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TITLE 34PUBLIC FINANCE
PART 1COMPTROLLER OF PUBLIC ACCOUNTS
CHAPTER 3TAX ADMINISTRATION
SUBCHAPTER OSTATE AND LOCAL SALES AND USE TAXES
RULE §3.305Criminal Offenses and Penalties

(a) General. Tax Code, Chapter 151, prohibits certain activities and provides criminal penalties for violations.

(b) Criminal offenses provided in Tax Code, Chapter 151, include, but are not limited to, the following:

  (1) A seller commits an offense if the seller directly or indirectly advertises or holds out to the public that the seller will assume, absorb, or refund any portion of the tax, or that the seller will not add the tax to the sales price of taxable items. This offense is a misdemeanor punishable by a fine of not more than $500 for each occurrence.

  (2) A person commits an offense if the person intentionally or knowingly makes a false entry in, or a fraudulent alteration of, an exemption or resale certificate; makes, presents, or uses an exemption or resale certificate with knowledge that it is false and with intent that the certificate be accepted as valid; or intentionally conceals, removes, or impairs the verity or legibility of an exemption or resale certificate; or unreasonably impedes the availability of an exemption or resale certificate. An offense is:

    (A) a Class C misdemeanor if the tax avoided by the use of the exemption or resale certificate is less than $20;

    (B) a Class B misdemeanor if the tax avoided by the use of the exemption or resale certificate is $20 or more but less than $200;

    (C) a Class A misdemeanor if the tax avoided by the use of the exemption or resale certificate is $200 or more but less than $750;

    (D) a felony of the third degree if the tax avoided by the use of the exemption or resale certificate is $750 or more but less than $20,000; and

    (E) a felony of the second degree if the tax avoided by the use of the exemption or resale certificate is $20,000 or more.

  (3) A person or officer of a corporation commits an offense if the person or the corporation engages in business as a seller in this state without a permit or with a suspended permit. A separate offense is committed each day a person operates a business without a permit or with a suspended permit. An offense is:

    (A) a Class C misdemeanor for a first offense;

    (B) a Class B misdemeanor punishable by a fine not to exceed $2,000 for a second conviction;

    (C) a Class A misdemeanor punishable by a fine not to exceed $4,000 for a third conviction; and

    (D) a Class A misdemeanor punishable by a fine not to exceed $4,000, confinement in jail for a term not to exceed a year, or both the fine and confinement for a fourth or subsequent conviction.

  (4) A person commits an offense if the person intentionally or knowingly fails to pay to the comptroller the tax collected by that person. When tax is collected and not paid pursuant to one scheme or continuous course of conduct, all such conduct may be considered as one offense and the amounts of tax collected and not paid may be aggregated in determining the grade of the offense. An offense is:

    (A) a Class C misdemeanor if the amount of the tax collected and not paid is less than $50;

    (B) a Class B misdemeanor if the amount of the tax collected and not paid is $50 or more but less than $500;

    (C) a Class A misdemeanor if the amount of the tax collected and not paid is $500 or more but less than $1,500;

    (D) a state jail felony if the amount of the tax collected and not paid is $1,500 or more but less than $20,000;

    (E) a felony of the third degree if the amount of the tax collected and not paid is $20,000 or more but less than $100,000;

    (F) a felony of the second degree if the amount of the tax collected and not paid is $100,000 or more but less than $200,000; and

    (G) a felony of the first degree if the amount of the tax collected and not paid is $200,000 or more.

  (5) A person commits an offense if the person refuses to furnish a report as required by Tax Code, Chapter 151, or by the comptroller. An offense is:

    (A) a Class C misdemeanor for a first offense;

    (B) a Class B misdemeanor punishable by a fine not to exceed $2,000 for a second conviction; and

    (C) a Class A misdemeanor punishable by a fine not to exceed $4,000 for a third or subsequent conviction.

  (6) A person commits an offense if the person intentionally or knowingly conceals, destroys, makes a false entry in, or fails to make an entry in records that are required to be made or kept under Tax Code, Chapter 151. An offense is a felony of the third degree.

  (7) A person commits an offense if the person fails to produce or allow inspection of a record that is required to be kept under Tax Code, Chapter 151, within an allowed period of time after a person who is authorized by the comptroller requests the record. Except as provided in paragraph (8) of this subsection, an offense is a Class C misdemeanor. A separate offense is committed each day the person fails to allow inspection of records or fails to produce records after the allowed time period expired. See subsection (c) of this section for certain restrictions.

