The Geo Group, Inc. and Geo Corrections and Detention, LLC v. Glenn Hegar, Comptroller of Public Accounts of the State of Texas, and Ken Paxton, Attorney General of the State of Texas, 709 S.W.3d 585

The GEO Group, Inc. (GEO) is a private, for-profit corporation operating correctional facilities in Texas, under contracts with federal/state agencies and counties, during 2011–2014.
GEO did not pay sales or use tax on necessary operational purchases (e.g., utilities, food), claiming these were exempt as made on behalf of governmental clients.
The Texas Comptroller conducted an audit, assessed a tax deficiency, and denied GEO's administrative protest.
GEO paid the assessed taxes (~$3.9 million) and sued for a refund, arguing it was exempt as a government “agent” or “instrumentality.”
The trial court denied GEO's claim, requiring “clear and convincing” proof; the court of appeals affirmed this decision.
The Texas Supreme Court reviewed whether GEO met the proper standard and qualified for the exemption under the Texas Tax Code and administrative rules.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Standard of Proof in Refund Suit	GEO argued the court should use a preponderance of evidence, not clear and convincing.	Comptroller argued clear and convincing is correct as per agency rules.	Preponderance of evidence applies in court; higher standard is only for administrative process.
Whether GEO is a Government Instrumentality	GEO claimed it is an instrumentality or agent of the government since it performs a government function by housing inmates.	Comptroller argued GEO is a separate, independent contractor and does not meet the statutory or regulatory definition of an agent/instrumentality.	GEO is not an agent or instrumentality—contracts do not so state, and GEO does not meet the detailed exemption criteria.
Qualification as "Unincorporated Instrumentality"	GEO argued it fits as an unincorporated instrumentality under broad definitions and state rules.	Comptroller said private, for-profit companies, especially incorporated ones, do not qualify under statutory or regulatory definitions.	GEO does not qualify as unincorporated instrumentality under the statute or rule.
Effect of Contractual Language	GEO minimized independent contractor language, arguing function should control.	Comptroller relied on language stating GEO is an independent contractor responsible for its own taxes.	Court found contract language dispositive; GEO is not a government instrumentality or agent.

Hegar v. Am. Multi-Cinema, Inc., 605 S.W.3d 35 (Tex. 2020) (clarifying de novo review and statutory interpretation in tax refund cases)
Sw. Bell Tel. Co. v. Pub. Util. Comm’n, 571 S.W.2d 503 (Tex. 1978) (explaining preponderance standard for trial de novo)
Ellis County State Bank v. Keever, 888 S.W.2d 790 (Tex. 1994) (preponderance standard is the default in Texas civil cases)
Odyssey 2020 Acad., Inc. v. Galveston Cent. Appraisal Dist., 624 S.W.3d 535 (Tex. 2021) (tax exemptions must be clearly proven, doubts resolved against the claimant)