Often, business clients approach us inquiring about challenging final Texas sales tax rulings in Texas courts. In Texas, taxpayers that challenge decisions reached by the Comptroller of Public Accounts, the agency overseeing the collection and enforcement of Texas sales and use taxes, do so through a proceeding at the State Office of Administrative Hearings (SOAH). SOAH is an administrative court that handles matters for various Texas government agencies, including the Texas Comptroller of Public Accounts.

Challenges raised with SOAH generally allow for a hearing to take place, where an Administrative Law Judge (ALJ) reviews the claims of the taxpayer and the state agency at a hearing (which can be held in person or through written submission). If a taxpayer disagrees with the ruling reached by the ALJ, the taxpayer can request a rehearing. Once the process is concluded with SOAH, the Comptroller will reach a final conclusion and usually render some sort of assessment against the taxpayer.

At this point, the taxpayer may be able to challenge final Comptroller decisions in state court. Pursuant to the Texas Tax Code, taxpayers maybe able to file a refund or protest suit in Travis County District Court, and even request injunctive relief from the court to stop the Comptroller’s office from pursuing the tax amount. Often, pursuing remedies in state court and challenging Comptroller decisions require the taxpayer to pay the underlying amount and then pursue the action.

Challenging state agency decisions in state court is a complicated process, and you should proceed only after discussing it thoroughly with an attorney familiar with this process. At Bajaria Law, we handle sales tax related matters and assist with various sales tax-related legal issues.