14th Court of Appeals holds immunity is waived for refund of penalties and interest paid on delinquent taxes only if taxpayer requested waiver within 180 days
Harris County, et al. v. Falcon Hunter, LLC, 14-18-00247-CV (Tex. App. – Houston [14th Dist.], February 7, 2019).
This is a delinquent tax case in which the taxpayer company, Falcon Hunter, LLC. (Falcon), sued for a refund of penalties and interest paid. The 14th Court of Appeals reversed the denial of the taxing entities’ plea to the jurisdiction and dismissed the case.
Falcon failed to pay property taxes after the tax bill was sent to an incorrect address. Upon discovering it was listed as delinquent, Falcon paid the taxes, including penalties and interest. Three years later, Falcon applied for a refund of the penalties and interest, but did not seek a refund of any property taxes paid. When Falcon did not receive a response, it sued for the amount in penalties and interest, plus collection fees and attorney’s fees. The taxing units filed a plea to the jurisdiction, which was denied. The units appealed.
Taking Falcon’s pleadings as true for purposes of the analysis, the Texas Tax Code §31.11(k) states that after a request for refund has been denied, the taxpayer may file suit against the taxing unit in district court to compel the payment of the refund within 60 days. However, it applies when a tax bill is returned to the taxing unit by the post office under certain conditions. To secure the benefit, the taxpayer must submit a request for waiver of penalties and interest under the code. The request must be made before the 181st day after the delinquency date. Since Falcon waited almost three years, it did not timely request a waiver and did not exhaust its administrative remedies. Section 31.11 waived immunity for a refund of “taxes.” However, the legislature took care to clearly distinguish the terms “penalty” and “interest” from the term “tax.” A taxpayer has three years to seek a refund of the tax. However, if a taxpayer wants penalties and interest on a delinquent tax waived, the taxpayer has, as relevant here, 180 days from the delinquency date to request the waiver in writing. Falcon sought a refund of penalties and interest, not the tax. As a result, no waiver of immunity exists for a refund of penalties/interest outside the 180-day limitation. The plea should have been granted.
If you would like to read this opinion, click here. Panel consists of Justice Wise, Justice Jewell and Justice Poissant. Memorandum opinion by Justice Jewell. The attorneys listed for the appellants are Stephen A. Smith, Mary Lucille Anderson and Patrick Nagorski. The attorneys listed for Falcon are Kory Ryan, John Brusniak Jr. and Tracy Turner.