|
|
SOAH DOCKET NO. 304-22-08184.70
CPA HEARING NO. 118,179
RE: **************
TAXPAYER NO: **************
AUDIT OFFICE: **************
AUDIT PERIOD: May 1, 2016 THROUGH November 30, 2019
Sel Fin -Mot Veh Sls/RDT
BEFORE THE COMPTROLLER
OF PUBLIC ACCOUNTS
OF THE STATE OF TEXAS
GLENN HEGAR
Texas Comptroller of Public Accounts
NICKIE YEE
Representing Respondent
**************
Representing Petitioner
COMPTROLLER’S DECISION
This decision is considered final on August 1, 2023, unless a motion for rehearing is timely filed; this date of finality is calculated based on the Administrative Procedure Act (APA).[1] The failure to timely file a motion for rehearing may result in adverse legal consequences.
Administrative Law Judge (ALJ) Keneshia Washington of the State Office of Administrative Hearings (SOAH) issued a Proposal for Decision (PFD) that includes Findings of Fact and Conclusions of Law. SOAH served the PFD on each party and each party was given an opportunity to file exceptions and replies with SOAH in accordance with SOAH’s rules of procedure. The ALJ recommended that the Comptroller adopt the PFD as written.
After review and consideration, IT IS ORDERED that the PFD is adopted as written.
The result from this Decision is Attachment A. The ALJ’s letter to the Comptroller is Attachment B. The PFD as written is Attachment C. Attachments A, B, and C are incorporated by reference.
Attachment A reflects a liability.[2]
The total sum of the tax, penalty, and interest is due and payable 20 days after a comptroller’s decision becomes final.[3] If such sum is not timely paid, an additional penalty of 10 percent of the taxes due will accrue.
SIGNED on this 7th day of July 2023
GLENN HEGAR
Comptroller of Public Accounts
By: Lisa Craven
Deputy Comptroller
Attachment A, Texas Notification of Hearing Results
Attachment B, ALJ’s letter to the Comptroller
Attachment C, Proposal for Decision as written
ATTACHMENT B
State Office of Administrative Hearings
Keneshia Washington
Presiding Administrative Law Judge
February 14, 2022
The Honorable Glenn Hegar
Comptroller of Public Accounts
LBJ Building
111 E. 17th Street, 1st Floor
Austin, TX 78701
RE: SOAH Docket: 304-23-08184.70
TCPA Hearing No.: 118,179
************** v. Texas Comptroller of Public Accounts
Dear Comptroller Hegar:
Please be advised that Petitioner filed exceptions to the Proposal for Decision (PFD) in this matter on January 17, 2023. Staff filed a reply to Petitioner’s exceptions on January 26, 2023. Petitioner’s exceptions reassert arguments made in the hearing. Having reviewed the filings of the parties, and finding no errors in the findings of fact or conclusions of law, I recommend that the PFD be adopted as written. Because SOAH has concluded its involvement in the matter, the case is being remanded to the Comptroller of Public Accounts. See Tex. Gov’t Code § 2003.051(a).
Sincerely,
Keneshia Washington
Administrative Law Judge
ATTACHMENT C
SOAH Docket No. 304-22-08184
TCPA Hearing No.: 118,179
**************
TAXPAYER NO: **************
v.
TEXAS COMPTROLLER OF PUBLIC ACCOUNTS
BEFORE THE STATE OFFICE OF ADMINISTRATIVE HEARINGS
************** (Petitioner) seeks redetermination of a motor vehicle sales and use tax audit assessment made by the Tax Division (Staff) of the Texas Comptroller of Public Accounts (Comptroller). Petitioner contends they were not aware of the registration requirement and provided documentation to support adjustments due to clerical error. Staff contends that Petitioner has not shown audit error beyond the agreed adjustments. In this Proposal for Decision, the Administrative Law Judge (ALJ) recommends that the proposed amended audit be affirmed.
I. NOTICE, JURISDICTION, AND PROCEDURAL HISTORY
Staff referred this case to the State Office of Administrative Hearings (SOAH) and, on August 17, 2022, issued a Notice of Hearing by Written Submission. On August 18, 2022, ALJ Keneshia Washington issued an order setting the written submission hearing. Nickie Yee represented Staff. Petitioner was represented by **************. The contested case record closed on October 31, 2022.
