# Ebs Solutions, Inc. v. Glenn Hegar, Comptroller of Public Accounts of the State of Texas And Ken Paxton, Attorney General of the State of Texas

> Texas Supreme Court · May 8, 2020

URL: https://www.frixlaw.com/law-library/cases/10485018

## Case

- **Court:** Texas Supreme Court
- **Decided:** May 8, 2020
- **Precedential status:** Published
- **Opinion:** Opinion
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE SUPREME COURT OF TEXAS
444444444444
NO. 18-0503
444444444444

EBS SOLUTIONS, INC., PETITIONER,

v.

GLENN HEGAR, COMPTROLLER OF PUBLIC ACCOUNTS OF THE STATE OF TEXAS;
AND KEN PAXTON, ATTORNEY GENERAL OF THE STATE OF TEXAS, RESPONDENTS

4444444444444444444444444444444444444444444444444444
ON PETITION FOR REVIEW FROM THE
COURT OF APPEALS FOR THE THIRD DISTRICT OF TEXAS
4444444444444444444444444444444444444444444444444444

Argued December 3, 2019

JUSTICE GREEN delivered the opinion of the Court.

In this case, we must determine whether the trial court has subject matter jurisdiction over

a taxpayer’s suit to challenge the Comptroller’s franchise tax assessment. Having prepaid some of

the taxes due under the assessment and filed an oath of inability to pay the remainder, the taxpayer

contends that it satisfied Chapter 112’s jurisdictional requirements under section 112.108 of the Tax

Code. See TEX. TAX CODE § 112.108. The Comptroller asserts that the court of appeals previously

declared section 112.108 unconstitutional and argues that partial prepayment of taxes owed is

insufficient to waive the State’s sovereign immunity. See Rylander v. Bandag Licensing Corp., 18

S.W.3d 296, 305 (Tex. App.—Austin 2000, pet. denied). The court of appeals held that the trial

court lacked jurisdiction to consider the suit because by failing to prepay the taxes due in full, the
taxpayer did not comply with the Tax Code’s statutory requirements. 549 S.W.3d 849 (Tex.

App.—Austin 2018). We hold that section 112.108 of the Texas Tax Code, as applied to EBS, does

not create an unreasonable financial barrier of access to the courts, but instead allows EBS to

exercise its right to access the courts to seek judicial review of its tax assessment. Because the

taxpayer satisfied the statute’s requirements to waive the State’s sovereign immunity, we reverse

the court of appeals’ judgment and remand the case to the trial court for further proceedings.

I. Factual Background

The facts in this case are undisputed. The Comptroller audited EBS Solutions, Inc.’s

franchise tax report for years 2009 through 2012, assessing additional taxes, penalties, and interest

in the amount of $298,519.50. EBS timely filed for redetermination. See TEX. TAX CODE §

111.009. After a hearing, the administrative law judge ruled in the Comptroller’s favor, leaving the

assessment at $298,519.50. EBS then made two partial payments in protest, totaling $150,000. EBS

included a protest letter with each payment. Additionally, EBS filed with the Attorney General a

statement of grounds for seeking an injunction, as required by Texas Tax Code section 112.101. See

id. § 112.101(a)(1). Soon after, EBS filed suit seeking return of the partial payment and an

injunction to prohibit the Comptroller from taking action to collect the remainder of the taxes owed

under the assessment.1

1
Although EBS sought to recover tax monies paid in protest, EBS did not bring a claim for declaratory
judgement or tax refund suit under section 112.151. Rather, EBS challenged its tax assessment by seeking an injunction
under section 112.101, to prohibit the Comptroller from collecting additional taxes, and through a tax protest suit under
section 112.052, seeking recovery of tax monies prepaid.

2
Relying on the inability-to-pay provision of section 112.108, EBS filed an oath of inability

to pay the remainder of the taxes assessed, claiming that requiring it to prepay the full amount of

taxes assessed would constitute an unreasonable restraint on EBS’s access to the courts. See id.

§ 112.108 (providing an inability-to-pay exception to the prepayment prerequisite to challenge a tax

assessment). After EBS requested a hearing on its oath of inability to pay, as required by section

112.108, the Comptroller objected, arguing “that such an inquiry is wholly irrelevant” because the

court of appeals had previously ruled that section 112.108 was unconstitutional. See Bandag, 18

S.W.3d at 305; see also Combs v. Tex. Small Tobacco Coal., 440 S.W.3d 304, 310 (Tex.

