Redetermination Hearing

Although the Texas Comptroller’s Office wants ‘to be fair and give taxpayers full consideration in every case’, protesting your audit is not as easy as stated in Contesting Disagreed Audits, Examinations and Refund Denials (September 2017). On the contrary, it is a rather complex process, riddled with pitfalls. In fact, even if the Administrative Law Judge rules in your favor, the Comptroller may still reject their decision.

If you would like to protest your audit results, Texas Tax Group can help. Texas Tax Group can represent any taxpayer in the redetermination process up to and including an Administrative hearing in front of an Administrative Law Judge (ALJ). We have significant experience in this area as both former Texas Comptroller state tax auditors and now as Texas state tax consultants.

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How to Request a Redetermination After You Receive Your Tax Bill

If you have issues with your auditor or you disagree with your auditor’s findings, you may request a reconciliation conference, or possibly even an Independent Audit Review Conference at any time prior to receiving your tax bill. However, if have already received your tax bill, or in other words, your Notification of Audit Results has already been produced, then the redetermination process is your only option.

To request a redetermination hearing, you are required to send a letter with a statement of grounds to the Texas Comptroller’s Office. This must be done within 30 days of the tax bill date or 20 days in the case of a jeopardy determination. Tax Rule 1.7 contains the law on how this is done. Parts (a), (b) and (c) of Tax Rule 1.7 state:

(a) The Statement of Grounds must contain the reasons the taxpayer disagrees with the action of the agency. The taxpayer must list and number the items or transactions, individually or by category, with which he disagrees. For each contested item or category of items, the taxpayer must also state the factual basis and the legal grounds to support why the taxpayer argues that the tax should not be assessed or the tax should be refunded. If the taxpayer disagrees with the agency’s interpretation of the law, specific legal authority must be cited in support of the taxpayer’s arguments.

(b) If an item or transaction, or category thereof, is not listed in the Statement of Grounds, it may be barred from consideration in a hearing.

(c) In the event that the taxpayer’s Statement of Grounds fails to list and number items or transactions, individually or by category, or fails to state the factual basis and legal grounds upon which relief is sought, the case may be dismissed.

In other words, the Statement of Grounds must be specific as to the adjustments being contested as well as the legal grounds for your arguments. If you intend to request a redetermination hearing on your own, we urge you to carefully draft your hearing request and to: (1) number and name all contentions and (2) include any legal grounds for your arguments such as statutes, tax rules, Comptroller Letter Rulings and Administrative Hearings.

After Your Hearings Request Has Been Granted

Once your request has been granted, your audit will be re-assigned to the original auditor for a 60 day period in which the auditor will consider any new evidence as well as the contentions you presented in your Statement of Grounds. If the auditor agrees with your contentions, he, or she will then amend and re-bill the audit. However, if the auditor disagrees with your contentions, then the audit will be forwarded to a Hearings Attorney.

At this point the Hearings Attorney will accept any other supporting evidence to argue your case. If the Hearings Attorney decides not to reduce the tax then a Position Letter will then be issued outlining their case against you. The Position Letter will contain significant references to statutes, rules, letter rulings and possibly hearings. You may then issue a Reply to the Position Letter. And finally, the Hearings Attorney issues a final Response to the Reply to the Position Letter.

The Hearings Attorney may, at any point, issue various demands. (You also have the option of making similar requests to the hearings attorney.) These demands may include:

  1. Request for Interrogatories
  2. Document Discovery Requests
  3. Admissions and Denials

You will eventually be given the option of submitting your case for either a ‘written submissions hearing’ or an ‘oral hearing’. A Written Submission Hearing means all written documents and contentions are submitted to a judge for a decision. An Oral Hearing means that both parties will present both evidence and oral testimony in a Hearing in front of the judge.

In either case, the Administrative Law Judge will issue a proposal for decision. Both sides may file exceptions to the decision as well as contest the other party’s exceptions. The judge will eventually ‘close the record’ and make a final Administrative Hearing Decision. That decision is final unless overturned by the Comptroller or the taxpayer decides to sue in District Court.

Texas Tax Group Can Help

As you can see, the redetermination process is complex. One misstep can cost you a lot of money or even your business. So don’t take a chance representing yourself. Texas Tax Group can work with you, your tax department and/or CPA to devise the best strategy for a successful outcome.

To get started, please call us toll-free at 855-892-8348 or enter your name, your best email address, and your phone number into the form on the right to schedule your FREE consultation. We’re here for you. We understand. And we’re ready to fight for you, all the way. Request your free consultation now.