Sovereign Immunity Prevents Taxpayer From Suing State

Friday, April 17th, 2015

 
 
Texas Department of Revenue
Share
Link
Texas
General

A Texas taxpayer sued the state comptroller after being assessed for unpaid sales tax. The taxpayer claimed that a part of the tax code was unconstitutional and that a tax rule was not authorized. The taxpayer had not gone through the normal administrative process to challenge the assessment. The taxpayer also did not pay the disputed tax or post a bond before suing the state.

The Court of Appeals ruled that the taxpayer's suit should be dismissed. It stated that sovereign immunity did not allow the suit. Sovereign immunity protects a state from lawsuits unless the state legislature agrees to be sued. The legislature does this by creating a law that expressly allows lawsuits against the state. Without such a law, a court must dismiss a suit against the state.

The Texas tax code does allow the state to be sued on tax disputes. However, it only allows (1) suits after a taxpayer has paid tax under protest, (2) suits for injunction after the taxpayer has paid tax or posted a bond, and (3) suits for a refund of paid taxes. The Court stated that these were the only ways a taxpayer could sue to challenge an assessment of a state tax.

The taxpayer did not pay the tax or post a bond, so it could not sue the state over the tax. Because the tax code only allowed suits after a taxpayer had paid or posted a bond, sovereign immunity prevented the taxpayer from suing the state.

http://www.search.txcourts.gov/SearchMedia.aspx?MediaVersionID=40a41e65-defd-4c12-9f50-ca3530908fee&coa=coa03&DT=Opinion&MediaID=265e0b66-172b-418f-96f9-7d60b280189f


About TTR

Transaction (buying or selling things), Tax (the tax on this activity), Resources (our people, our website, our support services) - TTR, Inc.

TTR has a website that companies subscribe to and use daily. This website provides a list of everything that can be bought or sold in the U.S. It provides simple answers to whether buying or selling these items is taxable (subject to a sales tax or other tax), and it provides all the legal authority to support these tax answers.

TTR likes to keep things simple and fun, which is why it has great people who provide help to clients on any support questions they have about transaction tax issues.

Please visit TTR on the web at www.ttrus.com or call 866.578.8193.

Colorado Waives Penalties for Notice and Reporting...

Monday, February 19th, 2018 -The Colorado Department of Revenue (DOR) released a publication stating that it has agreed to waive penalties ...

Maryland Sales Tax Holiday for Energy Efficient...

Friday, February 16th, 2018 -The Maryland sales tax holiday for energy efficient appliances runs from Saturday, February 17, 2018, at 12:01...

Dental Prostheses Exempt in Michigan

Wednesday, February 14th, 2018 -The Michigan Department of Treasury recently released a publication describing the retroactive exemption for d...

Taxability of Amusement Devices and Video Games in...

Monday, February 12th, 2018 -The Wisconsin Department of Revenue has released guidance addressing the taxability of video games and amuseme...

Video Streaming Subscriptions Taxable in Texas

Friday, February 9th, 2018 -The Texas Comptroller of Public Accounts recently ruled that video streaming and add-on services are taxable a...

Moratorium on Medical Devise Excise Tax Extended Two More...

Wednesday, February 7th, 2018 -The United States Congress extended the moratorium on the Medical Device Excise Tax (MDET) for another two yea...