App.—Austin 2014) (“[W]e have held that section 112.108 is unconstitutional . . . .”), overruled on

other grounds sub nom. Hegar v. Tex. Small Tobacco Coal., 496 S.W.3d 778 (Tex. 2016). After a

hearing, the trial court found that requiring EBS to pay “the franchise taxes, penalties, and interest

assessed . . . would constitute an unreasonable restraint on [EBS]’s right of access to the courts.”

Incorporated into its original answer, the Comptroller filed a plea to the jurisdiction asserting

that the trial court lacked subject matter jurisdiction because EBS had failed to meet the applicable

prepayment prerequisite by only paying about half of the tax assessment. See TEX. TAX CODE

§§ 112.051(a), .101. Because EBS did not pay the full amount of the assessment, as required by

sections 112.051 and 112.101, and the court of appeals had previously ruled that section 112.108

as amended failed to cure the constitutional defect we identified in R Communications v. Sharp, 875

S.W.2d 314 (Tex. 1994), see Bandag, 18 S.W.3d at 305, the Comptroller took the position that

sovereign immunity was not waived and the trial court was required to dismiss EBS’s protest suit

3
and request for an injunction. See TEX. TAX CODE §§ 112.051, .101. The trial court denied the

Comptroller’s plea to the jurisdiction.

The court of appeals reversed the trial court’s denial of the plea to the jurisdiction. 549

S.W.3d at 864. The court referenced this Court’s analysis in R Communications, in which we held

section 112.108, before amendment, was unconstitutional, and the court of appeals’ earlier holding

in Bandag to hold that “the amended version of section 112.108 was unconstitutional and explained

that ‘the entirety of section 112.108’ was an ‘unreasonable financial barrier against access to the

courts.’” Id. at 856 (citing Bandag, 18 S.W.3d at 304–05). Noting that the Bandag decision

remained undisturbed by this Court and the Legislature after almost twenty years, the court of

appeals determined that EBS “ignore[d] the effect of [its] ruling in Bandag” and did not satisfy the

statutory prerequisites necessary to waive the State’s sovereign immunity or pursue a common-law

declaratory judgment claim. Id. at 863. The court held that after Bandag,“the legal landscape . . .

reverted back to what it was when the [S]upreme [C]ourt invalidated the original version of section

112.108.” Id. at 864. Accordingly, the court of appeals concluded whether EBS complied with

section 112.108’s inability-to-pay procedural requirements was irrelevant because “section 112.108

is invalid.” Id. at 864 n.7.

II. Standard of Review

Sovereign immunity implicates a court’s subject matter jurisdiction. Tex. Dep’t of Parks &

Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004). “As subject-matter jurisdiction is a question

of law, we review a trial court’s ruling on a plea to the jurisdiction de novo.” Hous. Belt & Terminal

Ry. Co. v. City of Hous., 487 S.W.3d 154, 160 (Tex. 2016) (citing Klumb v. Hous. Mun. Emps.

4
Pension Sys., 458 S.W.3d 1, 8 (Tex. 2015)). In determining whether the State has waived sovereign

immunity, we apply traditional principles of statutory interpretation. See City of San Antonio v. City

of Boerne, 111 S.W.3d 22, 25 (Tex. 2003). When we interpret a statute, our purpose is to give effect

to the Legislature’s intent by looking at its plain and ordinary meaning, “and then consider the

term’s usage in other statutes, court decisions, and similar authorities.” Tex. State Bd. of Exam’rs

of Marriage & Family Therapists v. Tex. Med. Ass’n, 511 S.W.3d 28, 35 (Tex. 2017). We turn to

extrinsic sources only if the statute is ambiguous or if applying the statute’s plain meaning would

produce an absurd result. See Tex. Health Presbyterian Hosp. of Denton v. D.A., 569 S.W.3d 126,

135 (Tex. 2018); Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex. 2009).

III. Analysis

A. Jurisdiction in Suits Challenging Tax Assessments

Although the trial court generally lacks jurisdiction to hear a taxpayer’s challenge to a tax

assessment, see TEX. TAX CODE § 112.108, the Legislature has waived the State’s sovereign

immunity as to three types of tax challenges—protests, injunctions, and refunds—conferring

exclusive, original jurisdiction on the district courts of Travis County. In re Nestle USA, Inc., 359

S.W.3d 207, 208–09 (Tex. 2012); R Commc’ns, 875 S.W.2d at 318–19; see TEX. TAX CODE

§§ 112.001, .051, .101, .108. For each of these suits, the taxpayer normally must meet some

prepayment prerequisite prior to bringing the tax suit. See TEX. TAX CODE §§ 112.001, .051, .101.

