SB266

SB266 changes how taxpayers document and litigate disputes with the state comptroller, including a new court route for disputes over managed-audit results. It was signed and took effect May 24, 2025. It applies to managed audits in progress and administrative or judicial proceedings pending or filed on or after that date, even when the taxes were due earlier. Final law, Sections 1–13; Official history.

Evidence: the law changes “contemporaneous” records to “sufficient” records in the affected administrative and court provisions. Taxpayers still must substantiate claims with appropriate, verifiable documentation. It also repeals the specific refund-hearing rule that allowed the comptroller to set an evidence cutoff and barred later-produced evidence at the administrative hearing. That repeal does not erase all procedural deadlines or recordkeeping duties. Former evidence-cutoff provision, subsection (e).

Managed-audit disputes: a taxpayer who conducts an authorized sales-tax or gas-production-tax managed audit can elect to bypass administrative redetermination. The written notice must be filed within 60 days after the comptroller issues the results letter and state the material facts, each legal basis and disputed underpayment or overpayment amounts. This route is not available for every kind of audit. Sales-tax managed audits; Gas-tax managed audits.

The comptroller has 30 days after the notice is filed to require a conference in writing, with its date and time; the scheduled date must be within 90 days after the notice. After participating, the taxpayer must sue within 60 days after the conference ends, unless the comptroller agrees to a later date. If no timely conference notice is given, the deadline is 90 days after the taxpayer’s notice. After a conference, facts or legal grounds may be amended only with the comptroller’s written agreement. A rescheduling request requires a good-faith accommodation effort; if no rescheduled date is agreed by day 90, the taxpayer may rescind the notice and petition for redetermination by day 120. Otherwise, filing the notice waives that administrative redetermination right. New Tax Code 111.0091.

The new suit names both the comptroller and attorney general, states the disputed amounts and attaches the notice to the petition and served copies. Chapter 112 places these suits in Travis County district court. The statutory filing deadline is mandatory; other people may not intervene. Issues and tax periods are limited to the applicable notice or rehearing grounds and periods, rather than an unrestricted challenge to unrelated taxes. Sections 7–8; Court jurisdiction.

Collection and penalties: after timely service of a compliant managed-audit suit, collection of its disputed underpayments is halted during the case. Tax liens remain available; alternatively, the state may require security for the entire disputed amount, penalties and accrued interest, using cash, a bond, letter of credit or another guarantee. The law also adds this security alternative to existing suits after redetermination. Courts may award damages when amounts were disputed solely for delay. This is not a general tax-payment holiday. Sections 7 and 9.

For a timely suit under Chapter 112, Subchapter E, the specific 10% late-payment penalty following final administrative redetermination is abated for the disputed amount. If the amount due under a final court judgment is not paid within 20 days after the judgment becomes final, a 10% penalty applies to that amount excluding penalties and interest. The law does not waive all interest or other applicable penalties, and undisputed redetermination amounts remain payable. Sections 2 and 9; Existing payment duties.