1. (a) A person who has paid tax in error to the state or to a permitted seller may request a refund of tax paid in error.

   1. (1) A person who does not have a sales and use tax permit and who has paid tax in error to a permitted seller may request a refund from only the permitted seller to whom the tax was paid. The permitted seller who refunds tax to a purchaser may claim a refund with the comptroller as provided by subsection (b).
   2. (2) A sales and use tax permit holder who has paid tax in error directly to the comptroller may request from the comptroller a refund of the tax paid in error.
   3. (3) A sales and use tax permit holder who has paid tax in error to another permitted seller may request from the comptroller or the seller a refund of tax paid in error.

   4. (4) A person who requests a refund from the comptroller must:

      1. (A) submit a claim made in writing and must state fully and in detail the specific grounds upon which the claim is based;
      2. (B) indicate the period for which the claimed overpayment was made;
      3. (C) submit the claim within the applicable limitations period as provided subsection (c); and
      4. (D) submit supporting documentation required by the comptroller.

2. (b) The following procedures must be used to request a refund from the comptroller.

   1. (1) Seller who requests a refund from the comptroller.

      1. (A) Before a seller refunds to a purchaser tax collected in error, the seller must obtain from the purchaser a properly completed exemption or resale certificate that meets all the requirements of §3.285 of this title (relating to Sales for Resale; Resale Certificate) and §3.287 of this title (relating to Exemption Certificates). The seller must retain the certificate to document the basis for the refund.
      2. (B) After the seller has refunded or, with the purchaser's written consent, credited the tax to the account of the purchaser, the seller may then seek reimbursement from the state in accordance with the procedures that are outlined in subsection (a) of this section or take a credit on the seller's next return in the amount refunded or credited to the account of the purchaser.

   2. (2) A permitted purchaser who requests a refund from the comptroller.

      1. (A) A permitted purchaser who requests a refund from the comptroller must submit to the comptroller a written request that states the basis for the refund and includes the following information:

         1. (i) the seller's name, address, and either the sales tax permit number or information that will enable the comptroller to identify the seller's sales tax permit number;
         2. (ii) the invoice number, if applicable;
         3. (iii) the date of purchase;
         4. (iv) a description of the item purchased;
         5. (v) the specific basis for the refund;
         6. (vi) information that identifies the local taxing authorities for which tax was paid; and
         7. (vii) a statement or reasonable estimate of the amount of the tax refund requested.
      2. (B) The comptroller may require a person to submit additional information to verify the refund claim. The person must show to the satisfaction of the comptroller that the refund is due and make available to the comptroller any documentation that the comptroller requires to process the refund.
      3. (C) A permitted purchaser may amend the return for the period in which the overpayment was made or file a refund claim with the comptroller for sales tax paid in error to a seller. The refund claim must identify the period in which the tax was originally paid. The purchaser must retain, for the period required in Tax Code, Chapter 111, all documentation that is necessary to support the credit.

3. (c) A claim for refund must be made within the limitations periods.

   1. (1) A claim for refund must be made within four years from the date on which the tax was due and payable as provided by §151.401, Tax Code.

   2. (2) A claim for refund for tax paid pursuant to a deficiency determination must be made by the later of:

      1. (A) four years from the date on which the tax was due and payable; or
      2. (B) six months after the date on which the deficiency determination for the periods becomes final.
   3. (3) If the comptroller and a taxpayer have agreed in writing to extend the limitations period, then a claim for refund must be made before the expiration of the extended period in the agreement. An extension of the statute of limitations applies only to the periods that are specified in the agreement. An expired agreement to extend the statue of limitations has no effect and the statue of limitations for subsequent assessments and refund requests is determined as if no extension had been authorized. For the limitations period for assessments, see §3.339 (relating to Statute of Limitations).
   4. (4) A redetermination or refund proceeding does not toll the statute of limitations, except for the issues contested.
   5. (5) Failure to file a claim within the limitations prescribed by this section constitutes a waiver of any demand against the state on account of the overpayment.

4. (d) Interest.

   1. (1) Except as provided by paragraphs (2) and (3) of this subsection, in a comptroller's final decision on a claim for refund or in an audit, interest accrues at the rate that is set in Tax Code, §111.060, on the amount that is found to be erroneously paid:

      1. (A) beginning on the later of 60 days after the date of payment or the due date of the tax report; and

      2. (B) ending on, as determined by the comptroller, either:

         1. (i) the date of allowance of credit that results from a final decision that the comptroller has issued, or from an audit; or
         2. (ii) a date that is not more than 10 days before the date of the refund warrant.
   2. (2) The interest rate for a refund that is granted for a period for which a report is due after December 31, 1999, is the rate set in Tax Code, §111.060. A refund for a period for which a report is due before January 1, 2000, does not accrue interest.
   3. (3) Credits taken by a taxpayer on the taxpayer's return do not accrue interest.
   4. (4) No taxes, penalties, or interest will be refunded to a person who has collected the taxes from another person until all taxes are first refunded to the party from whom they were collected.

5. (e) Denial of refund.

   1. (1) If the comptroller determines that the claim for refund cannot be granted either partially or fully, then the comptroller will notify the claimant of the denial. Claimant may request a refund hearing within 30 days of the denial.
   2. (2) A person may not refile a refund claim for the same transaction or item, tax type, period, and ground or reason that was previously denied by the comptroller.
6. (f) Payments under protest. A person who intends to file suit under Tax Code, Chapter 112, Subchapter B, must submit to the comptroller a letter of protest with the payment of the tax that is the subject of the protest. See subsection (e) of §3.9 of this title (relating to Electronic Filing of Returns and Reports; Electronic Transfer of Certain Payments by Certain Taxpayers). The letter of protest must state fully and in detail every reason that the taxpayer contends that the assessment is unlawful or unauthorized, and must accompany the payment. If the payment and letter of protest do not accompany one another, the payment will not be deemed to have been made under protest. For the taxpayer's convenience, the comptroller will advise the taxpayer of the amount of payment under protest that the comptroller has received and the date of the payment.

Source Note:The provisions of this §3.325 adopted to be effective April 13, 1979, 4 TexReg 1105; amended to be effective May 24, 1982, 7 TexReg 1750; amended to be effective February 29, 1984, 9 TexReg 1028; amended to be effective February 2, 1987, 12 TexReg 186; amended to be effective November 19, 1987, 12 TexReg 4121; amended to be effective May 28, 2001, 26 TexReg 3823; amended to be effective June 3, 2004, 29 TexReg 5415.