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Click here for the full text of this decision FACTS:Willow Creek, an oil and gas exploration company, requested a tax refund of more than $464,000 covering January 1997 to December 1999. The state comptroller reviewed the request under Tax Code 111.1042 and approved it in part, refunding Willow Creek more than $362,000. Willow Creek did not contest the reduction or request a full hearing on it. Nearly two years later, in December 2001, Willow Creek filed another refund claim, this one for $3,770. Like the first request, this request was based on marketing cost credits. This request covered the period from October 1997 to December 1999. While the comptroller was reviewing the second claim, Willow Creek was informed by the Railroad Commission that the five wells Willow Creek was basing its refund requests on were high-cost gas producers. The comptroller approved Willow Creek’s request for a high-cost gas exemption at a reduced rate. Willow Creek filed a third request for a refund, this one in July 2002, and covering January 1997 to 1999. The requested refund amount was $1.92 million. The comptroller reviewed the third claim and determined that the portion stemming from January 1997 to April 1998 was barred, because the request was filed after the four-year statute of limitations had run. The comptroller approved the remainder of the third claim and issued a refund to Willow Creek for more than $764,000. Willow Creek requested a full refund hearing to contest the denial of a portion of the third claim based on limitations. After the hearing, the comptroller adopted the administrative law judge’s conclusion that part of the third claim was barred by the four-year statute of limitations. After Willow Creek’s motion for rehearing was denied, it filed suit against the comptroller. On dueling motions for summary judgment, the trial court granted Willow Creek’s motion, ruling that the comptroller’s review of the first claim tolled the statute of limitations. The trial court ordered the comptroller to issue an additional refund of more than $748,000 for the period between July 1997 and April 1998. On appeal, the parties argue over the term administrative proceeding as it was used in the former Tax Code 111.207(d). Willow Creek says that the comptroller’s review of its first claim was an administrative proceeding that tolled the statute of limitations. It says the term is used to describe the process by which an agency adjudicates disputes, regardless of whether a hearing is held. On the other hand, the comptroller insists that the informal review given of the first claim was not an administrative proceeding, and the statute of limitations was not tolled. She says the legislature intended the term to refer to agency adjudications involving either a contested case or a hearing. HOLDING:Affirmed. As monthly gas-production tax payments are due on the 20th day of the second month following production, the court points out that, when Willow Creek filed its third claim on July 1, 2002, any refund on taxes paid prior to May 1998 was barred by limitations unless the applicable statute of limitations was tolled. The court notes that the comptroller has the burden to conclusively negate the tolling provision provided by 111.207(d) in order to have prevailed on her cross-motion for summary judgment. The court begins by tracing the development of 111.1042 and 111.207. In response to a holding in Bullock v. Sage Energy Co., No. 728 S.W.2d 465 (Tex.App. – Austin 1987, writ ref’d n.r.e), which opened up the floodgates for refund claims in a different context, the comptroller began using an abbreviated refund procedure. The court finds that 111.1042 statutorily authorized that informal, abbreviated review and disposition process. The court finds nothing to indicate that 111.1042 was passed to limit the scope of 111.207(d)’s tolling provision to contested cases or hearings. Furthermore, the court continues, if the Legislature intended 111.1042(b) to limit the application of the tolling provision to the formal review of tax-refund claims, it could have easily said that. Instead, the Legislature used the specific terms “hearing” and “contested case” in 111.1042(b). Similarly, had the Legislature intended that an informal review of a refund claim not toll the statute of limitations, it could have said so. The court turns next to determine whether the informal review of a tax refund claim constitutes an administrative proceeding for the purposes of tolling the filing deadline for a tax-refund claim. The court finds parallels in the informal and formal dispute resolution procedures in the Transportation Code. Accordingly, by informally reviewing and disposing of a refund claim, the comptroller adjudicates the requesting party’s dispute. The only difference between the informal disposition process and a contested case is that a contested case generally involves a hearing. However, a contested case may also be disposed of without a hearing. Thus, the court holds that there is no significant difference between a refund claim that is informally disposed of under 111.1042 and the informal disposition of a formal refund request that was initially treated as a contested case. The comptroller urges the court to adopt a three-part test for administrative proceedings, taken from Hickel v. Halford, 872 P.2d 171 (Alaska 1994), which requires: 1. the existence of a dispute; 2. a document reflecting the fact of the dispute, which serves a function similar to that of a complaint in a civil action, or an accusation or statement of issues that is served by one party on the other party; and 3. the document must set in motion mechanisms prescribed by statute or regulation under which the dispute will ultimately be resolved. The court reminds the comptroller that the Alaska case is not binding but also finds that that, even if it was, the informal review used in this case possessed all three essential attributes. The court rejects the comptroller’s arguments that the court’s interpretation of the term “administrative proceeding” will lead to either conflicting or confusing statutory constructions of other statutes. The court clarifies that, by holding that the informal review of a refund claim under 111.1042 is an administrative proceeding, it is not saying that every investigation or audit of a taxpayer’s records is also an administrative proceeding. “We are only saying that a refund claim that meets the statutory requirements laid out in section 111.104(c) and is adjudicated pursuant to section 111.1042 constitutes an administrative proceeding for the purpose of tolling the statute of limitations under former section 111.207(d).” The court rejects the comptroller’s further contention that, unless the comptroller’s definition of “administrative proceeding” is accepted, any construction that includes an informal review will only serve to invite further litigation to determine the line between agency actions that toll the statute of limitations and those that do not. The court finds that this type of litigation is unlikely to occur. First, a construction of the term “administrative proceeding” that includes the informal review of tax-refund claims under 111.1042 is quite narrow. Second, because the legislature repealed former 111.207(d) and amended former 111.207(a) to include the phrase “administrative redetermination or refund hearing” in place of “administrative proceeding,” it is unlikely that there will be future litigation concerning the scope of the term administrative proceeding in this context. OPINION:Smith, J.; Law, C.J., Smith and Pemberton. JJ.

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