Article Submitted to NTBA by Favad Bajaria

Passed during the 80th Texas Legislative Session in 2007, House Bill 11 dramatically increased the Comptroller’s ability to identify, audit and, when appropriate, prosecute retailers who are collecting sales tax but not remitting the proper amount to the state.  HB 11 amended the Alcoholic Beverage Code and the Tax Code to require distributors and wholesalers who make sales of ale, beer, wine, cigarettes, cigars and tobacco products to Texas retailers to report those sales monthly to the Comptroller’s office. Those distributors and wholesalers are also required now to report that data electronically, unless inability to do so is shown.

HB 11 data, which has now been collected since January 2008, allows the Comptroller to compare the purchases that retailers have made of these products with the sales that retailers are required to report. Because both sets of data are largely received electronically, discrepancies can be more easily and rapidly identified. Rapid identification is essential so that the Comptroller auditors can begin their work to mitigate and recoup the revenue loss to the state. Since fiscal year 2009, the Comptroller’s office has identified more than $523 million due to the state.

In some cases, audit documentation may suggest that the taxpayer had criminal intent to evade taxes. If so, the case will be reviewed and evaluated by the Criminal Investigations Division for the possible filing of criminal charges.

A second HB 11, passed by the 2011 Legislature and effective as of Sept. 1, 2011, amended Chapter 151 of the Tax Code by requiring electronic reporting for all wholesale sales of alcoholic beverages. Holders of brewer’s permits, manufacturer’s licenses and package stores that hold a local distributor’s permit all must now file monthly […]