By this letter, Appellees/Cross-appellants Comptroller Glenn Hegar and Attorney General

Ken Paxton (together, the Comptroller) notify the Court of developments bearing on the pending

motion for rehearing and reconsideration en banc, filed on June 5, 2015. Please file this letter and

circulate it to the Court.

On pages 9–10 of his Motion for Rehearing and for Reconsideration en Banc, and pages 7-8

of his Reply in Support of Motion for Rehearing and for Reconsideration en Banc, the Comptroller

warned that the panel opinion’s construction of “tangible personal property” might lead to tax-

exemption claims for the “sale” of experiences such as sporting events, music concerts, art

exhibitions, rodeos, and carnivals, and claims of “costs of goods sold” for the cost of providing

services such as examination rooms, lawyer’s offices, sporting facilities, and the like. There are

now three cases pending in Travis County district courts in which taxpayers are claiming to have

sold tangible personal property when patrons were provided admission to events where they had

sensory experiences:

1. Dallas World Aquarium Corp. v. Glenn Hegar, Comptroller of Public Accounts

of the State of Texas and Ken Paxton, Attorney General of the State of Texas;

Cause No. D-1-GN-15-004255; 345th District Court, Travis County: Plaintiff

claims that it is selling “tangible personal property” to patrons when it provides admission because the patrons sense the animals and atmosphere as they pass

through the aquarium/zoo.

2. Hollywood Theaters, Inc. v. Glenn Hegar, Comptroller of Public Accounts of

the State of Texas and Ken Paxton, Attorney General of the State of Texas;

Cause No. D-1-GN-15-002935; 345th District Court, Travis County. Like

AMC, plaintiff claims that it is selling “tangible personal property” by

providing admission to the exhibition of movies.

P os t Offic e B ox 12548 , Au stin , Texa s 7 8 7 1 1 - 2 5 4 8 • ( 5 1 2 ) 4 6 3 - 2 1 0 0 • www. t exa sa tt or n eygen era l. gov

Jeffrey D. Kyle, Clerk of the Court

Texas Third Court of Appeals

03-14-00397-CV; Post-Submission Letter

December 20, 2016

Page 2

3. Colonial Country Club v. Glenn Hegar, Comptroller of Public Accounts of the State

of Texas and Ken Paxton, Attorney General of the State of Texas ; Cause No. D-1-

GN-16-005464; 201st District Court, Travis County: Plaintiff claims that it is

selling “tangible personal property” when it sells spectator tickets to an annual PGA

golf tournament.

Of these cases, the first two have been abated pending the outcome of this case. The third

case, which was very recently filed, is currently pending.

Very truly yours,

/s/ Cynthia A. Morales Cynthia A. Morales

Texas Bar No. 14417420

Assistant Attorney General

Financial Litigation and Charitable Trusts Division Tel: (512) 475-4470

cynthia.morales@oag.texas.gov

CAM:lje

Cc: Doug Sigel Via EFileTexas.gov

Ryan Law Firm, LLP

CERTIFICATE OF SERVICE

On December 20, 2016, the foregoing document was served on Appellant/Cross-Appellee

through its attorney of record, Doug Sigel via EFileTexas.gov and by email at

doug.sigel@ryanlawllp.com.

/s/ Cynthia A. Morales Cynthia A. Morales

Assistant Attorney General

P os t Offic e B ox 12548 , Au stin , Texa s 7 8 7 1 1 - 2 5 4 8 • ( 5 1 2 ) 4 6 3 - 2 1 0 0 • www. t exa sa tt or n eygen era l. gov