841, 846 (Tex. App.—Austin 2002, pet.

denied) (citing Camarena v. Texas Emp’t Comm’n, 754 S.W.2d 149, 151 (Tex. 1988)). “A case

becomes moot when: (1) it appears that one seeks to obtain a judgment on some controversy, when

in reality none exists; or (2) when one seeks a judgment on some matter which, when rendered

for any reason, cannot have any practical legal effect on a then-existing controversy.” Id.

(citations omitted).

                 Ryan presented evidence at trial that the Comptroller rejected and did not

acknowledge or file claims that the Comptroller concluded did not comply with the 2011 rule.6 By

refusing to acknowledge the claims, the Comptroller precluded the limitations period from being

tolled and there was no mechanism to appeal the Comptroller’s decision. See Tex. Tax Code

§ 111.104(c); see also id. § 112.151 (requiring person to file tax refund under section 111.104 and

motion for rehearing under section 111.105 before bringing suit for refund); Combs v. Chevron, Inc.,

319 S.W.3d 836, 844–45 (Tex. App.—Austin 2010, pet. denied) (noting that jurisdiction over tax

refund claim is contingent on filing proper refund claim under administrative procedures specified

in tax protest law).7

        6
          One of Ryan’s witnesses testified, “When the 2011 Rule was first implemented, we would
just get stuff returned to us. There was no record of, you know, the claims being filed; it was just
rejected, saying that we did not meet the requirements of a refund claim.”
        7
            The Comptroller did not contend otherwise. The trial court’s findings of fact included:

        44.      Defendant has admitted in [his] summary judgment motion that if a taxpayer
                 fails to comply with Rule 3.325’s implementation of Tax Code § 111.104(c)
                 the taxpayer will lose its right to file a refund suit in district court.
                 Noncompliance with rule 3.325 by the taxpayer creates an ability for the
                 Defendant to file a plea to the jurisdiction to obtain a dismissal of the refund
                 claim on jurisdictional grounds.

                                                   13
                The Comptroller points to his “judicial admission” during trial that claims filed under

the 2011 rule will be handled under the procedures of the 2013 rule and that the tolling provision of

the 2013 rule “retroactively fixes any ‘damages’ that Ryan might have incurred” to claims filed

during the time period the 2011 rule was effective.8 Subsection (b)(10) of the 2013 rule specifies

the requirements for tolling the statute of limitations and allows tolling even if a claim does not

comply with the transactional detail and supporting documentation requirements in subsections

(a)(4)(C) and (E). See 34 Tex. Admin. Code § 3.325(a)(4)(C), (E), (b)(10)(B). But, even if the

Comptroller agrees to apply the procedures of the 2013 rule to 2011 claims, the Comptroller

continues to contest Ryan’s challenges to both the 2011 and 2013 rules and asserts that Ryan also

should have challenged the 2001 version of the rule. Further, the 2013 rule does not state that it

applies retroactively. On this record, we cannot conclude that the Comptroller mooted Ryan’s

challenge to the 2011 rule by filing his “judicial admission.” See Tex. Gov’t Code § 402.004 (“An

admission, agreement, or waiver made by the attorney general in an action or suit to which the state

is a party does not prejudice the rights of the state.”).




        8
          On the first day of trial, the Comptroller filed the following document, titled
“Comptroller’s Judicial Admission”:

        Every refund claim filed since July 19, 2011 will be deemed ‘perfected’ with respect
        to statute of limitations as of the date of filing, if the claim includes the tax liability
        period at issue, the approximate amount of refund requested, and the legal theories
        justifying the refund. In other words, limitations toll for the tax liability period,
        approximate amount of refund requested, and legal theories justifying the refund,
        from the date of filing. This retroactively includes claims which the Comptroller
        denied and which were deemed not to toll limitations at the time. Furthermore, every
        such claim will be handled under the procedures of the 2013 Rule.

                                                    14
                We conclude that the trial court had subject matter jurisdiction over Ryan’s claims

and overrule the Comptroller’s first issue.


