Court of Appeals of Texas, Third District, Austin
Glenn Hegar, Comptroller of Public Accounts of the State of Texas; and Ken Paxton, Attorney General of the State of Texas, Appellants
1st Global, Inc., Appellee
THE 126TH DISTRICT COURT OF TRAVIS COUNTY NO.
D-1-GN-17-005832, THE HONORABLE DON R. BURGESS, JUDGE
Chief Justice Rose, Justices Triana and Smith
Rose, Chief Justice
Glenn Hegar, Comptroller of Public Accounts of the State of
Texas, and Ken Paxton, Attorney General of the State of
Texas, appeal from the trial court's order denying their
motion to dismiss for lack of jurisdiction filed in the
underlying tax-protest suit brought by appellee 1st Global,
Inc. As explained below, we will reverse the trial
court's order and render judgment dismissing 1st
Global's protest suit.
case involves the interplay between Sections 112.051,
112.052, and 171.202 of the tax code. See Tex. Tax
Code §§ 112.051, 112.052, 171.202. Under Section
171.202, a taxable entity that is required to pay franchise
taxes must file with the Comptroller an annual report
providing the information necessary to compute its
franchise-tax obligation. Id. § 171.202(a). The
report is due by May 16 of each year, but the Comptroller
"shall grant an extension of time" if the entity
requests it and remits a certain sum with its extension
request.Id. § 171.202(c), (e). The
length of the extension varies depending on whether the
taxpayer is required to use electronic funds transfer (EFT)
to pay its taxes: if the entity is "not required by rule
to make its tax payments by" EFT, it can obtain an
extension to November 15, id. § 171.202(c); but
if it is "a taxable entity that is required by rule to
make its tax payments by" EFT, it can obtain an
extension to August 15, id. §
112.051, titled "Protest Payment Required,"
provides that a taxpayer who contends that a tax "is
unlawful or that the public official charged with the duty of
collecting the tax . . . may not legally demand or collect
the tax" and wishes to bring a protest suit must both
"pay the amount claimed by the state" and
"submit with the payment" a written protest that
states "fully and in detail each reason for recovering
the payment." Id. § 112.051. If the
taxpayer complies with those requirements, Section 112.052,
titled "Taxpayer Suit After Payment Under Protest,"
waives the State's sovereign immunity and allows the
taxpayer to file suit against the state "before the 91st
day after the date the protest payment was made, or the suit
is barred." Id. § 112.052; see In re
Nestle USA, Inc., 359 S.W.3d 207, 208, 212 (Tex. 2012)
(Chapter 112's provision of taxpayer rights of action
waives State's immunity from suit). In the franchise-tax
context, Section 112.052(b) allows for the extension of the
deadlines for filing the protest statement and protest
lawsuit. Tex. Tax Code § 112.052(b). If the taxpayer is
granted an extension of time for filing its franchise-tax
report "under Section 171.202(c)" and files its
franchise-tax report by the extended deadline, its protest
statement, otherwise required by Section 112.051 to be
submitted with the tax payment, may be filed with the report.
Id. Further, if those requirements are met, the time
for filing a protest suit is extended to ninety days from the
date the report is filed. Id.
construing a statute, we seek to ascertain and effectuate the
legislature's intent in enacting the statute.
Southwest Royalties, Inc. v. Hegar, 500 S.W.3d 400,
404 (Tex. 2016); Rent-A-Center, Inc. v. Hegar, 579
S.W.3d 493, 495 (Tex. App.-Austin 2019, pet. filed). "We
start with the text because it is the best indication of the
Legislature's intent." Ojo v. Farmers Grp.,
Inc., 356 S.W.3d 421, 435 (Tex. 2011). We consider the
statutory language in the context of the entire act and
presume that the legislature chose each word for a purpose
and purposefully omitted words not chosen. City of Dallas
v. TCI W. End, Inc., 463 S.W.3d 53, 55 (Tex. 2015);
Rent-A-Center, 579 S.W.3d at 495-96. "When
statutory text is clear, it is determinative of legislative
intent, unless enforcing the plain meaning of the
statute's words would produce an absurd result."
Combs v. Newpark Res., Inc., 422 S.W.3d 46, 49 (Tex.
App.-Austin 2013, no pet.); see Hegar v. Sunstate Equip.
