Has the Texas Comptroller Stopped Issuing Tax Policy Letters?

Due to a significant loss of Tax Policy Experts, the Texas Comptroller’s Office has not issued a Tax Policy Letter (TPL) since late 2012. Folks, that is over 4 years!

You might say, ‘Who cares and what the heck is a Tax Policy Letter anyway?’. Well, let me tell you.

Dino Marcaccio, President Former Texas Comptroller State Tax Auditor, 16 Years

Dino Marcaccio, President
Former Texas Comptroller State Tax Auditor, 16 Years

Background

Tens of thousands of TPLs had been issued continuously since the 1970s up until late 2012 when abruptly, and with very little explanation, the agency almost completely stopped issuing them. TPLs were the leading source of Sales Tax authority because they gave concrete Sales Tax answers for specific transactions. Everybody, including Sales Tax consultants, business owners and even auditors relied on these documents when it came to sales tax answers.

Without TPLs, many taxpayers have a much harder time understanding their tax reporting responsibilities. This results in taxpayers either under collecting or over collecting Sales Taxes. It is not until the taxpayer is audited that they find out that they were over collecting, or worse, under collecting taxes.

I was a Texas Comptroller Auditor for 16 years and I can tell you that I relied heavily on TPLs when I wanted to understand whether or not a transaction was subject to Sales Tax. When I had questions about the taxability of ANY transaction, I read the TPLs before reading the applicable statute, tax rule or administrative hearings. The bottom line, now that TPLs have almost completely disappeared, we are now often left in the dark when it comes to the taxability of specific transactions.

Other Sources of Tax Authority Just Don’t Cut It

Yes, there are three other main sources of Texas Sales Tax authority (i.e., statutes, tax rules and administrative hearings) but these pale in comparison to what LTRs can provide. Tax statutes and tax rules rarely provide a useful level of detail because they are, by their nature, generalized documents. And administrative hearings (there are now 114,000+ of these) are just not as good a source at figuring out what is and is not taxable in Texas.

Private Letter Rulings (PLR)

Since 2012, the Texas Comptroller has offered to issue what are called a Private Letter Rulings (PLR). But PLRs are rarely issued (about 20-25 per month). You can see the strict requirements to even request a PLR here. To begin with, you must: (1) review all existing sources of state Sales Tax authority (who has time to do that?) and (2) you must identify your company (that was NEVER a requirement for the TPLs). PLRs are simply no replacement for TPLs. To make matters worse, many of these past TPLs were, and still are, not available to the general public. Why is this?

These TPLs were issued to a specific businesses requesting a response to a specific sales tax question. The Comptroller would then decide if they wanted to issue a TPL. Then, if the TPL was issued to the business, the agency then decided if that TPL would be published (with business info. redacted) and placed on the agency’s website under the public access State Tax Automated Tax Research (STAR) system.

It is unfortunately that many of those past TPLs will never be publicly available. I personally think this is a terrible idea. We need to see 100% of the TPLs published. It is bad enough that there are not even issued anymore. Feel free to visit the Texas Comptroller’s STAR system to view all available TPLs.

What Happened?

Now you know that: (1) very few TPLs have been issued over the past four years and (2) many of those past TPLs are not publicly available. So let me explain why I believe TPLs are not issued anymore. It is very simple. Leading up to 2012 the Comptroller had lost most of their most experienced Tax Policy Experts. Without these experts the agency just doesn’t feel comfortable issuing any more TPLs.

Note: Texas Tax Group actually has four former Texas Comptroller Tax Policy Experts on staff. Utilizing these experts, Texas Tax Group offers what we call Limited Tax Reviews (LTR). But more on that subject in another article.

Current State of the Texas Comptroller Auditor Experience Level

One last thought. A major percentage of the auditors now employed by the Texas Comptroller’s Office are rookie auditors (i.e., 1 to 3 years employment) who have limited knowledge of many areas of sales tax. That experience level is a huge drop from 20 years ago when the average auditor had almost 10 years of experience. The bottom line is that we need more guidance from the Texas Comptroller’s Office than ever before (i.e., Tax Policy Letters) and we need more experienced auditors.

We Are Here To Help

Texas Tax Group is ready to help. We are staffed by more than 15 former Texas Comptroller auditors, supervisors and tax policy experts with over 400 years of combined experience working at the agency. In addition, we have four offices located around the State (Houston, Dallas, Austin, San Antonio). Please give us a call.

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