After a Texas audit assessment, how long does a taxpayer have to raise credit issues in a redetermination, and can limitations-barred credit issues be added later?

Plain-English summary

At the State Bar of Texas State Taxation Committee (November 12, 2004), a practitioner asked the Comptroller's General Counsel about Tax Code Sec. 111.009 redeterminations: if the agency issues a Notice of Audit Results on the last day of the limitations period, and the taxpayer then files a Petition for Redetermination within 30 days, can the taxpayer raise any issue in the Statement of Grounds, including credit issues?

• Within the 30 days, yes - including credits. House Bill 2425 (2003) did not affect Sec. 111.009. The Comptroller has always allowed a taxpayer who timely requests redetermination to raise any issues challenging the assessment and any credit issues to offset it. The agency treats a timely redetermination request as relating back to the assessment date for limitations, so credit issues can be raised in that timely request.
• HB 2425 did not change this. Because Sec. 111.009 was left undisturbed, the taxpayer still has 30 days to raise redetermination and credit issues for the period.
• But you cannot add barred issues later. The amendment to Sec. 111.207 limits tolling to the issues actually contested in the proceeding - reflecting legislative intent that limitations not be indefinitely extended on every conceivable issue just by filing a redetermination request or refund claim. The 30-day deadline in Sec. 111.009 is the statutory cutoff for raising contested issues.
• The Rule 1.7 amendment path has a limit. Even though Rule 1.7 lets a statement of grounds be amended during the hearing process, the Comptroller's position is that new credit issues otherwise barred by limitations may not be raised by amendment after the 30-day filing period.

What this means for you

Taxpayers contesting an audit assessment

If you receive a Notice of Audit Results, the 30-day Sec. 111.009 window is your one chance to put every challenge and every offsetting credit on the table. Credits raised inside that window relate back to the assessment date; credits you try to add after the window, if already barred by limitations, will be rejected even if you later amend your statement of grounds mid-hearing.

Accountants and tax professionals

Front-load the statement of grounds: identify all assessment challenges and credit offsets before the 30-day deadline. Sec. 111.207 tolls only contested issues, so an amendment under Rule 1.7 will not revive a limitations-barred credit after the deadline.

Common questions

Q: Can I raise credit issues in a redetermination after an audit assessment?
A: Yes, if raised within the 30-day Sec. 111.009 window - the timely request relates back to the assessment date, so both assessment challenges and offsetting credits can be raised.

Q: Can I add new credit issues later by amending my statement of grounds?
A: Not if they are already barred by limitations. Although Rule 1.7 permits amendments during the hearing, the Comptroller will not allow limitations-barred credit issues to be added after the 30-day deadline.

Q: Did House Bill 2425 change this?
A: No. HB 2425 left Sec. 111.009 undisturbed and did not alter the relation-back policy, but the Sec. 111.207 amendment limits tolling to the contested issues.

Citations and references

Statutes and rules:

• Tex. Tax Code Sec. 111.009 (petition for redetermination; 30-day deadline)
• Tex. Tax Code Sec. 111.207 (tolling limited to contested issues)
• HB 2425, 78th Legislature, R.S., 2003
• 34 Tex. Admin. Code Sec. 1.7 (amending the statement of grounds)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=FIT
• Opinion: https://star.comptroller.texas.gov/view/200412947L

Original ruling text

December 20, 2004

Dear **:

At the November 12, 2004, meeting of the State Taxation Committee of the State
Bar of Texas, you asked a question relating to Section 111.009 of the Tax Code.
As we understood it, your question was:

If the agency issues a Notice of Audit Results on the last day of the
limitations period, the taxpayer is permitted by Section 111.009 to file a
Petition for Redetermination within 30 days. Can the taxpayer raise any issue
in the Statement of Grounds, including credit issues?

No provision of House Bill 2425, 78th Legislature, R.S., 2003, affected Section
111.009. The Comptroller has always allowed a taxpayer that timely requested
redetermination pursuant to Section 111.009 to raise any issues to challenge
the assessment and to raise any credit issues to offset the same. That is, the
Comptroller viewed the filing of a timely request for redetermination as
relating back to the date of the assessment for limitations purposes, thus
allowing taxpayers to raise credit issues in the timely filed redetermination
request.

House Bill 2425 was not intended by the Comptroller to alter the agency's
relation back policy in the circumstances about which you have inquired.
Because Section 111.009 was left undisturbed by House Bill 2425, the
Comptroller's position remains that in the circumstances you have recited a
taxpayer has 30 days within which to raise redetermination and credit issues
for the period involved.

Insofar as tolling of limitations is concerned, the amendment to Section
111.207 limits tolling to the issues contested in the proceeding. Such
amendment reflects clear legislative intent that periods not be indefinitely
extended on all conceivable taxation issues by the mere filing of a
redetermination request or a refund claim. The 30-day provision in Section
111.009 sets the statutory deadline for raising contested issues. Beyond that
period, there is no statutory provision on the basis of which to allow credit
issues to be raised in the circumstances you have recited. Therefore, please
be advised that even though Rule 1.7 allows a statement of grounds to be
amended during the hearing process, the Comptroller's position is that new
credit issues that are otherwise barred by limitations may not be raised by
amendment to the statement of grounds after the 30-day filing period provided
by Section 111.009.

Should you have any further questions concerning this matter, please do not
hesitate to contact me by E-mail at [email protected] or by
telephone at (512) 936-4446.

Sincerely yours,

Timothy Mashburn
General Counsel