Are the Challenged Subsections Facially Valid?

                In his second and third issues, the Comptroller contends that the trial court erred in

declaring invalid and illegal subsection (a)(4) of the 2011 rule and subsections (a)(4), (b)(10), and

(e) of the 2013 rule. See 34 Tex. Admin. Code § 3.325(a)(4), (b)(10), (e); 36 Tex. Reg. 4570

(subsection (a)(4) of 2011 rule). He urges that the legislature unambiguously authorized the rule and

that, even if there is ambiguity, the rule reasonably resolves any statutory ambiguity.9


        Facial Validity Challenges to Agency Rules and Standard of Review

                The applicable test for a facial rule challenge, as stated by this Court, is “whether the

rule is contrary to the relevant statute.” DuPont Photomasks, Inc. v. Strayhorn, 219 S.W.3d 414, 420

(Tex. App.—Austin 2006, pet. denied) (citing Office of Pub. Util. Counsel, 131 S.W.3d at 321). “To

establish the rule’s facial invalidity, a challenger must show that the rule: (1) contravenes specific

statutory language; (2) runs counter to the general objectives of the statute; or (3) imposes additional

burdens, conditions, or restrictions in excess of or inconsistent with the relevant statutory

provisions.” Office of Pub. Util. Counsel, 131 S.W.3d at 321; see also Ware v. Texas Comm’n on




       9
         Much of the Comptroller’s briefing addresses his position that Ryan files “baseless claims.”
Ryan’s evidence concerning its business practices is relevant to the Comptroller’s standing
arguments but does not impact our analysis of Ryan’s challenge to the facial validity of the 2011 and
2013 rules. See Office of Pub. Util. Counsel v. Public Util. Comm’n, 131 S.W.3d 314, 321 (Tex.
App.—Austin 2004, pet. denied) (describing facially invalid rules).

                                                   15
Law Enforcement, No. 03-12-00740-CV, 2013 Tex. App. LEXIS 5983, at *4–5 (Tex. App.—Austin

May 16, 2013, no pet.) (mem. op.).

               Whether the challenged subsections of the 2011 and 2013 rules are facially invalid

turns on construction of the rule and relevant Tax Code provisions, matters of law that we review

de novo. See Texas Mun. Power Agency v. Public Util. Comm’n, 253 S.W.3d 184, 192 (Tex. 2007);

Rodriguez v. Service Lloyds Inc. Co., 997 S.W.2d 248, 254 (Tex. 1999) (construing agency rules in

the same manner as statutes). Our primary concern in construing a statute is the express statutory

language. See Galbraith Eng’g Consultants, Inc. v. Pochucha, 290 S.W.3d 863, 867 (Tex. 2009).

“We thus construe the text according to its plain and common meaning unless a contrary intention

is apparent from the context or unless such a construction leads to absurd results.” Presidio

Indep. Sch. Dist. v. Scott, 309 S.W.3d 927, 930 (Tex. 2010) (citing City of Rockwall v. Hughes,

246 S.W.3d 621, 625–26 (Tex. 2008)). We consider the statutory scheme, not isolated portions.

Railroad Comm’n v. Texas Citizens for a Safe Future & Clean Water, 336 S.W.3d 619, 628 (Tex.

2011); 20801, Inc. v. Parker, 249 S.W.3d 392, 396 (Tex. 2008).

               We also are mindful that a precondition to deference to an agency’s interpretation of

a statute is ambiguity. See Combs v. Roark Amusement & Vending, L.P., 422 S.W.3d 632, 635 (Tex.

2013) (describing agency-deference doctrine); Combs v. Health Care Servs., 401 S.W.3d 623,

629–30 (Tex. 2013) (same). Further, “[t]axing statutes are construed strictly against the taxing

authority and liberally for the taxpayer.” See Morris v. Houston Indep. Sch. Dist., 388 S.W.3d 310,

313 (Tex. 2012). Guided by these standards, we turn to our review of the challenged subsections.




