### TEXA S COU RT O F AP PEAL S, THIR D DISTRIC T, AT AU STIN

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4444 NO. 03-00-00071-CV

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4444 Mary Ann C hamber

s, f/d/b/a Today’s Signs, Appel

lant
v. State of Texas and City of De nton, Texas, Appelle es

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4444444444 FROM THE DISTRICT CO URT OF TRAVIS COUNTY, 201S T JUDICIAL DIST RICT NO. 96-07787, H ONORABLE MARGARET COOPER, JUDGE PRESIDING

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4444444444 The Stateof Te xa s and the City of Denton, Texas (“the State”) , sued appellant Ma ry Ann Cham bers f/d/b/a Today’ s Signs to recover delinquent sales taxes. Follow in g a nonj ury trial, the trial cour t rendered judgment that the State recover $96,703.37 in sal es tax, penalty, and in terest. A t Ch amb ers’s request, the c ourt filed findings of f

act and conclusions of law. We will aff

irm the trial cour

t’s ju dgment. Cham bers, a s ol e p ro prie to r, di d b us in es s ma kin g a nd se ll in g s ig ns un de r t

he name Toda y’s Signs. Today’s Signs was in operation until March 1996
. In 1994, the comptroller audited Toda y’s Signs for sales tax compliance from 1990 through 1993 and issued a noticeof tax due. Follow ing the audi t, Today’s Sign s continued t o accrue unpaid sales t axes, for which th e comptroller assess ed a deficiency. Although the total liability period of Toda y’s Sign s extends from January 1990 through February 1996, the portion of the tax th at Chambers contes ts on app eal rela tes onl y to t he perio d audi ted by the co mp troll er.1 Although the prior vers ion of section 111.016 gover ns this case, the 1995 amendment is irrelevant he re and we cite the current version for convenience.
2 Although the prior ver sion of section 11 1.104 controls, the 1999 amendment is irrelevant to this ca

use. 2 In her firs t issue, Chambers contends that the tr ial court erred in determining that she is liable for tax on out- of-state s ales. Chambers maintains that a tax on out-of- state sales
uncons titutional ly bu rdensinters tate commerce . It isclear that taxin g out-of

-sta te sale s is
uncons titutional
. Bullock v. Lone Star Gas Co. , 567 S. W.2d 493, 497 (Tex . 1978) ; see Tex. Tax Code Ann. § 151.051(a) (West 1992) . The record doe s not show , how ever, tha t the t rial co urt imposed such a t ax. Ra ther, th e judg men t can b e suppo rted on the gro und t hat C ham bers
erroneous ly collec ted out- of-s tate sales ta x wit hou t s how ingsh e wa s e nti tle d to a r ef und . We dis cu ss thi s g ro und

be low. A vendor such as Chambers who co ll ec ts mon ey repr es ente d t o b e a

tax f ro m a customerholds the amount collec ted in tr ust fo r the benefit o f the Sta te and is liable to the State for the ful l amount colle cted. Ta x Code § 111. 016(a) (Wes t Su p p. 2001 ); 1 Fleming Foods of Tex., Inc. v. R

ylander , 6 S.W.3 d 278, 2 81 (Te x. 1999 ). If the vendor has erroneously collected taxes from a customer, the vend or may seek a ref und from the comptroller, but only after reim bursing the cu stom er for all t axes col lecte d. § 111 .104(f). 2 Moreov er, the custom er, as a person from whom the vendor erroneously collected the tax withoutreimburs ement, can also seek a ref und from the comptrolle r. § 1 11.104( a), (b); Fleming Foods , 6 S.W.3d at 280- 81. This
sc he me applies without doubt to taxes erron eously collected on out-of- state sales and r epudiates Cham bers’s argument that section 111.016(a) unconstit utionall y taxes such sales. Rat her, these3

sections require a vendo r who does no t reimbu rse her cu stomer to r emit erroneous ly collected taxes to the State, fr

om whi ch the customer may ultimately obtain a refund. Cham bers testif

ied that d uring th e time subje ct to the a udit, she collected tax on sales to an out-of-s tate customer, United States Tobacco Company. The evidence shows that from Ma rch 31, 1 990, t hrough the en d of D ecem ber 199 3, Ch amb ers collected$20,384 .09 in tax on the se sa les. Th is amount f orms par t of thedefic iency theState su ed to coll ect. In a suit to collect sales taxes , the comptroller’s c ertificate s howing a delinquency is prima fa cie proof of

the amount of

tax due after all lawful credits have been allowed. § 111.013(a) (West 1992). The comptroller’s de linquency certificate was admittedin evidence in this case and sho wedth at Chamb ers owed the State sales taxe s of $96,703. 37. The pres umption of va lidity acc orded the comptro ller’ s cer

tifica te shif ted the bu

rden to Cham bers to show by competent evidence that the assessment was illegal and excessi ve. Smith v. Stat e , 418 S .W.2d 893, 89 6 (Tex . Civ . App .—A ustin 1967, n o wri t).

