The Newly Formed 15th Court of Appeals Issues First Tax-Related Decision Involving the Texas Comptroller Holding that a Tax Lien Did Not Apply to Taxpayers' Homestead

The recently formed 15th Court of Appeals, created by the Texas Legislature in 2023, has issued what appears to be its first decision involving a tax-related lawsuit and the Texas Comptroller. See Cao v. Hancock, 2025 WL 2621887 (Tex. – Austin [15th Dist.], no pet h). The lawsuit was filed by taxpayers seeking declaration that a state tax lien securing over $30,000 in unpaid taxes was not valid as against their homestead. Noting the “irony” of the appeal, the 15th Court of Appeals held that the lien did not apply to the taxpayers’ homestead, which is essentially what the taxpayers sought to establish, but largely for that same reason also agreed with the Texas Comptroller’s argument that the lawsuit should be dismissed on jurisdictional grounds.

The lawsuit was brought by a married couple, who were the subject of a tax lien recorded by the Texas Comptroller in Harris County for over $36,000.00 in unpaid mixed beverage gross receipts taxes, including penalties and interest. See id. at *1. The tax lien listed their residential address and stated that all “taxes/fees, fines, penalties and interest due to the State of Texas were assessed by statute and were secured as of the assessment date by a statutory lien on all real and personal property owned, claimed or acquired by [Cao].” Id. The taxpayers’ lawsuit sought a declaration that the lien did not apply to their homestead. See id. The Texas Comptroller filed a plea to the jurisdiction seeking dismissal of the lawsuit on the grounds of sovereign immunity. See id.

Citing the language of the tax lien statute (Tex. Tax Code §113.001), its legislative history and the notice of lien itself, the 15th Court of Appeals first held that the lien attached only to nonexempt property and therefore as a matter of law did not apply to the taxpayers’ homestead. See id. at 2. For this reason, the statute was neither vague nor did the Texas Comptroller act in an ultra vires manner by issuing the lien as the taxpayers argued. See id. at *2-3. But the court also agreed with the Texas Comptroller that the taxpayers’ lawsuit was barred by sovereign immunity because (i) the lawsuit could not be filed under the Uniform Declaratory Judgments Act given that the UDJA does not permit a suit seeking guidance about the application of the law to particular facts; (ii) Chapter 113, which mentions certain lawsuits to determine the validity of a state tax lien did not clearly waive immunity and also did not apply because the taxpayers did not challenge the validity of the lien but rather sought a declaration as to what property was subject to it; and (iii) the taxpayers did not plead a valid claim for violation of any state law or legal duty, because the only act at issue was issuance of the lien which the Court stated was expressly allowed by the statute. See id. at *3-4.

For the above reasons, the 15th Court of Appeals upheld the district court’s dismissal of the lawsuit against the Texas Comptroller. See id. at *5. But in doing so, the Court appears to have essentially granted the taxpayers the relief they sought, which was a judicial declaration that the Texas Comptroller’s tax lien did not attach to their homestead. See id.

If you have questions regarding the information disclosed or on any other State tax related matter, please contact David Colmenero at dcolmenero@meadowscollier.com or Alex Pilawski at apilawski@meadowscollier.com. To contact them by phone, please call 214.744.3700.