                                                16
        Subsection (a)(4)

                In its judgment, the trial court declared subsection (a)(4) of the 2011 and 2013 rules

invalid and illegal because the subsection, as adopted and as amended, imposed “additional burdens,

conditions, and restrictions on sales and use refund claims in excess of the provisions of Texas

Tax Code § 111.104.” See Tex. Tax Code § 111.104; 34 Tex. Admin. Code § 3.325(a)(4);

36 Tex. Reg. 4570; Office of Pub. Util. Counsel, 131 S.W.3d at 321.

                As a threshold matter, the Comptroller, among his arguments, urges that the trial court

granted broader relief than requested by Ryan and that portions of subsection (a)(4), both as adopted

and as amended, are not invalid because they track statutory language. We agree with the

Comptroller on this point. Ryan’s challenges to subsection (a)(4), both as adopted and amended,

were limited to the nine categories of transactional detail and supporting documentation required to

be filed at the initiation of a refund claim. Those requirements are found in subsection (a)(4)(A) and

(C) of the 2011 rule and subsection (a)(4)(C) and (E) of the 2013 rule. Ryan did not challenge

subsection (a)(4)(B) or other provisions in subsection (a)(4)(A) of the 2011 rule or subsections

(a)(4)(A), (B), or (D) of the 2013 rule, provisions that track or follow from statutory language in

section 111.104 of the Tax Code. See Tex. Tax Code § 111.104(c).

                As to the 2013 rule, subsection (a)(4)(A), requiring the claim to be submitted in

writing and state “fully and in detail each reason or ground on which the claim is founded,” mirrors

the statutory language in subsections 111.104(c)(1) and (2) of the Tax Code. Id. § 111.104(c)(1),

(2); 34 Tex. Admin. Code § 3.325(a)(4)(A); see also Tex. Tax Code § 111.002(a) (authorizing

Comptroller to “adopt rules that do not conflict with the laws of this state or the constitution of this



                                                  17
state or the United States for the enforcement of the provisions of this title and the collection of taxes

and other revenues under this title”). Subsection (a)(4)(B) of the 2013 rule, requiring the

identification of the period during which the claimed overpayment was made, and subsection

(a)(4)(D), requiring the claim to be submitted within the applicable limitations period, follow from

the statutory language in subsection 111.104(c)(3) of the Tax Code. Tex. Tax Code § 111.104(c)(3);

34 Tex. Admin. Code § 3.325(a)(4)(B), (D). Subsection 111.104(c)(3) requires a claim to be filed

before the applicable limitations period expires. Tex. Tax Code § 111.104(c)(3).

                Similarly, subsection (a)(4)(A) of the 2011 rule required the claim to be submitted

in writing, identify the period during which the claimed overpayment was made, and state “fully and

in detail the specific grounds” upon which the claim is based, and subsection (a)(4)(B) of the 2011

rule required the claim to be submitted within the applicable limitations period. Given that these

provisions in subsection (a)(4), both as adopted and amended, were not challenged by Ryan and

mirror or follow from the statutory language in subsection 111.104(c) of the Tax Code, we conclude

that the trial court erred by declaring them illegal and invalid. See Office of Pub. Util. Counsel,

131 S.W.3d at 321. On this basis, we sustain the Comptroller’s second issue in part.

                Ryan also does not dispute that the nine categories of transactional detail required in

subsections (a)(4)(A) of the 2011 rule and (a)(4)(C) of the 2013 rule and supporting documentation

required in subsections (a)(4)(C) of the 2011 rule and (a)(4)(E) of the 2013 rule must be produced

during the administrative process in order for a claimant to be entitled to a refund. The crux of the

parties’ dispute then is when the transactional detail and supporting documentation must be

submitted to the Comptroller to support a refund claim.              In this context, we address the



                                                   18
Comptroller’s arguments that the legislature unambiguously authorized the Comptroller to require

the transactional detail and supporting documentation at the initiation of a refund claim and that,

even if there is ambiguity, these requirements reasonably resolve any statutory ambiguity.

