Vote No on House Bills HB 2857 

Vote No on House Bills HB 2857 

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Dino Marcaccio started this petition to State Representative Dustin Burrows and

Talking points opposing HB 2857 by Rep. John Frullo – Lubbock

HB 2857 – SEE ATTACHMENT A

The bill seeks to unconstitutionally restrict access to specific public records granted in the Texas Open Records Act of 1993 - Title 5. OPEN GOVERNMENT: ETHICS - Section 552.001 (see attachment B).  

Texas Open Records Act of 1993 - Title 5. OPEN GOVERNMENT: ETHICS - Section 552.001 includes a general requirement that the Texas Comptroller publish the names and contact information of ANY Texas business under a sales tax audit.  

The right to unrestricted access to this specific information is found in the TEXAS ATTORNEY GENERAL - 1994 OPINION #624 (see attachment C). This AG Opinion directly compelled the then Texas Comptroller John Sharp to release the names and contact information of ANY Texas business under a sales tax audit.  John Sharp did then eventually reluctantly comply with the AG’s opinion.   In his Opinion Dan Morales – Texas AG, responded to a complaint against Texas Comptroller John Sharp because he (John Sharp) would not release the names and contact information of ANY Texas business under a sales tax audit.  Dan Morales, recognizing that the integrity and ethics of both the TORA and the Texas Comptroller’s Office was at stake and clearly stated that: …. “WE ARE COMPELLED TO FIND THAT SECTION 552.111 DOES NOT EXCEPT THIS INFORMATION FROM DISCLOSURE”.  ‘This information’ referred to in this historic 1994 AG Opinion #624 that lawfully must be released is ‘the names and contact information of ANY Texas business under a sales tax audit’.  Nothing has changed since the day this AG Opinion letter was issued on June 28, 1994.  

The Texas Open Records Act (Section 552.001 – see attachment B) states that: “the government is the SERVANT and not the master of the people……The people in delegating authority, do not give the public servants the right to decide what is good for the people to know and what is not good for them to know.  The people insist on remaining informed so that THEY may retain control over the instruments they have created.  The provision of this chapter shall be liberally construed to implement this policy”. 

The bill seeks to DENY TIMELY LEGAL ACCESS (granted by the Texas Open Records Act) to the names and contact information of ANY Texas business under a sales tax audit. This information has been published continuously as required by law since 1995 by the Texas Comptroller John Sharp continuing through the end of Susan (Big Sue) Combs term in 2015.  

The bill unfairly singularly targets a firm known as Texas Tax Group (www.texastaxgroup.com . Texas Tax Group (TTG) is a sales tax audit defense firm founded by an ex-sales tax auditor (Dino Marcaccio) that believed that a uncomfortable large percentage of sales tax audits were over assessed.  Dino founded TTG in 2007.  TTG is composed primarily of 15 ex-Texas Comptroller auditors, supervisors and/or tax policy experts whose sole goal is to represent Texas businesses with their Texas Comptroller Sales Tax audits.  

It should be known that Texas Tax Group has successfully represented over 5,000 taxpayers with their sales tax audits over the last 15 years and has dismissed over $10 million dollars of over assessed sales tax (see attachment D – this list includes the names of TTG ‘client’ companies, the amount of sales tax reduced and why the sales tax was NEVER DUE ).  NOTE:  Every dollar of this $10 million was NOT DUE and was over-assessed by a Texas Comptroller auditor.  And every dollar of this $10 million was reversed by a Texas Tax Group consultant (often at great expense to the taxpayer – TTG does not work for free).  It is doubly ironic that the very sales tax collected by Texas businesses that is used to pay Texas Comptroller Sales Tax Auditors often results in an over assessment of Sales Tax against those same companies.  If you think this statement is ‘fluff’ then ask any business on that list described above. 

It is again doubly ironic that this bill was drafted by Texas Comptroller Glenn Hegar and sent to Rep John Frullo for him to submit ‘word for word’.  This is an unheard of attempt by a public official (Glenn Hegar) to use his office to interfere with and restrict the rights of Texas businesses to 3rd party sales tax audit representation.  It is A FACT that, if passed, this bill WILL reduce the number of small to medium sized businesses that will hire any 3rd party consulting firm.  It is a fact that this bill contradicts both the Texas Open Records Act and the 1994 Texas Attorney General’s Opinion #624 that clearly states that this information is PUBLIC and should not be restricted in ANY MANNER.  

