How Is a Mixed Beverage Audit Assessment Formally Challenged or Appealed?

Published Read 4 min read

On this page

The formal challenge is a petition for redetermination filed with the Texas Comptroller with a written statement of grounds. Under Tax Code Section 111.009, the petition must be filed within 60 days after the notice of determination is issued, or the determination becomes final. A timely petition leads to review by the auditor and a Comptroller attorney, a position letter, and, if the business still disagrees, a contested hearing at the State Office of Administrative Hearings, followed by the Comptroller’s decision.

The deadline

Tax Code Section 111.009 sets the rule: a petition for redetermination “must be filed before the expiration of 60 days after the date the notice of determination is issued,” or the redetermination is barred and the determination is final. The Comptroller’s notification states the final date, and that date governs the request.

Two variations change the timing:

  • Jeopardy determinations. If the Comptroller finds the state’s interest in jeopardy, the audit can be billed as a jeopardy determination, payment is due immediately, and the determination becomes final 20 days after it is issued.
  • Paying first. A business that pays the entire liability, including penalty and interest, may request a refund hearing within six months after the final date instead, and after that may seek refunds for report periods still within the statute of limitations.

Interest keeps accruing during a redetermination on whatever amount is finally found due.

The statement of grounds

The Comptroller’s publication Contesting Disagreed Audits, Examinations and Refund Denials (August 2026) sets out what the request must contain:

  • the items in dispute, listed individually or by category;
  • for each, the factual basis and the legal grounds supporting the taxpayer’s position, citing legal authority when the dispute is over the agency’s interpretation of the law; and
  • the signature of the taxpayer or an authorized representative.

It is sent by mail to the Comptroller’s Audit Processing Section or by email to Audit.Processing@cpa.texas.gov with “Administrative Hearing Request” in the subject line.

What happens after a timely petition

  1. Acknowledgment. A timely and complete statement of grounds brings a letter acknowledging the request and giving further instructions.
  2. Auditor review. The auditor reviews any additional documentation. If the business agrees with the changes, it signs a withdrawal of its hearing request and receives an amended notification of audit results.
  3. Comptroller attorney. Remaining issues go to an attorney in the Comptroller’s Tax Administration, who contacts the business to try to resolve the case and, in most cases, issues a position letter. Accepting the position letter ends the contested case. Until the case is referred to SOAH, the parties can also agree to a compromise and settlement agreement.
  4. SOAH hearing. A business that disagrees with the position letter can reply and ask for the case to be heard by an administrative law judge at the State Office of Administrative Hearings. The hearing can be oral or decided on written submissions, and the judge then issues a proposal for decision.
  5. Comptroller’s decision. The Comptroller renders the final decision. Under Section 111.009, it becomes final as a contested case decision does under the Administrative Procedure Act, and a dissatisfied taxpayer may file a motion for rehearing within the time that Act allows. The Comptroller’s publication also refers to challenging the decision in district court through a refund or protest suit, which has its own requirements.

Once the case has been referred for a formal hearing, the business can also ask to negotiate a settlement with the Comptroller’s Chief Settlement Officer.

What the Comptroller can do if a determination becomes final

The same publication lists the Comptroller’s collection tools for past-due taxes, including requiring security, filing a tax lien, freezing or seizing non-exempt assets, suspending permits, and filing criminal charges. A determination that becomes final because a deadline passed leaves the business facing collection with fewer ways to contest the amount.

Protecting the challenge

Calendar the final date on the notification the day it arrives, draft the statement of grounds item by item with the documents that support each point, and file well before the deadline. Because the process runs through an attorney review and a contested hearing, a business may want a tax professional or attorney at this stage.

This article is general information about Texas alcoholic beverage law, not legal advice, and reading it does not create an attorney-client relationship. Statutes and TABC rules change; confirm current requirements with the Texas Alcoholic Beverage Commission, the relevant city or county, or a licensed Texas attorney before acting.