                A starting point for the analysis is the supreme court’s guidance in Fleming Foods

of Texas, Inc. v. Rylander, 6 S.W.3d 278 (Tex. 1999). In that case, the supreme court considered a

prior version of rule 3.325. Id. at 281. The court relied on the plain language of sections 111.104

and 111.107 of the Tax Code to conclude that it would not defer to the Comptroller’s interpretation

of those statutes and that rule 3.325 conflicted with the plain language of section 111.104. Id. at 282.

Similarly, the parties’ dispute here primarily turns on our interpretation of subsection 111.104(c)(2)

of the Tax Code. See Tex. Tax Code § 111.104(c)(2). Subsection 111.104(c)(2) requires a claim

for a refund to “state fully and in detail each reason or ground on which the claim is founded.” Id.10

Guided by the supreme court’s analysis in Fleming Foods, we similarly conclude that subsection

111.104(c)(2) is not ambiguous and, thus, we do not defer to the Comptroller’s interpretation of this

subsection. See Fleming Foods, 6 S.W.3d at 282; see also Roark Amusement & Vending,

422 S.W.3d at 635; Health Care Servs., 401 S.W.3d at 629–30. On this basis, we overrule the

Comptroller’s third issue.

                To support his position that the legislature authorized the transactional detail and

supporting documentation requirements in the 2011 and 2013 rules, the Comptroller focuses on the


       10
           As previously stated, subsection 111.104(c) of the Tax Code also requires that the claim
“be written” and “be filed before the expiration of the applicable limitation period as provided by
this code or before the expiration of six months after a jeopardy or deficiency determination becomes
final, whichever period expires later.” Tex. Tax Code § 111.104(c)(1), (3).


                                                  19
plain meaning of “fully” and “in detail,” words that were added to subsection 111.104(c) in 2003.

See Tex. Tax Code § 111.104(c)(2); Act of May 29, 2003, 78th Leg., R.S., ch. 1310, § 86,

2003 Tex. Gen. Laws 4748, 4782; Webster’s Third New Int’l Dictionary 919 (2002) (defining “fully”

to mean, among others, “completely,” “entirely,” “thoroughly”), 616 (defining “detail” to mean,

among others, “extended treatment of or attention to particular items”). But, as previously stated,

subsection (a)(4)(A) of the 2011 and 2013 rules already mirrors this statutory language. The

Comptroller’s interpretation would render this language in both versions of the rule “as mere

surplusage.” See In re Caballero, 272 S.W.3d 595, 599 (Tex. 2008) (noting that courts “give effect

to all [of a rule’s] words and, if possible, do not treat any [ ] language as mere surplusage” (quoting

State v. Shumake, 199 S.W.3d 279, 287 (Tex. 2006)). Further, in subsection (b)(10)(B) of the 2013

rule, the Comptroller expressly refers to the transactional detail and supporting documentation

requirements in subsections (a)(4)(C) and (E) as “other requirements under subsection (a)(4) of this

section,” when it refers to them, recognizing that they are distinct from the subsection (a)(4)(A)

requirements that mirror subsections 111.104(c)(1) and (2) of the Tax Code. See Tex. Tax Code

§ 111.104(c)(1), (2); 34 Tex. Admin. Code § 3.325(a)(4), (b)(10)(B).

               We interpret the phrase “fully and in detail” in subsection 111.104(c)(2) in context.

The phrase specifically refers to “each reason or ground on which the claim is founded.” See Tex.

Tax Code § 111.104(c)(2); Webster’s at 1891 (defining “reason” to mean, among others, “an

expression or statement offered or an explanation of a belief or assertion or as a justification of an

act or procedure”), 1002 (defining “ground” to mean, among others, “foundation or basis on which

knowledge, belief, or conviction rests”). The plain language of the requirements of subsection (c)(2)



                                                  20
are satisfied when the ground—the legal foundation or basis—of the claim is stated “fully and in

detail.” See Tex. Tax Code § 111.104(c)(2).