There are no issues of notice or jurisdiction; therefore, those matters are set out in the Findings of Fact and Conclusions of Law without further discussion.
II. REASONS FOR DECISION
A. Evidence
Petitioner did not submit evidence for the hearings. Staff provided the pleadings the parties exchanged prior to referring the matter to SOAH and offered the following exhibits:
III. Texas Notification of Audit Results;
1. Penalty & Interest Waiver Worksheet;
2. Audit Report;
3. Audit Plan; and
4. Adjustment Report.
Staff’s exhibits were admitted into the record without objection.
B. Agreed Adjustments
Staff agreed to the adjustments shown in Exhibit 5.
C. Facts Demonstrated by the Evidence
During the period at issue, Petitioner, based in CITY, Texas, operated two “buy here, pay here” car dealerships and was permitted to collect tax on seller-financed motor vehicle sales. In February 2020, Staff initiated a motor vehicle sales tax compliance audit of Petitioner for the period May 1, 2016, through November 30, 2019. A detailed examination was conducted, and adjustments were made in Exam 100 for motor vehicle titles registered more than 60 days after the date of sale. On June 18, 2020, Staff issued a Texas Notification of Audit Results to Petitioner, assessing a liability that consisted of tax, late penalty for four late periods, and accrued interest. Petitioner requested redetermination and provided documentation to support adjustments based on clerical error. Staff’s agreed adjustments are shown in Exhibit 5.
Petitioner does not dispute the title transfers for the vehicles assessed in Exam 100 were completed more than 60 days after the date of sale, but contends it was unaware of the registration requirements. Staff contends that Petitioner has not shown audit error beyond the agreed adjustments and transferred the matter to SOAH.
D. ALJ’s Analysis and Recommendation
A tax is imposed on every retail sale of every motor vehicle sold in this state. Tex. Tax Code §§ 152.001(1), .021(a). The tax is imposed on the total consideration paid or to be paid for a motor vehicle. Id. § 152.002(a). A retail sale completed by a motor vehicle dealer in which the seller collects all or part of the total consideration in periodic payments and retains a lien on the motor vehicle until all payments have been received is defined as a seller-financed sale. Id. § 152.001(15).
A seller engaged in seller-financed motor vehicle sales must keep a lienholder’s copy of the receipt for title application, registration, and motor vehicle tax issued by a county tax assessor‑collector (CTAC). Id. § 152.0635(b)(1). Additionally, a seller engaged in seller-financed motor vehicle sales must keep a ledger or other document containing a complete record of the payment history for that motor vehicle that includes: the name and address of the purchaser; the total consideration; the amount of the down payment received at the time the motor vehicle is sold; the date and amount of each subsequent payment; the date of sale; and the date of any repossession. Id. § 152.0635(b)(2). Generally, the seller of a motor vehicle shall report and pay the tax imposed on a seller‑financed sale to the Comptroller on the seller’s receipts from the seller-financed sales in the same manner as sales tax is reported and paid under Chapter 151. Id. § 152.047(a).
A dealer who makes a seller-financed sale must apply to the appropriate CTAC to title and register the motor vehicle by filing an Application for Texas Title and/or Registration no later than the 45th day after the date the motor vehicle is delivered to the purchaser. Id. § 152.069(a); 34 Tex. Admin. Code § 3.74(c)(1)(A). A dealer making a seller‑financed sale must also collect and remit motor vehicle tax on the total consideration for the motor vehicle at the time the Application for Texas Title and/or Registration is presented to the CTAC or collect and remit the motor vehicle tax to the Comptroller as the payments are received. 34 Tex. Admin. Code § 3.74(c)(1)(B)(i), (ii). If the seller fails to apply for title and registration for a motor vehicle sold in a seller‑financed sale by the 60th day after the date the motor vehicle is delivered to the purchaser, the seller is liable for all unpaid tax on the total consideration. Tex. Tax Code § 152.047(f); 34 Tex. Admin. Code § 3.74(e)(5). In that instance, the dealer must remit all unremitted motor vehicle tax on the first seller-financed sales tax report due no later than the 20th day of the month following the end of the reporting period in which the expiration of the 60 days occurred. 34 Tex. Admin. Code § 3.74(e)(5).
