OGCI Training, Inc. v. Glenn Hegar, Comptroller of Public Accounts of the State of Texas And Ken Paxton, Attorney General of the State of Texas
03-16-00704-CV
| Tex. App. | Oct 27, 2017Background
- OGCI Training, an Oklahoma-based provider of technical training, paid a 2009 Texas franchise-tax assessment under protest after the Texas Comptroller disallowed its COGS deduction and treated all live-training receipts as Texas receipts.
- OGCI argued administratively that many receipt-producing activities (content creation, curriculum development) occurred in Oklahoma and the Comptroller should apportion receipts using a cost-of-performance method; the Comptroller rejected this and concluded the live trainings were entirely performed in Texas.
- OGCI filed a protest-payment suit in Travis County after paying the assessment and alleged in its district-court petition that some live training was delivered by third-party "Risk/Reward" instructors who receive two-thirds of net course income, while OGCI receives one-third and performs much work in Oklahoma.
- The Comptroller filed a partial plea to the jurisdiction arguing (1) OGCI’s claim that third-party contractors performed the Texas training was not preserved in the protest letter (Tex. Tax Code ch. 112) and therefore outside the suit’s scope, and (2) OGCI lacked standing to mention an unrelated amended tax report seeking $17,082.88 in a separate administrative claim.
- The trial court granted the plea, dismissing paragraph 54 (third-party instructors) and striking paragraph 17 (notice of separate administrative refund claim); OGCI appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether OGCI’s allegation that live trainings were delivered by third-party instructors is within the scope of its protest-payment suit (preservation under Tex. Tax Code §112.053) | OGCI: the third-party-instructor facts merely elaborate the same legal theory raised in the protest letter—that many receipt-producing activities occur outside Texas and apportionment should reflect that | Comptroller: alleging that third parties actually performed the Texas services is a different legal ground than the protest and was not raised administratively, so the district court lacks jurisdiction | Court: Reversed dismissal. Read liberally, paragraph 54 can be viewed as part of the same apportionment theory; pleadings do not affirmatively negate jurisdiction and OGCI should be allowed to replead |
| Whether the district court properly dismissed paragraph 17 notifying the Comptroller of a separate amended franchise-tax report seeking $17,082.88 (standing/redressability) | OGCI: paragraph 17 was background notice of a separate claim and seeks no relief in this suit | Comptroller: OGCI lacked standing to assert a hypothetical administrative claim in this proceeding | Court: Reversed dismissal. Because OGCI does not seek relief here, the allegation is not a jurisdictional defect; striking it was error |
Key Cases Cited
- Texas Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217 (Tex. 2004) (standard for pleading to show jurisdiction and permissive amendment when jurisdiction not negated)
- In re Nestle USA, Inc., 387 S.W.3d 610 (Tex. 2012) (explaining franchise-tax margin and apportionment principles)
- Humble Oil & Refining Co. v. Calvert, 414 S.W.2d 172 (Tex. 1967) (localization of transaction for tax purposes)
- Hallmark Mktg. Co. v. Hegar, 488 S.W.3d 795 (Tex. App.—Austin 2016) (apportionment limits franchise tax to Texas-attributable revenue)