Texas Court of Appeals Upholds Denial of Franchise Tax Refund Claims

The Texas Court of Appeals affirmed the district court’s judgment denying franchise tax refund claims and declaratory relief sought by two related companies—a transportation business and a landfill operator—following a 2010 Comptroller audit that disallowed their cost-of-goods-sold (COGS) deductions for tax years 2008 and 2009. Although a jury found that the taxpayers were eligible to claim COGS, the appellate court held that the taxpayers failed to meet their burden of proving entitlement to a refund because they did not demonstrate that recalculating the franchise tax with the allowed deductions would result in a lower tax liability than the amounts already ...