Cham bers argues that

she proved as a m atter o f law that sh e refunde d the o ut-ofstate sales taxto U.S. Tobacco. She contends that during the audit of Today’s Signs, the auditor foundthat she had fully reimbursed U.S. Tobacco and that he c redited the amount of

out-of -sta te sales tax agai nst the remainder of tax due . The trial court f ound that Chambers had received credi t for all off

sets to which she was entitled. To resolveCham bers’s matter-of-law contention, we first examine the ev idenc e suppo rting t he cou rt’s finding, ignoring any contrary evidence. If no evi dence su pports t he find ing, w e then exam ine th e enti re record to see if th e cont rary propositionis established as a matter of law
. Holley v . Watts , 629 S .W.2d 694, 69 6 (Tex . 1982).3 Althoug h Chambers characterize s Palla’s sta tements in the document as an admission , the testimony co ntradi ctin g the ef fect of the s tatements negates their use a s an admission. Marshall v. Vise , 767 S.W.2d 699, 700 (Tex. 1989)
. 4 Mary Haw kins, anauditor for the c omptroller, testified for the State. Although Hawkins did not audit Chambers’s businessherself, she had reviewed the documents prepar ed by the pe rson w ho perform ed the audit , Rob ert Pal la. H awk ins desc ri b ed a document titled “Adjustments to Taxable Sales - Credits” that Palla ha d prepared f or Chambers during the audit
. In this document, Palla itemized Cha mbers’ s out- of-state sales to U.S. Tobacco and calculated $20,384.09 as the total s ales ta x that Chamber s had bil led and c ollected . A footno te rel ating to each sale s tates, “Ite ms shipped to US Tobacco OO S [out-of- state] locations. The tax was refunded to th e custo mer.” Near the bottom of the document, in a sectio n call ed “C om men ts,” Pallawrote, “This exam is to give credit for tax collectedin error.”The document isdated Apri l 8, 1994. 3 Ha wkins test ified that the audit package prepared by Palla contained all the adjustments made in the audit and that the document item izing sales to U.S. Tobacco was not part of the audit. It was instea d prep ared o n the dateof the e xit conferenc e with Cham bers and appeared to be information show ing he r h ow the audit could be amended if she ref unded the
erroneous ly colle cted t ax. In a rep ort Palla submitted as part of the audit documents, Palla noted that he had inf

ormed Chambersthat credit would b e allowed in th e audit on ly afte r he co uld verify that the ta

xes pa id in er ror had been refunded to the customer. The audit package indicated to Hawkins that Cham bers had presented no documentation to show Palla that she had in fact ref

unded the money to U.S. Tobacco.5 Cham bers testified that Palla gave her the docu ment item izing sales to U.S. Tobacco. Palla told her that she needed to ref und $20, 384.09 t o the customer and that once she refunded the money, she would receive a credit fr om the comptroller. After the audit , Cham bers issued U.S. Tobacco a credit of $20, 384.09 to use aga inst fu ture sales. Chambers state d that U.S. Tobacco drew down the credit over the cours e of the follow ing ye ar. An invoice of Toda y’s Signs showing a credit to U.S. Tobacco of $20,384. 09, without identifying the reason for t he cre dit, was a dmitted in evidence and is dated October 5, 1994. This date f ollows by a significant time April 8, 1994, th e date of Palla’s document. Chambers testif ied that once the audit was completed, she never re quested a rehea ring of the audit or of

any returns that s he had filed. Haw kins’s and Chambers’s testimony provide s evide nce that Chambers f

ailed to show during the audit thatshe had m ade reim bursem ent an d faile d to ask the co mp troll er for a redetermination of the audit afterw ard. Therefore , despite some evidence that she r eimbursed U.S. Tobacco after the audit, Chambers did not prove as a matter of law that she documented the reimbursement with the comptrolle r so a s to be e ntitled to c redit fo r t he out -o f- st at e t ax . We accordingly overr

ule issue one. In her s econd is sue, Chambers c laims the tr ial cour t erroneous ly allowed theState to ambush her at trial with eviden ce that was inconsi stent with inf ormation it p rovide d in discovery. Chambers argues that the court erred by overruling her motion to stri ke the Stat e’s evidence. In tw o int errogato ries subm itte d before tria l, Ch amb ers asked t he St ate to ident ify each period

it contendedshe incorre ctly reported taxesand to identify each payment she made6

during the liabil i ty period. The document the State provided supplies this information. Cham bers complains because the total tax due that she extrapo lated from t he doc um ent di ffers signif icantly from the am ount Haw kins t estifie d to at trial. C ham bers’s extrapo lati on, how ever, does not accoun

t for overd ue amounts th e auditor

found d uring th e audit in

addition to th e amounts Chambers incorrectly reported in each tax peri od. That Chambers interpreted the document in an

unwarr anted manne r doesnot entitleher to r elief on appeal. Assuming that t he St ate’s do cum ent w as unrespo nsive, h owe ver, the fa ilure to obtain a pretrial ruling on a discovery disput e that exists before tri al waives any claim for sanctions based

on that c onduc t. Remington Ar ms Co. v . Caldw ell , 850 S.W.2d 167, 170 (Tex. 1993). Because Chambers failed to move to compel a responsive answer before trial, the trial court proper

ly overruled her

motion to strike. We overrule issuetwo. We aff irm the trial cour

t’s ju dgment.

Bea Ann Sm ith, Justice Before Chief JusticeAboussie, Justices B. A. Smith and Patterson Affirmed Filed: February 28, 2001 Do N ot Publi sh