Motor vehicle sales tax is due on each retail sale of a vehicle even if the vehicle was subsequently repossessed. See, e.g., Comptroller’s Decision Nos. 101,710 (2009), 46,212 (2007), 30,670 (1993), 28,003 (1992). Regarding dealers who make seller-financed sales, the Comptroller has specifically stated that dealers who fail to register the vehicles within 60 days of the sale owe tax on the full consideration even if the vehicles are repossessed within the 60-day period. See, e.g., Comptroller’s Decision No. 112,479 (2016); see also State Tax Automated Research (STAR) Document No. 9309L1257C04 (September 10, 1993).
In this case, there is no dispute regarding the sale of the vehicles at issue or the fact that the title transfers for those vehicles were completed beyond 60 days from the date of the sale. The ALJ concludes Staff met its prima facie burden to demonstrate motor vehicle tax was due on the sales price of the vehicles included in Exam 100, and Petitioner bears the burden of showing audit error by a preponderance of the evidence. See 34 Tex. Admin. Code § 1.26(e).
Petitioner contends they were unaware of the requirement to register the vehicles within 60 days. However, it is well-established Texas case law that taxpayers are conclusively presumed to know the law and are charged with the responsibility to comply. Greater Houston Transportation v. Phillips, 801 S.W.2d 523, 525 (Tex. 1990) (“In Texas, the law recognizes that there is no duty to inform others of the law because all persons are presumed to know the law.”); Comptroller’s Decision No. 107,751 (2014).
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. Tex. Tax Code § 111.0041(c). 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. Id.
Petitioner has not provided any source records to show audit error. Therefore, Petitioner failed to meet its evidentiary burden to show audit error, and the ALJ recommends that the proposed amended assessment be upheld.
IV. FINDINGS OF FACT
1. During the period at issue, ************** (Petitioner), based in CITY, Texas, operated two “buy here, pay here” car dealerships and was permitted to collect tax on seller-financed motor vehicle sales.
2. In February 2020, the Tax Division (Staff) of the Texas Comptroller of Public Accounts (Comptroller) initiated a motor vehicle sales tax compliance audit of Petitioner for the period May 1, 2016, through November 30, 2019.
3. A detailed examination and adjustments were made for motor vehicle titles registered more than 60 days after the date of sale in Exam 100.
4. On June 18, 2020, Staff issued a Texas Notification of Audit Results to Petitioner, assessing a liability that consisted of tax, late penalty for four late periods, and accrued interest.
5. Petitioner requested redetermination.
6. Staff agreed to adjustments reflected in Exhibit 5.
7. Staff referred the matter to the State Office of Administrative Hearings (SOAH).
8. On August 17, 2022, Staff issued a Notice of Hearing by Written Submission to Petitioner. The notice contained a statement of the nature of the hearing; a statement of the legal authority and jurisdiction under which the hearing was to be held; a reference to the particular sections of the statutes and rules involved; and a short, plain statement of the factual matters asserted, or an attachment that incorporated by reference the factual matters asserted in the complaint or petition filed with the state agency.
9. On August 18, 2022, the Administrative Law Judge issued an order setting the written submission hearing.
10. The contested case record closed on October 31, 2022.
V. CONCLUSIONS OF LAW
1. The Comptroller has jurisdiction over this matter. See Tex. Tax Code ch. 111.
2. SOAH has jurisdiction over matters related to the hearing in this matter, including the authority to issue a proposal for decision with findings of fact and conclusions of law. See Tex. Gov’t Code ch. 2003.
3. Staff provided proper and timely notice of the hearing. See Tex. Gov’t Code ch. 2001; Tex. Tax Code § 111.009.
4. A tax is imposed on every retail sale of every motor vehicle sold in this state. Tex. Tax Code §§ 152.001(1), .021(a).
5. The tax is imposed on the total consideration paid or to be paid for a motor vehicle. Tex. Tax Code § 152.002(a).
6. A retail sale completed by a motor vehicle dealer in which the seller collects all or part of the total consideration in periodic payments and retains a lien on the motor vehicle until all payments have been received is defined as a seller-financed sale. Tex. Tax Code § 152.001(15).
7. A seller engaged in seller-financed motor vehicle sales must keep a lienholder’s copy of the receipt for title application, registration, and motor vehicle tax issued by a county tax assessor‑collector (CTAC). Tex. Tax Code § 152.0635(b)(1).