  (8) A person commits an offense if the person intentionally fails to produce to the comptroller records that document the taxpayer's taxable sale of items that the taxpayer obtained using a resale certificate. The records to which the offense applies are those required to be kept under Tax Code, §151.025 (Records Required to be Kept), which were requested by the comptroller under Tax Code, §151.023 (Investigations and Audits) and which are not produced in the period required by that section. The items to which the offense applies are items the sales of which are required to be reported to the comptroller under Tax Code, §§151.433 (Reports by Wholesalers and Distributors of Beer, Wine, and Malt Liquor), 154.212 (Reports by Wholesalers and Distributors of Cigarettes), or 155.105 (Reports by Wholesalers and Distributors of Cigars and Tobacco Products). It is an affirmative defense to prosecution under this paragraph that the items listed for purchase on the resale certificate had not been resold at the time of the comptroller's request for records under Tax Code, §151.023. If the conduct described by this paragraph is related to one scheme or continuous course of conduct, all such conduct may be considered as one offense and the amounts aggregated in determining the grade of the offense. See subsection (c) of this section for certain restrictions. An offense is:

    (A) a Class C misdemeanor if the tax avoided by use of the resale certificate is less than $20;

    (B) a Class B misdemeanor if the tax avoided by use of the resale certificate is $20 or more but less than $200;

    (C) a Class A misdemeanor if the tax avoided by use of the resale certificate is $200 or more but less than $750;

    (D) a felony of the third degree if the tax avoided by use of the resale certificate is $750 or more but less than $20,000; or

    (E) a felony of the second degree if the tax avoided by use of the resale certificate is $20,000 or more.

(c) Inspection and demand for production. Tax Code, §151.023 permits the comptroller to inspect business premises where a taxable event has occurred and to issue a written demand notice to a taxpayer or to an employee, an authorized representative, or agent of the taxpayer for the production of documents within 10 business days of delivery of the notice. This authority will be exercised within the parameters outlined in §3.281(f) of this title (relating to Records Required; Information Required). The comptroller may file criminal charges with appropriate authorities for violations of Tax Code, §151.023, if the taxpayer fails to permit inspection or fails to produce documents in response to a demand by the comptroller's Enforcement Division or Criminal Investigation Division.

(d) Confidential information. The comptroller or the attorney general may use taxpayer information or records made confidential by Tax Code, Title 2 to enforce Tax Code, Title 2 or the criminal laws of Texas or the United States, or may authorize the use of information or records made confidential by Tax Code, Title 2 in a judicial or administrative proceeding in which this state, another state, or the federal government is a party.

(e) Penal Code.

  (1) Criminal conspiracy. Penal Code, §15.02 (Criminal Conspiracy) and §15.04 (Renunciation Defense) apply to all criminal offenses prescribed by the Tax Code.

  (2) Organized crime. A person commits an offense under Penal Code, §71.02, if the person, with the intent to establish, maintain, or participate in a combination or in the profits of a combination or as a member of a criminal street gang, commits or conspires to commit a felony offense prescribed by the Tax Code. The terms "combination," "profits," "criminal street gang," and "conspires to commit," are defined by Penal Code, §71.01.

  (3) Money laundering. The definition of the term "proceeds" in Penal Code, Chapter 34 (Money Laundering) includes funds acquired or derived directly or indirectly from, produced through, or realized through conduct that constitutes an offense under Tax Code, §151.7032 (Failure to Pay Taxes Collected; Criminal Penalty and Aggregation of Amounts Involved).

(f) Venue. The venue for prosecution of any offense incurred under Tax Code, Chapter 151 is Travis County or the county in which any element of the offense occurs. If prosecution for engaging in criminal conspiracy, an organized criminal activity, or money laundering is based upon an offense classified as a felony under the Tax Code, the venue for prosecution of the conspiracy, organized criminal activity, or money laundering is any county in which venue for the underlying offense is proper under the Tax Code.


Source Note: The provisions of this §3.305 adopted to be effective February 18, 2002, 27 TexReg 1177; amended to be effective September 23, 2013, 38 TexReg 6224

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