               We also interpret the phrase “reason or ground” in conjunction with other sections

of the Tax Code that contain similar language. See id. §§ 111.105(d) (referring to “specific ground

of error”), 111.107(b) (referring to “ground or reason”), 112.051(b) (referring to “each reason”),

112.152(a) (referring to “grounds of error”); Scott, 309 S.W.3d at 930–31 & n.3 (noting that

generally use of substantially same phrases in statutes on same subject matter will have same

meaning); Anderson-Clayton Bros. Funeral Home, Inc. v. Strayhorn, 149 S.W.3d 166, 173–74 (Tex.

App.—Austin 2004, pet. denied) (noting that “‘when the same or a similar term is used in the same

connection in different statutes, the term will be given the same meaning in one as in the other,

unless there is something to indicate that a different meaning was intended’” (quoting Guthery

v. Taylor, 112 S.W.3d 715, 722 (Tex. App.—Houston [14th Dist.] 2003, no pet.))).

               Section 112.051 of the Tax Code, addressing suits after protest payments, states:

“The protest must be in writing and must state fully and in detail each reason for recovering the

payment.” Tex. Tax Code § 112.051(b). This Court has interpreted this sentence, which similarly

includes the phrase “fully and in detail” in reference to “reason,” to mean that the “reason” must be

stated in such a way as to put the comptroller on notice of the legal basis of the claim. See Local

Neon Co. v. Strayhorn, No. 03-04-00261-CV, 2005 Tex. App. LEXIS 4667, at *13–15 (Tex.

App.—Austin June 16, 2005, no pet.) (mem. op.) (discussing protest letter and what was required

“to state fully and in detail each reason”); see also In re Nestle, USA, Inc., 359 S.W.3d 207, 208–09




                                                 21
(Tex. 2012) (generally discussing requirements of protest letter); H.K. Global v. Combs, 429 S.W.3d

132, 136 (Tex. App.—Austin 2014, pet. denied) (concluding protest letter sufficient).

                The Comptroller urges that the phrase “fully and in detail” has different meanings in

subsections 111.104(c)(2) and 112.051(b) of the Tax Code because refund suits under chapter 111

serve different purposes from protest suits under chapter 112. See Strayhorn v. Lexington Ins. Co.,

128 S.W.3d 772, 779 (Tex. App.—Austin 2004), aff’d, 209 S.W.3d 83 (Tex. 2006) (noting that “tax

code provides two distinct types of suits, with different procedural requirements: protest suits and

refund suits”). But other sections of chapter 111 also support an interpretation of subsection

111.104(c) that does not entail requiring a claimant to submit the nine categories of transactional

detail and supporting documentation when initially filing its refund claim.

                For example, section 111.107 of the Tax Code addresses when a refund claim is

permitted, and subsection (b) provides that “[a] person may not refile a refund claim for the same

transaction or item, tax type, period, and ground or reason that was previously denied by the

comptroller.” Tex. Tax Code § 111.107. This subsection lists “transaction or item” separately from

“ground or reason,” recognizing that they are not synonymous. See id. § 111.107(b); see also

34 Tex. Admin. Code § 3.325(e)(2) (tracking language of subsection 111.107(b)). Had the

legislature intended the nine categories of transactional detail and the supporting documentation to

be filed when the refund claim initially is filed under subsection 111.104(c), it could have included

language referring to the “transaction or item” as well as the “reason or ground” as it did in

subsection 111.107(b). See Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 540 (Tex. 1981)

(“Only when it is necessary to give effect to the clear legislative intent can we insert additional words



                                                   22
or requirements into a statutory provision.”); City of Rockwall, 246 S.W.3d at 631 (declining to read

additional words into statute in construing statute).

