Susan Combs, Comptroller of Public Accounts of the State of Texas And Greg Abbott, Attorney General of the State of Texas v. Newpark Resources, Inc., 422 S.W.3d 46

Texas franchise tax dispute: Newpark Resources sought a refund after paying under protest for 2008–2009; NES handled waste disposal and subcontracted hauling, forming part of Newpark’s unitary group.
Newpark and NES are affiliated under a combined-group filing; the group elects a single general deduction (COGS, 30%, or compensation).
Comptroller challenged including NES’s expenses in COGS, arguing NES provides only services and not goods, and argued flow-through payments to subcontractors may not be excluded from total revenue.
Newpark argued NES labor constitutes costs of selling real-property improvements under 171.1012(i), allowing NES expenses to be included in COGS, and that flow-through payments could be excluded from total revenue.
Trial court ruled in Newpark’s favor, concluding NES expenses could be included in COGS; no findings of fact were issued. The issue was dispositive, so the court affirmed.
Statutory framework: 171.1011 total revenue; 171.1012 COGS; 171.1014 rules for combined groups; 171.1012(i) labor/materials for real-property projects.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether NES expenses qualify for COGS within the combined group.	Newpark—NES furnishes labor to real-property projects; NES expenses should be COGS under 171.1012(i).	Comptroller—NES provides services, not goods; not eligible for COGS.	NES expenses may be included in COGS within the combined-group framework.
Whether NES’s flow-through payments to subcontractors can be excluded from total revenue.	Newpark—flow-through payments are excluded; otherwise costs may still be deductible.	Comptroller—payments do not meet exclusion criteria under 171.1011(g)(3).	Not necessary to decide; not reached on record.

In re Nestle USA, Inc., 387 S.W.3d 610 (Tex. 2012) (franchise tax structure and revenue concepts cited as background)
In re Allcat Claims Serv., L.P., 356 S.W.3d 455 (Tex. 2011) (context on franchise tax reform and allocations)
City of Rockwall v. Hughes, 246 S.W.3d 621 (Tex. 2008) (statutory interpretation; read statute in context; whole statute)