1st Global, Inc. v. Glenn Hegar, Comptroller of Public Accounts of the State of Texas, and Ken Paxton, Attorney General of the State of Texas
03-19-00740-CV
| Tex. App. | Oct 29, 2021Background
- 1st Global, Inc. is the reporting entity for a group of investment advisors; it has a Dallas office and some advisors work outside Texas.
- The Comptroller takes the position that receipts from advisors’ services (wherever performed) are apportioned to Texas because of the Dallas office; 1st Global contends receipts are earned where advisors perform services.
- For tax year 2018, 1st Global filed its regular annual franchise-tax report, self‑assessed tax consistent with the Comptroller’s position, paid that amount, and simultaneously filed a protest disputing the tax computation.
- At the time 1st Global paid and protested, the Comptroller had not audited, assessed, issued a deficiency or refund denial, or otherwise identified a specific amount owed for 2018.
- The State moved to dismiss for lack of jurisdiction, arguing 1st Global did not pay "the amount claimed by the state" as required by Tex. Tax Code §112.051(a); the trial court granted the motion and dismissed. 1st Global appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §112.052(b) permits filing the protest with the regular annual report | 1st Global: §112.052(b) allows filing a protest with the regular annual report | State: §112.052(b) only applies where an extension under §171.202(c) was granted; 1st Global had EFT requirement and used a different extension | Court: §112.052(b) does not apply to 1st Global; issue overruled |
| Whether "the amount claimed by the state" includes a taxpayer’s self‑assessment paid with the annual report | 1st Global: its self‑assessed payment satisfies the statute’s requirement to pay "the amount claimed by the state" | State: statute requires an affirmative claim by the state (Comptroller) for a specific amount; a self‑assessment is not enough | Court: phrase reasonably reads to require an affirmative state claim; self‑assessment alone does not waive immunity |
| Whether the live petition pleaded facts sufficient to establish a waiver of sovereign immunity | 1st Global: pleadings show it paid the required amount and raised jurisdictional fact issues | State: facts are undisputed and show no payment of an amount claimed by the state; pleadings cannot cure that | Court: pleadings insufficient; no genuine factual dispute; dismissal affirmed |
Key Cases Cited
- Texley, Inc. v. Hegar, 613 S.W.3d 322 (Tex. App.—Austin 2020) (discussing requirement to pay tax under protest before suing)
- In re Nestle USA, Inc., 387 S.W.3d 610 (Tex. 2012) (appellate acceptance of jurisdiction does not necessarily decide unbriefed jurisdictional issues)
- Texas Dep't of Transp. v. York, 284 S.W.3d 844 (Tex. 2009) (ambiguities in statutes waiving sovereign immunity are resolved to retain immunity)
- Wichita Falls State Hosp. v. Taylor, 106 S.W.3d 692 (Tex. 2003) (same principle on retaining immunity when statutory waiver ambiguous)
- Texas Facilities Comm'n v. Speer, 559 S.W.3d 245 (Tex. App.—Austin 2018) (strict compliance with statutory prerequisites required for waiver of sovereign immunity)
- Town of Shady Shores v. Swanson, 590 S.W.3d 544 (Tex. 2019) (courts should not infer dispositive significance from prior opinions’ silence on jurisdictional issues)