                Other provisions of the Tax Code that reference “ground(s)” are subsections

111.105(d) and 112.152(a). Tex. Tax Code §§ 111.105(d), 112.152(a). Subsection 111.105(d)

requires the motion for rehearing to “assert each specific ground of error,” and subsection 112.152(a)

limits the issues that may be raised in suits for tax refunds to the “grounds of error contained in the

motion for rehearing.” This Court has interpreted these phrases to require a sufficient description of

the legal foundation of the claims. See Sharp v. International Bus. Machs. Corp., 927 S.W.2d 790,

794 (Tex. App.—Austin 1996, writ denied) (noting that section 112.152 is satisfied if motion for

rehearing is sufficiently definite to identify grounds for refund); Lawrence Indus., Inc. v. Sharp,

890 S.W.2d 886, 893 (Tex. App.—Austin 1994, writ denied) (holding that language used was

“sufficient to alert the Comptroller to the subject matter of the protest as required by the Tax Code”).

                Section 112.151 of the Tax Code also refers to sections 111.104 and 111.105 as

prerequisites for bringing a suit for refund. See Tex. Tax Code § 112.151. The statutory scheme,

from the filing of a refund claim to a suit for refund, is designed so that the Comptroller is aware of

the legal basis for the refund claim but then gives the taxpayer a period of time to prove its claim.

As acknowledged by Ryan, the transactional detail and supporting documentation will be required

to prove a refund claim during the administrative process, but the rules’ requirement that this

information be filed at the initiation of a refund claim is unjustified by the wording of the statute and

inconsistent with the overall statutory scheme. See Texas Citizens, 336 S.W.3d at 628 (reviewing

statutory scheme to interpret term).



                                                   23
               The 2011 and 2013 rules’ supporting documentation requirement also directly

conflicts with the statutory limitation in subsection 111.105(e) of the Tax Code concerning the time

period in which the Comptroller is authorized to request evidence to support a claim for refund. See

Tex. Tax Code § 111.105(e); 34 Tex. Admin. Code § 3.325(a)(4)(E); 36 Tex. Reg. 4570 (subsection

(a)(4)(C) of 2011 rule). Subsection 111.105(e) provides:


       During the administrative hearing process, a person claiming a refund under Section
       111.104 must submit documentation to enable the comptroller to verify the claim for
       refund. The comptroller may issue a notice of demand that all evidence to support
       the claim for refund must be produced before the expiration of a specified date in the
       notice. The specified date in the notice may not be earlier than 180 days after the
       date the refund is claimed. The comptroller may not consider evidence produced
       after the specified date in the notice in an administrative hearing. The limitation
       provided by this subsection does not apply to a judicial proceeding filed in
       accordance with Chapter 112.


Tex. Tax Code § 111.105(e); see also 34 Tex. Admin. Code § 3.325(e)(3) (tracking language of

subsection 111.105(e)). The statutory time period in which the Comptroller is authorized to demand

documentation supporting the refund claim—not before “180 days after the date the refund is

claimed”—directly conflicts with the rules’ requirement to file the supporting documentation with




                                                24
the initial refund claim.11 See 34 Tex. Admin. Code 3.325(a)(4)(E); 36 Tex. Reg. 4570 (subsection

(a)(4)(C) of 2011 rule).

                 Requiring the nine categories of transactional detail and supporting documents at the

outset is also inconsistent with subsection 111.0041(c) of the Tax Code, which requires a taxpayer

to keep and produce records and supporting documentation. It provides:


       A taxpayer shall produce 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.
       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.




       11
            The trial court recognized the time distinction in its findings of fact:

       42.       An important distinction exists between requiring that information and
                 documents be provided with an initial refund claim filing and requiring that
                 the information be submitted after the claim has been filed. The later
                 requirement creates large additional and unique burdens on Plaintiff, as
                 described in detail by the witnesses called by Plaintiff.

Ryan’s witnesses testified about the practicalities of gathering the information to support a refund
claim. Testimony supported findings that it was not always practical or possible to provide
information when a refund claim was filed because, for example, it was not always possible to know
in advance what documents would ultimately be required to prove a claim.

                                                   25
Tex. Tax Code § 111.0041(c).12 The plain language of this subsection sets out the taxpayer’s time

period to prove its claim “for the transactions in question” as being during the administrative or

judicial process, not at the outset of filing, and expressly allows flexibility as to the appropriate proof

to support a given transaction. See id.; see also id. §§ 111.105(e), 112.151(f) (referring to

requirement in section 111.0041 to “produce contemporaneous records and supporting

documentation appropriate to the tax or fee for the transactions in question”).