8. A seller engaged in seller-financed motor vehicle sales must keep a ledger or other document containing a complete record of the payment history for that motor vehicle that includes: the name and address of the purchaser; the total consideration; the amount of the down payment received at the time the motor vehicle is sold; the date and amount of each subsequent payment; the date of sale; and the date of any repossession. Tex. Tax Code § 152.0635(b)(2).
9. The seller of a motor vehicle shall report and pay the tax imposed on a seller‑financed sale to the Comptroller on the seller’s receipts from the seller-financed sales in the same manner as sales tax is reported and paid under Chapter 151. Tex. Tax Code § 152.047(a).
10. A dealer who makes a seller-financed sale must apply to the appropriate CTAC to title and register the motor vehicle by filing an Application for Texas Title and/or Registration no later than the 45th day after the date the motor vehicle is delivered to the purchaser. Tex. Tax Code § 152.069(a); 34 Tex. Admin. Code § 3.74(c)(1)(A).
11. A dealer making a seller‑financed sale must also collect and remit motor vehicle tax on the total consideration for the motor vehicle at the time the Application for Texas Title and/or Registration is presented to the CTAC or collect and remit the motor vehicle tax to the Comptroller as the payments are received. 34 Tex. Admin. Code § 3.74(c)(1)(B)(i), (ii).
12. If the seller fails to apply for title and registration for a motor vehicle sold in a seller‑financed sale by the 60th day after the date the motor vehicle is delivered to the purchaser, the seller is liable for all unpaid tax on the total consideration. Tex. Tax Code § 152.047(f); 34 Tex. Admin. Code § 3.74(e)(5).
13. The dealer must remit all unremitted motor vehicle tax on the first seller- financed sales tax report due no later than the 20th day of the month following the end of the reporting period in which the expiration of the 60 days occurred. 34 Tex. Admin. Code § 3.74(e)(5).
14. Motor vehicle sales tax is due on each retail sale of a vehicle even if the vehicle was subsequently repossessed. See, e.g., Comptroller’s Decision Nos. 101,710 (2009), 46,212 (2007), 30,670 (1993), 28,003 (1992).
15. Dealers who fail to register the vehicles within 60 days of the sale owe tax on the full consideration even if the vehicles are repossessed within the 60-day period. See, e.g., Comptroller’s Decision No. 112,479 (2016); see also State Tax Automated Research (STAR) Document No. 9309L1257C04 (September 10, 1993).
16. Staff has met its prima facie burden to demonstrate motor vehicle tax was due on the sales price of the vehicles included in Exam 100.
17. Petitioner bears the burden of showing audit error by a preponderance of the evidence. See 34 Tex. Admin. Code § 1.26(e).
18. Taxpayers are conclusively presumed to know the law and are charged with the responsibility to comply. Greater Houston Transportation v. Phillips, 801 S.W.2d 523, 525 (Tex. 1990) (“In Texas, the law recognizes that there is no duty to inform others of the law because all persons are presumed to know the law.”); Comptroller’s Decision No. 107,751 (2014).
19. 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. Tex. Tax Code § 111.0041(c).
20. Petitioner failed to meet its evidentiary burden to show audit error.
21. The ALJ recommends that the proposed amended assessment be affirmed.
SIGNED January 2, 2023
KENESHIA WASHINGTON
PRESIDING ADMINISTRATIVE LAW JUDGE
ENDNOTES:
1] The date calculated is 25 days after this decision is signed. See APA, Tex. Gov’t Code § 2001.146(a); S.B. 1095, Acts 2017, 85th Leg. For additional guidance, refer to the Frequently Asked Questions Related to Motions for Rehearing, found here: http://comptroller.texas.gov/taxes/publications/96-1789.pdf
[2] At present, insufficient information is available to determine which items and amounts are disputed or undisputed for purposes of Tex. Tax Code, Ch. 112. In the absence of this information, the Comptroller will assume the entire amount of the assessment, as it appears in Comptroller’s Decision Attachment A, the Notification of Hearing Results, remains in dispute. If Petitioner intends to sue the comptroller to dispute an amount of tax, penalty, or interest assessed in a deficiency redetermination or jeopardy determination under Tex. Tax Code, Ch. 111, Petitioner is required to file a motion for rehearing that “states the specific grounds of error and the disputed amounts associated with the grounds of error.” Tex. Tax Code § 112.201(a)(3). Petitioner should refer to Tex. Tax Code, Ch. 112, for further guidance regarding a suit after redetermination.