| (a) The comptroller has discretion to settle penalty
or interest on a tax liability if the comptroller determines that
the taxpayer exercised reasonable diligence to comply with the tax
laws of this state. In determining whether a taxpayer has exercised
reasonable diligence to comply with the tax laws of this state, the
Audit Division and Revenue Accounting Division will consider the factors
set out in subsections (b) and (c), respectively.
(b) Procedure for requesting waiver, audits.
(1) Penalty or interest on an audit liability may be
waived if the taxpayer exercised reasonable diligence to comply with
the tax laws of this state. A request to waive penalty or interest
will be presumed in all cases governed by this subsection.
(2) The comptroller has delegated to the Audit Division
the initial authority to waive penalty or interest or both in appropriate
cases. At the conclusion of an audit and during the exit conference,
the taxpayer will be told whether any penalty or interest will be
waived. At this conference the taxpayer may request that the Audit
Division reconsider the decision on penalty or interest waiver.
(3) When reviewing a request for penalty waiver, the
Audit Division will consider the following factors:
(A) the taxpayer's audit history, including, but not
limited to, the errors identified in prior audits;
(B) the tax issues involved;
(C) whether a change in comptroller policy occurred
during the audit period;
(D) whether changes in the law took effect during the
audit period;
(E) the size and sophistication of the taxpayer;
(F) whether tax was collected but not remitted;
(G) whether returns were timely filed;
(H) the completeness of the taxpayer's records;
(I) the taxpayer's efforts to comply with the recordkeeping
requirements of this state, such as maintaining an accrual system
for taxable purchases;
(J) delinquencies in other taxes;
(K) reliance on advice provided by the comptroller's
office pursuant to §3.10(c) of this title (relating to Taxpayer
Bill of Rights); and
(L) the error rate in the current audit.
(4) When reviewing a request for interest waiver, the
Audit Division will consider the factors enumerated in subsection
(e) of this section.
(5) The taxpayer will be advised of the acceptance
or rejection of the request for waiver of penalty or interest in the
audit cover letter sent with the copy of the audit schedules.
(6) If a taxpayer's request for waiver is denied at
the audit level, the taxpayer may raise the issue as a contested case
matter during either a refund or redetermination hearing, or during
an independent audit review conference under §3.10(e)(4) of this
title.
(c) Procedure for requesting waiver, non-audit.
(1) The comptroller has delegated to the Revenue Accounting
Division the initial authority to waive penalty or interest or both
on return and report liabilities. Penalty or interest on a non-audit
liability may be waived if the taxpayer exercised reasonable diligence
to comply with the tax laws of this state.
(2) A written request stating the reasons penalty or
interest or both should be waived must be sent to the comptroller's
Revenue Accounting Division accompanied by supporting documentation.
A single waiver request may address the penalty or interest or both
imposed on one annual return or report period, two quarterly returns
or report periods, or six monthly returns or report periods. The comptroller
may require the production of any additional documentation necessary
to evaluate a request.
(3) When reviewing a penalty waiver request under this
subsection, the Revenue Accounting Division will consider the following
factors regarding a taxpayer's account and will inform the taxpayer
of the division's decision to accept or reject part or all of the
penalty waiver request:
(A) whether the taxpayer is current in the filing of
all returns;
(B) whether the taxpayer is current in the payment
of all taxes and fees due the state;
(C) whether penalty has been waived on other occasions
for any tax type;
(D) why any previous penalty waiver requests were granted
or denied;
(E) whether the taxpayer has a good record of timely
filing and paying past returns;
(F) the size and sophistication of the taxpayer;
(G) whether advanced collection actions were initiated
on the liability with respect to which the waiver is requested;
(H) whether multiple liabilities are included in the
waiver request; and
(I) whether the taxpayer has taken the necessary steps
to correct the problem for future filings.
(4) When reviewing an interest waiver request under
this subsection, the Revenue Accounting Division will consider the
factors enumerated in subsection (e) of this section and will inform
the taxpayer of the division's decision to accept or reject all or
part of the interest waiver request.
(5) A taxpayer may request an administrative appeal
with the Revenue Accounting Division of a denial of all or part of
a waiver request within ten calendar days from the date of written
notification of the denial. Such a request for an administrative appeal
must be in writing and must state the reasons the taxpayer disagrees
with the denial of the waiver. New or additional documentation upon
which the taxpayer relies for support should be submitted with the
written request for an administrative appeal.
(6) The taxpayer will be sent written notification
from the Revenue Accounting Division of the disposition of the appeal
within 30 days of either the comptroller's receipt of the request
for an appeal or the comptroller's receipt of all additional information
requested from the taxpayer in relation to the appeal.
(7) If a taxpayer's request for waiver is denied by
the Revenue Accounting Division, the taxpayer may raise the issue
as a contested case matter during either a refund or redetermination
hearing.
(d) Review of penalty waiver. When reviewing the Audit
Division's denial of a penalty waiver request during an independent
audit review conference under §3.10(e)(4) of this title, the
independent audit reviewer will consider the factors enumerated in
subsection (b)(3) of this section. When reviewing the Audit Division's
denial of a penalty waiver request in a contested case, the comptroller
will consider the factors enumerated in subsection (b)(3) of this
section. When reviewing the Revenue Accounting Division's denial of
a penalty waiver request in a contested case, the comptroller will
consider the factors enumerated in subsection (c)(3) of this section.
(e) Interest. When reviewing an interest waiver request
under subsection (b) or (c) of this section, in a contested case,
or during an independent audit review conference under §3.10(e)(4)
of this title, the following factors regarding a taxpayer's account
will be considered:
(1) undue delay caused by comptroller personnel;
(2) reliance on advice provided by the comptroller's
office pursuant to §3.10(c) of this title; and
(3) natural disasters.
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| Source Note: The provisions of this §3.5 adopted to be effective March 10, 1992, 17 TexReg 1546; amended to be effective August 7, 1997, 22 TexReg 7059; amended to be effective May 12, 2004, 29 TexReg 4551; amended to be effective October 28, 2014, 39 TexReg 8406 |