                In contrast, the requirements of nine categories of transactional detail and supporting

documentation set out the minimum that must be produced at the time the initial tax refund claim

is made with no margin for error.13 See Chevron, 319 S.W.3d at 844–45 (requiring party to follow

jurisdictional prerequisites to suit in sections 111.104 and 111.105 of Tax Code). If the tax refund

claim is administratively denied, the failure to file the supporting documentation and transactional

detail at the initiation of a claim sets up a jurisdictional barrier to bringing suit against the

Comptroller, even if the Comptroller was aware of the legal basis for the refund claim from the




        12
          The Comptroller relies on the phrase in the title to this section, “Burden to Produce and
Substantiate Claims,” as evidence of legislative intent to authorize the supporting documentation
requirement in the 2011 and 2013 rules. See Tex. Tax Code § 111.0041. But placing the burden on
the taxpayer to prove its claims does not equate with the rules’ requirement that the taxpayer file all-
inclusive proof at the initiation of a claim.
        13
          The Comptroller contends that the 2013 rule actually stops short of what would be allowed
under the Tax Code because it contains a “safety valve,” the alternative of filing a certified statement
instead of producing the supporting documents in subsection (a)(4)(E) in specified circumstances.
See 34 Tex. Admin. Code § 3.325(a)(4)(E). The alternative only applies, however, if “supporting
documents cannot easily be mailed or otherwise easily submitted to the agency.” Id. The crux of
Ryan’s complaint concerns the practicalities and burdens of identifying and locating the necessary
supporting documents for a given claim, not the act of mailing or delivering the documents.

                                                    26
outset and the appropriate transactional detail and supporting documentation could have been

provided during the administrative process. See id.

               Based on the plain language of subsection 111.104(c) of the Tax Code, we conclude

that the 2011 and 2013 rules’ requirements that claimants file the nine categories of transactional

detail and supporting documentation at the time the refund claim is initially filed impose “additional

burdens, conditions, or restrictions in excess of or inconsistent with” subsection 111.104(c) and the

overall statutory scheme. See Office of Pub. Util. Counsel, 131 S.W.3d at 321. Thus, we conclude

that the trial court did not err when it declared that the transactional detail requirements in

subsections (a)(4)(A) of the 2011 rule and (a)(4)(C) of the 2013 rule were illegal and invalid and

when it declared that the supporting documentation requirements in subsections (a)(4)(C) of the 2011

rule and (a)(4)(E) of the 2013 rule were illegal and invalid.


       Subsections (b)(10) and (e)

               As previously stated, the trial court also declared that subsections (b)(10) and (e) of

the 2013 rule were invalid and illegal because the subsections imposed additional burdens,

conditions, and restrictions on refund claims in excess of the provisions of section 111.104 of the

Tax Code. See Tex. Tax Code § 111.104; 34 Tex. Admin. Code § 3.325(b)(10), (e); Office of Pub.

Util. Counsel, 131 S.W.3d at 321.

               As was the case with subsection (a)(4), we narrow the scope of the trial court’s

declarations as to subsections (b)(10) and (e) of the 2013 rule. The trial court declared these

subsections entirely illegal and invalid, but certain provisions in these subsections track or follow

from statutory language. Further, Ryan’s challenge to the tolling provision in subsection (b)(10)

                                                 27
concerned only the consequences of the transactional detail and supporting documentation

requirements in subsections (a)(4)(C) and (E) on tolling and its challenge to subsection (e) concerned

a taxpayer’s ability to introduce evidence at an administrative hearing.