It is again ironic that Glenn Hegar was quoted in 2015 (his 1st year in office) as saying that: “he did not want to interfere, comment on or take ANY SIDE of a bill that would restrict the access of a Texas Company to hire any 3rd party sales tax consultant”.  This is a ‘word for word’ ‘face to face’ quote by Glenn Hegar to Dino Marcaccio at a meeting in 2015 regarding another bill (SB1808 that would have again restricted access to ‘the names and contact information of ANY Texas business under a sales tax audit’).  Luckily for Texas Taxpayers, Texas Tax Group and their Legislative Consultant (RON HINKE) lobbied against and successfully defeated this bill.  Now Glenn Hegar is going back on his own word not to interfere in any proposed bill that would ‘restrict access to the names and contact information of ANY Texas business under a sales tax audit’.

It is again ironic that in 2015 Texas Comptroller Glenn Hegar (his 1st year in office) immediately published the TEXAS BILL OF RIGHTS (see attachment E).  This bill is done in a graphic style that looks like an old fashioned ‘parchment’ so that it would conjure up images of the US Declaration of Independence.  I hope this irony is not lost to the casual observer.  It is a fact that Glenn Hegar’s Texas Taxpayer Bill of Right #5 states: “YOU HAVE THE RIGHT TO REPRESENTATION – We recognize that audits can be intimidating, and every taxpayer has the right to engage the person of their choice to represent them during that process.” 

It is a fact that Glenn Hegar has DRAFTED (HB 2857) that that would STOP Texas Tax Group and other smaller similar sales tax consulting firms from contacting companies that have received their audit notices by over 20 days from the date of their audit notice.  It is a fact that Glenn Hegar asked Texas Representative John Frullo to propose a bill that directly contradicts his own word not to interfere as well as his Texas Bill of Rights #5.   This is not ethical.  This is not right.  This is not lawful.  

One of Glenn Hegar’s jobs is to audit businesses for sales tax.  Often those audits result in significant OVER ASSESSMENTS of sales tax for.  For instance, Texas Tax Group reduced a single sales tax audit by $1.7 MILLION dollars against a Houston company that sold drilling tubular products.  If not for TTG this company would have been illegally over assessed $1.7 million dollars that they NEVER OWED by a Texas Comptroller auditor.  I can give you the name of the company and the owners phone number if you specifically request it.  This same taxpayer is now under a follow-up sales tax audit and the owner is ANGRY because the new auditor is trying to again over assess sales tax.  Texas Tax Group is representing this company.

Government has no role in telling 3rd party consulting firms such as Texas Tax Group that they cannot LEGALLY contact a business that has just received it’s notice of sales tax audit.  The Texas Open Records Act (TORA) says that government is not the master of the people but its servant. 

HB 2857 is an affront to the TORA (Texas Open Records Act) of 1993.  The TORA (Section 552.001) was passed in 1993 because Texas agencies were routinely illegally denying access to PUBLIC INFORMATION by falsely claiming that the information requested was simply deemed CONFIDIENTIAL (by default).  Thankfully, the Texas Legislature saw this injustice and passed the TORA which completely reversed the offensive  notion that ALL Texas agency information was, by default, confidential and replaced it with the current TORA LAW that all agency data was PUBLIC unless specifically designated as confidential per 552.111.  

Now because of the Texas Open Records Act (TORA) anyone, from a bus driver to the president of Exxon, can find out specific information such as  an agency’s budget to who bought the Governor lunch and how much it cost. 

HB 2857 unfairly targets independent sales tax consultants whose sole job it is to represent Texas businesses under a sales tax audit and make sure they get a FAIR AUDIT.  It is a fact that there are many FAIR auditors but is also a fact that there are many UNFAIR auditors.  Therefore, sales tax consultants exist and their right to public access to those companies under sales tax audit should not be impeded or restrained by the VERY agency that is performing those audits.  It could be assumed that the Texas Comptroller has asked Rep John Frullo to introduce ‘his bill’ because he does not want Texas businesses to know about their right to 3rd party representation BEFORE the auditor has started the audit.  Texas Tx Group’s president would say to that: ‘sir, we are not interfering with the audit ….. we are conducting ‘pre-audits’ and then proactively managing the audit until we are satisfied that a fair audit has been achieved.  It is then we withdraw our Power of Attorney and our client can rest assured that the result was fair and accurate’.   

It is a fact that there is already another tax law (Section 111.0075 – see attachment F) that restricts the right of any person or sales tax consulting firm to contact a business under a sales tax audit for 6 days from the date that information is legally required to be released by the Texas Comptroller’s Office.  And that law has been in effect since 2005.  And since 2005 Texas sales tax consultants have been bound by Section 111.0075 to not call or contact, in any way, a business until 6 days have passed since the publication of the names and contact information of those businesses under a sales tax audit. 

