601 S.W.3d 744
Tex.2020Background
- Comptroller audited EBS for 2009–2012 and assessed $298,519.50 in taxes, penalties, and interest; EBS timely protested.
- EBS made partial payments totaling $150,000, filed protest and an oath of inability to pay the remainder, and sought an injunction to stop collection and recovery of the prepaid taxes.
- Section 112.108 of the Texas Tax Code (amended after R Communications) bars declaratory relief but contains an inability-to-pay exception that permits a taxpayer to avoid full prepayment if the court finds prepayment would unreasonably restrain access to courts.
- The Comptroller relied on appellate precedent (Bandag/Rylander) holding §112.108 invalid and argued partial prepayment does not waive sovereign immunity; the trial court conducted a hearing, found prepayment would unreasonably restrain EBS, and denied the Comptroller’s plea to the jurisdiction.
- The court of appeals reversed, holding the amended §112.108 remained unconstitutional and EBS lacked jurisdictional compliance; the Supreme Court of Texas reversed, holding §112.108, as applied to EBS, permits relief and that EBS satisfied its jurisdictional requirements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §112.108’s inability-to-pay exception can waive sovereign immunity so taxpayer may avoid full prepayment | EBS: filed oath, had hearing, trial court found prepayment would unreasonably restrain access — waiver exists | Comptroller: Bandag(holding §112.108 invalid) controls; partial prepayment insufficient and no waiver | Court: §112.108 as applied allows waiver; EBS satisfied the statute’s four requirements and sovereign immunity was waived |
| Whether the amended §112.108 (which still bans declaratory relief) violates the Texas Open Courts clause as applied to EBS | EBS: court of appeals’ refusal to give effect to the inability-to-pay exception creates an Open Courts violation for taxpayers who can pay some but not all | Comptroller: §112.108 remains unconstitutional under Bandag; exception void | Court: declined to strike statute here; as-applied interpretation (broad inability-to-pay) preserves access and avoids constitutional invalidation |
| What "inability to pay" means under §112.108 (may a taxpayer who pays some be eligible?) | EBS: means unable to pay the full assessed tax, so partial prepayment is allowed while invoking the exception | Comptroller: means inability to pay any part — partial payment defeats the exception and full prepayment required | Court: reads the term broadly — inability to pay the tax, penalties, and interest due includes inability to pay the full amount; partial prepayment does not bar the exception |
| Whether the Comptroller is entitled to remand for further factfinding on EBS’s inability-to-pay claim | EBS: no remand — Comptroller had the statutorily provided hearing and did not contest facts there | Comptroller: sovereign-immunity jurisdiction can be challenged at any time; asks remand to contest jurisdictional facts | Court: no remand — the Comptroller had notice and opportunity, did not contest the oath at hearing, and trial-court findings suffice |
Key Cases Cited
- R Communications v. Sharp, 875 S.W.2d 314 (Tex. 1994) (invalidated predecessor §112.108’s ban on declaratory relief as violating Open Courts and allowed declaratory actions as remedy)
- Cent. Appraisal Dist. of Rockwall Cty. v. Lall, 924 S.W.2d 686 (Tex. 1996) (prepayment of any portion of contested tax as a condition of review violates Open Courts)
- Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440 (Tex. 1993) (statutory forfeiture/prepayment restriction declared an unreasonable financial barrier to access)
- Rylander v. Bandag Licensing Corp., 18 S.W.3d 296 (Tex. App.—Austin 2000) (held amended §112.108 invalid; relied on by Comptroller below)
- Griffin Indus., Inc. v. Thirteenth Court of Appeals, 934 S.W.2d 349 (Tex. 1996) (explains standards for sustaining an inability-to-pay affidavit)
- Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W.3d 217 (Tex. 2004) (sovereign immunity implicates subject-matter jurisdiction and is reviewed de novo)