                Because we have concluded that only subsections (a)(4)(C) and (E) of the 2013 rule

are illegal and invalid and that remaining provisions in subsection (a)(4) are valid, it follows

that subsection (b)(10) is valid.      Subsection (b)(10) specifically only refers to subsections

(a)(4)(A) and (a)(4)(B) of the 2013 rule, subsections that we have concluded are valid. See

34 Tex. Admin. Code § 3.325(a)(4)(A), (B). Relevant to this appeal, subsection (b)(10)(A) of the

2013 rule expressly tolls the statute of limitations for claims that (i) state “fully and in detail each

reason or ground on which the claim is filed, as required by subsection (a)(4)(A) of this subsection,”

(ii) identify the period of the claimed overpayment, “as required by subsection (a)(4)(B) of this

subsection,” and (iii) include with the claim a power of attorney “if a person other than the person

to whom the refund is due is submitting the claim for refund.” See id. § 3.325(b)(10)(A).

Subsection (b)(10)(B) allows a refund hearing if a claim is denied that meets the requirements of

subsection (b)(10)(A), and subsection (b)(10)(C) expressly states that limitations are not tolled if the

requirements of subsection (b)(10)(A) are not met. See id. § 3.325(b)(10)(B), (C). These provisions

track or follow from language in subsections 111.104(b) and (c) of the Tax Code. See Tex. Tax

Code §§ 111.104(b) (requiring claim to be filed by person who paid tax or “person’s attorney,

assignee, or other successor”), (c)(2) (requiring claim to “state fully and in detail each reason or

ground on which the claim is founded”), (c)(3) (requiring claim to be filed before expiration of

limitations period); see also id. §§ 111.105(a) (authorizing hearing), .207(a)(3) (tolling limitations



                                                  28
for “period during which an administrative redetermination or refund hearing is pending before the

comptroller”).

                 It also follows that subsection (e) of the 2013 rule, addressing the denial of refund

claims, is valid except as to the last sentence of subsection (e)(3). That sentence reads: “The ability

of the comptroller to demand documentation once a claim for a refund hearing is requested does not

eliminate the requirement that persons provide documentation under subsection (a)(4)(E) of this

section when the refund is first claimed.” 34 Tex. Admin. Code § 3.325(e)(3). Because the last

sentence references and affirms the supporting documentation requirement in subsection (a)(4)(E),

we conclude that the sentence is illegal and invalid for the reasons stated above as to subsection

(a)(4)(E). The remaining provisions of subsection (e), however, track or follow from statutory

language. Compare Tex. Tax Code §§ 111.105(a) (authorizing person to request hearing “on or

before the 30th day after the date the comptroller issues a letter denying the claim for refund”),

.105(e) (setting out documentation requirements during administrative process), .107(b) (prohibiting

person from refiling “refund claim for the same transaction or item, tax type, period, and ground or

reason that was previously denied by the comptroller”), with 34 Tex. Admin. Code § 3.325(e)(1)

(authorizing claimant to “request refund hearing within 30 days of the denial”), (e)(2) (mirroring

language from subsection 111.107(b)), (e)(3) (mirroring language from subsection 111.105(e) as to

documentation requirements during administrative process).

                 Thus, we conclude that the trial court erred when it declared that subsections (b)(10)

and (e) of the 2013 rule were illegal and invalid, except as to the last sentence in subsection (e)(3).

Because we have narrowed the scope of the trial court’s declarations based on the plain language of



                                                  29
the relevant statutes, we sustain the Comptroller’s second issue in part and overrule it in part. See

Scott, 309 S.W.3d at 930.


                                            CONCLUSION

                  For these reasons, we affirm the trial court’s judgment to the extent the trial court

declared illegal and invalid the nine categories of transactional detail and supporting documentation

requirements in subsection (a)(4)(A) and (C) of the 2011 rule and subsections (a)(4)(C) and (E) and

the last sentence of subsection (e)(3) of the 2013 rule. We reverse the trial court’s judgment to the

extent that the trial court found other challenged provisions in the rule, as adopted in 2011 and as

amended in 2013, illegal and invalid and render judgment declaring those provisions to be

facially valid.



                                             __________________________________________

                                             Melissa Goodwin, Justice

Before Chief Justice Rose, Justices Puryear and Goodwin

Affirmed in Part; Reversed and Rendered in Part

Filed: May 20, 2015




                                                   30