And it is a fact that Section 111.0075 does impose some of the most expensive penalties ever for EVERY phone call or letter from any firm that violates the 6 DAY DO ONT CALL sales tax law.  It is a fact that the 1st violation will cost that consultant $500.  The 2nd violation will cost that consultant $1,000 and the 3rd violation (and thereafter) will cost $1500.  Now consider that each week the Texas Comptroller discloses the prior weeks audit information and the number of sales tax audits disclosed is often 100 to 200 businesses.  And now consider that if a consulting firm did indeed break the ‘6 DAY DO NOT CALL’ sales tax law for just a single month (about 500 phone calls or letters) then that sales tax consulting firm could be fined out of existence (i.e., lets say 600 audits were called during a 1 month period and that 100% of these calls violated the 6 DAY DO NOT CALL period per Section 111.0075).  And lets further assume that each of those violation were worth $1500 then that unfortunate sales tax consulting firm would then owe about a $900,000 fine….because 600 calls x $1500 fine per violation would equal about $900,000  

But it is also a peculiar and suspicious fact that this sales tax 6 DAY DO NOT CALL Section of 111.0075 has NEVER been enforced (i.e, there has never been a fine since this law was passed way back in 2005…..that would be over 15 years now).  Not one dollar.  Not ever.  Ever.  

And it is a fact that the Texas Comptroller has denied 2 email requests made by Dino Marcaccio, President of Texas Tax Group, to the Audit Division Manager, to state on the ‘Sales Tax Audit Notice’ COVER LETTER that: ‘anyone who receives a call by a sales tax consultant during the 6 DAY DO NOT CALL period should immediately contact Mr. Richard Clark, Attorney – Texas Comptroller’s Office, who is in charge of receiving complaints of this nature’.  This suggestion was made because Dino Marcaccio actually supports the current version of 111.0075 and wants all businesses to have a week to receive their sales tax audit notice before any sales tax consulting firm contacts that business but also BEFORE the auditor has had a chance to begin the audit.  It is a fact that if a business hires a sales tax consulting firm that they should do so BEFORE they provide a single document to the auditor.  This is a fact.  

And if is also a fact that the Texas Comptroller’s Office (in particular Mr Richard Clark, Atty – in charge of enforcement of 111.0075) has never issued a single dollar in fines since the day that Section 111.0075 (the 6 DAY DO NOT CALL law) was established.  

So it would be a fact that the Texas Comptroller has had a legal remedy in place for the last 15+ years that could be enforce a waiting period but that law never was enforced.  It is a fact that past documented violations of this 6 DAY DO NOT CALL law have never resulted in a monetary fine.  And if this section had been enforced it would have resulted in very few, if any, further violations of Section 111.0075.  And that this would allow at least 6 days for the mail person from the US Post Office to deliver the audit notice to the business before any sales tax consultant could call that taxpayer / business to solicit their services.  Again, it is a fact that the Texas Comptroller refuses to enforce this very potentially effective Section 111.0075 – 6 DAY DO NOT CALL law.  It is a fact that HB 2857 is not needed because there is already a law that specifically protects businesses from being called before they receive their sales tax audit notice.  

HB 2857 is simply a way for the Texas Comptroller to let the auditor contact a business and begin the sales tax audit before those businesses even know there are companies that exist to PROTECT THEIR RIGHTS.   

HB 2857 also is defective on its face because it would require the Texas Comptroller to potentially release new sales tax audit contact information EVERY BUSINESS DAY.   The bill is not written well and will cost the agency additional funds (i.e., staff) to comply with its own faulty law language.  Currently the Texas Comptroller discloses all new sales tax audit information on a weekly basis.  That is, the agency must place on it website each Monday, the information regarding all the sales tax audit notices mailed the previous week. Section 111.0075 then requires all consultants to DO NOT CALL FOR 6 DAYS.  This is reasonable.  It gives the business time to receive their sales tax audit notice.  

HB 2857 would require the agency to potentially have to disclose sales tax audit data on a daily basis (Monday thru Friday).  This is 5 times the amount of staff time required to disclose sales tax audit data currently (once a week – Monday).  That is, this bill legally requires the Texas Comptroller to, daily, look back 20 days and on that day if there were any sales tax audit notices mailed out then the agency must disclose that information on its website.  That is absolutely more expensive and a FISCAL NOTE should be applied to this bill since it would require additional staff to disclose sales tax audit data on a DAILY basis instead of a once a week basis.

If there is any doubt about what is stated above and why this bill will create a burden on the agency then simply read the relevant part of HB 2857: 

 (b)  Notwithstanding Section 552.221(a), Government Code, 

the comptroller may not provide [A person who obtains] information  described by Subsection (a) of this section to a person other than the [and who is not a] taxpayer to whom the information relates  earlier than the 20th day after the date the comptroller mails the notice of intent to audit to the taxpayer [may not, before the sixth day after the date the comptroller made the information available to the person, use the information for the direct solicitation of business or employment for pecuniary gain].


Be it known that these truths are self-evident...

Attachment A

Attachment B

Attachment C

Attachment D

Attachment E

Attachment F

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