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Meadows, Collier, Reed, Cousins, Crouch & Ungerman, L.L.P.

901 Main Street, Suite 3700
Dallas, TX 75202

Phone: (214) 744-3700
Fax: (214) 747-3732
Toll Free: (800) 451-0093

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The Texas Comptroller Issues Potential Life-line for Struggling Businesses: But Proceed with Caution!

By David E. Colmenero and Alex J. Pilawski on March 26, 2020

This week, the Texas Comptroller issued a potential life-line to businesses that are struggling to pay their taxes in light of COVID-19, but taxpayers should proceed with caution. The announcement acknowledges that during periods of economic hardship, paying or remitting taxes and fees can feel like an extra burden. The announcement goes on to state that for businesses that are struggling to pay the fulll amount of sales taxes collected in February, the Comptroller’s office is offering assistance in the form of short-term payment agreements and, in most instances, waiver of penalties and interest.  The announcement invites taxpayers to contact the Comptroller’s Enforcement Hotline to learn more about these options.  The announcement is available on the Comptroller’s website at https://comptroller.texas.gov/about/emergency/.  

While the announcement may provide good news for some, taxpayers should be aware that the Comptroller often imposes significant penalties for failing to timely remit taxes collected to the State. The Comptroller generally views sales or use tax collected as a trust-fund type tax that taxpayers hold in a fiduciary capacity for the benefit of the State.  The announcement suggests waiver of penalties and interest may not necessarily be granted to all taxpayers who contact the Texas Comptroller’s Enforcement Hotline.  Because civil penalties can add up to as much as 70% and criminal penalties may also apply in some instances, taxpayers who have collected but not remitted tax to the State should proceed with caution and may want to seek legal advice before contacting the Texas Comptroller. Additionally, taxpayers should not assume that the Texas Comptroller would offer similar relief for tax collected related to any other period, either past or future.

If you have questions or would like assistance, please contact David Colmenero at dcolmenero@meadowscollier.com or Alex Pilawski at apilawski@meadowscoller.com.  Both attorneys can be reached by calling 214-744-3700.