Co., 578 S.W.3d 533, 535 (Tex. App.-Austin 2017, pet.
granted). If the statute is unambiguous, we simply consider
the statutory language rather than turning to extrinsic aids
or canons of construction to construe it. City of
Richardson v. Oncor Elec. Delivery Co., 539 S.W.3d 252,
261 (Tex. 2018); Combs v. Roark Amusement & Vending,
L.P., 422 S.W.3d 632, 635 (Tex. 2013);
Rent-A-Center, 579 S.W.3d at 496; see Combs v.
Health Care Servs. Corp., 401 S.W.3d 623, 630 (Tex.
2013) ("It is true that courts grant deference to an
agency's reasonable interpretation of a statute, but a
precondition to agency deference is ambiguity; an
agency's opinion cannot change plain language."
statute is ambiguous, on the other hand, we give deference to
the interpretation of the agency charged with enforcement of
the statute as long as that interpretation is consistent with
the statutory language and not plainly erroneous. Texas
Dep't of Ins. v. American Nat'l Ins., 410 S.W.3d
843, 853 (Tex. 2012); TGS-NOPEC Geophysical Co. v.
Combs, 340 S.W.3d 432, 438 (Tex. 2011);
Rent-A-Center, 579 S.W.3d at 495-96. Our deference,
however, is "tempered by several considerations,"
and we look to whether "(1) the agency's
interpretation has been formally adopted; (2) the statutory
language at issue is ambiguous; and (3) the agency's
construction is reasonable." American Nat'l
Ins., 410 S.W.3d at 853-54 (quoting Railroad
Comm'n of Tex. v. Texas Citizens for a Safe Future &
Clean Water, 336 S.W.3d 619, 625 (Tex. 2011));
Rent-A-Center, 579 S.W.3d at 496.
generally construe administrative rules in the same manner.
Zimmer US, Inc. v. Combs, 368 S.W.3d 579, 583 (Tex.
App.-Austin 2012, no pet.); see TGS-NOPEC ("If
there is vagueness, ambiguity, or room for policy
determinations in a statute or regulation, as there is here,
we normally defer to the agency's interpretation unless
it is plainly erroneous or inconsistent with the language of
the statute, regulation, or rule."). "Unless a rule
is ambiguous, we follow the rule's clear language; when
there is vagueness, ambiguity, or room for policy
determinations in a rule, we defer to the agency's
interpretation unless it is plainly inconsistent with the
language of the rule." Zimmer US, 368 S.W.3d at
Global paid more than $45, 000 in franchise taxes for the
2016 tax year, meaning it was required to make "certain
payments" by EFT under Rule 3.9(b)(2). See 34
Tex. Admin. Code § 3.9(b)(2) (2019) (Comptroller of
Public Accounts, Electronic Filing of Returns and Reports;
Electronic Transfer of Certain Payments by Certain
Taxpayers). On May 12, 2017, 1st Global requested an
extension of time to file its 2017 franchise tax report and
also submitted a $182, 000 "extension payment" via
EFT. 1st Global's deadline for filing its report was then
extended to August 15, 2017, and on that date, it submitted
its 2017 franchise tax report along with a protest letter,
seeking a refund of $121, 777.41 from the $182, 000 paid in
May. On October 17, 1st Global filed the underlying protest
suit. The Comptroller filed a motion to dismiss for lack of
jurisdiction, arguing that the suit was barred by sovereign
immunity because 1st Global had paid its $182, 000 extension
payment without an accompanying protest letter, meaning the
payment should not be considered a protest payment under
Section 112.051. See Tex. Tax Code §§
112.051, .052. The trial court denied the motion to dismiss,
and the Comptroller filed this appeal.
noted earlier, if a taxable entity is required to pay a tax
but believes that the tax is unlawful or that the relevant
official may not legally demand or collect it, the taxpayer
still must "pay the amount claimed by the state."
Id. § 112.051(a). If the taxpayer intends to
file a protest lawsuit, it must file a written statement of
protest at the same time the payment is made.
Id. § 112.051. If such a statement is not
submitted at the time, the payment generally is not
considered to be a protest payment and may not be the subject
of a protest suit. See Local Neon Co. v. Strayhorn,
No. 03-04-00261-CV, 2005 WL 1412171, at *5 (Tex. App.-Austin
June 16, 2005, no pet.) (mem. op.) (purpose of
protest-statement requirement is to put State on notice of
argument that tax demand is unlawful or unauthorized).
Because the Tax Code specifies that only a taxpayer that
receives an extension under Section 171.202(c) may postpone
the filing of its protest statement to coincide with the
filing of its report, the logical corollary is that a
taxpayer that obtains an extension under any other subsection
does not receive an extension of time to file its protest
statement. See Tex. Tax Code § 112.052(b). Such
a taxpayer ...