Related posts:

  1. How Is an Emergency Suspension Order Challenged at a Hearing? An emergency suspension order under Section 11.614 of the Alcoholic Beverage Code is challenged at a hearing that TABC must set no later than the 10th day after the order......
  2. What Records Must a Bar or Restaurant Keep to Survive a Mixed Beverage Audit? The Comptroller's mixed beverage rule, 34 Texas Administrative Code Section 3.1001, prescribes the records: a source record for every sale showing each serving and its price, a daily summary, and......
  3. How Does a Comptroller Mixed Beverage Tax Audit Actually Work, Step by Step? A mixed beverage tax audit follows the Texas Comptroller's standard audit process: selection, a notice by mail, a review of the account, an initial conference, a request for records, fieldwork......
  4. How Are Six-Figure Mixed Beverage Audit Assessments Negotiated Down? When a large mixed beverage assessment comes from a depletion estimate, it comes down mainly one way: by replacing the estimate's assumptions with the business's own records. Before the audit......
  5. What Is the Mixed Beverage Gross Receipts Tax, and How Does It Differ from the Mixed Beverage Sales Tax? Texas taxes drinks sold under a mixed beverage permit twice. The mixed beverage gross receipts tax is 6.7 percent of the permittee's receipts from alcoholic drinks and the ice and......
  6. What Is a Wine and Malt Beverage Retailer’s Permit, and How Does It Differ From a Mixed Beverage Permit? The Wine and Malt Beverage Retailer's Permit (BG) lets a business sell wine and beer of up to 17 percent alcohol for customers to drink on the premises or take......
  7. What Is a Mixed Beverage Permit, and Which Texas Businesses Are Required to Hold One? The Mixed Beverage Permit (MB) is the Texas permit for selling distilled spirits by the drink. Under Section 28.01 of the Alcoholic Beverage Code, it lets the holder sell mixed......
  8. How Do Mixed Beverage Taxes Affect Menu Pricing, and What Disclosure Rules Apply on the Customer Check? The two mixed beverage taxes land on the menu differently. The gross receipts tax is the permittee's own tax and has to be built into the drink price, because it......
  9. What is a Food and Beverage Certificate (FB) and which permits can it attach to? A Food and Beverage Certificate (FB) is a certificate TABC issues to a licensed location that has permanent food service facilities and qualifies either as a restaurant or by keeping......
  10. Griffith & Hughes PLLC, TABC Licensing and Alcohol Law A Texas law firm focused exclusively on TABC licensing and alcohol law. At a Glance Firm Griffith & Hughes PLLC (formerly Griffith Firm) Focus Texas Alcoholic…...
  11. Which Alcohol Permits Apply to Convenience Stores and Gas Stations Selling Beer and Wine? A convenience store or gas station that sells beer and wine to go needs one of two Texas off-premise retail authorizations. The Wine and Malt Beverage Retailer's Off-Premise Permit (BQ)......
  12. What Should a Written Alcohol Policy Contain to Protect a Permit Holder? A written alcohol policy protects a permit only if it covers the decisions that create violations, such as checking identification, recognizing and refusing intoxicated customers, and training staff, and if......
  13. How a TABC Violation Is Defended at a SOAH Hearing At a State Office of Administrative Hearings (SOAH) hearing, TABC usually carries the burden of proving the violation by a preponderance of the evidence, meaning more likely than not, and......
  14. What Is an L-Cert (Certificate of Local Compliance), and Why Does TABC Require It Before Issuing a Permit? The L-Cert, also called the Certificate of Local Compliance, is TABC's Required Certifications form (Form L-CERT): the set of sign-offs that new license and permit applications carry. In it, the......
  15. What Is a Package Store Permit, and What Ownership and Operating Rules Are Unique to Texas Liquor Stores? A Package Store Permit (P) is the Texas permit that lets a retailer sell liquor in sealed, original containers for customers to take away and drink somewhere else. It carries......

Leave a comment

Your email address will not be published. Required fields are marked *