For a protest or refund suit, the taxpayer must first pay the amount allegedly owed in taxes and fees,

accompanied by a statement as to which type of challenge the taxpayer makes. Id. §§ 112.051, .151.

For a suit seeking a statutory injunction, the taxpayer elects to either pay the taxes, fees, and

5
penalties allegedly owed or file a “good and sufficient bond” equal to twice the amount of taxes,

fees, and penalties allegedly owed. Id. § 112.101(a). We have referred to these prepayment

prerequisites as jurisdictional requirements to challenging a tax assessment. See In re Nestle USA,

Inc., 387 S.W.3d 610, 616 (Tex. 2012) (citing Nestle, 359 S.W.3d at 208).

In section 112.108, the Legislature carved out an exception to the prepayment prerequisite,

allowing certain taxpayers to challenge a tax assessment without meeting the prepayment

prerequisite. TEX. TAX CODE § 112.108. As originally enacted, section 112.108 provided that

except in the case of a restraining order or injunction “as provided by this subchapter,”

a court may not issue a restraining order, injunction, declaratory judgment, writ of
mandamus or prohibition, order requiring the payment of taxes or fees into the
registry or custody of the court, or other similar legal or equitable relief against the
state or a state agency relating to the applicability, assessment, collection, or
constitutionality of a tax or fee covered by this subchapter or the amount of the tax
or fee due.

See Act of May 19, 1989, 71st Leg., R.S., ch. 232, § 16, 1989 Tex. Gen. Laws 1070, 1074 (amended

1995). As the court of appeals discussed, this Court considered the constitutionality of that version

of section 112.108 in R Communications. 549 S.W.3d at 853–55 (discussing R Communications, 875

S.W.2d at 315–18). This Court reasoned that the prepayment prerequisites of sections 112.051 and

112.101, combined with the “ban on declaratory judgments in section 112.108, and the inadequacy

of the remedy of awaiting the filing of a collection suit [under sections 111.010 and 111.013(b)] by

the Comptroller mean that a taxpayer is financially restricted in its ability to get to court.” R

Commc’ns, 875 S.W.2d at 317–18. As a result, this Court declared section 112.108’s ban on

declaratory judgments, as originally written, unconstitutional as a violation of the Texas

6
Constitution’s Open Courts Provision because, when combined with the prepayment provisions, it

conditioned the ability to challenge a tax assessment on full prepayment, and the Court remedied

the defect by permitting the taxpayer to bring a suit for declaratory relief. Id. at 318; see TEX.

CONST. art. I, § 13 (“All courts shall be open, and every person for an injury done him, in his lands,

goods, person or reputation, shall have remedy by due course of law.”).

The following legislative session, the Legislature amended section 112.108, keeping the

statute identical to its original version but adding the following exception:

provided, however, that after filing an oath of inability to pay the tax, penalties, and
interest due, a party may be excused from the requirement of prepayment of tax as
a prerequisite to appeal if the court, after notice and hearing, finds that such
prepayment would constitute an unreasonable restraint on the party’s right of access
to the courts.

Act of May 24, 1995, 74th Leg., R.S., ch. 579, § 13, 1995 Tex. Gen. Laws 3374, 3377 (current

version at TEX. TAX CODE § 112.108). Thus, section 112.108 excuses the prepayment prerequisite

and allows a taxpayer to challenge its tax assessment in district court if a taxpayer meets certain

requirements that include filing a statement that it is unable to pay the monies owed. See TEX. TAX

CODE § 112.108. Although this Court has not ruled on whether the inability-to-pay amendment to

section 112.108 resolved the constitutional problem created by combination of the prepayment

prerequisites and section 112.108’s ban on declaratory judgment actions, we have noted that after

R Communications, the Legislature amended the statute “to preclude an Open Courts violation.”

Nestle, 359 S.W.3d at 211 n.38 (citation omitted).

7
B. Constitutionality of Section 112.108 as Amended

Both parties urge us to take this opportunity to rule on whether section 112.108 as amended,

which still bans declaratory relief, violates the Open Courts Provision, as we held the original

version did. See R Commc’ns, 875 S.W.2d at 318. EBS argued in the trial court that it complied

with all valid requirements of Chapter 112, asserting that conditioning its suit on full prepayment

of the entire sum owed would unreasonably restrain its access to the courts. In other words, EBS

assumed section 112.108’s amendment resolved the constitutional problem and relied on the

inability-to-pay exception for access to the courts. Relying on the court of appeals’ decision in

Bandag, the Comptroller assumed that section 112.108 had been declared unconstitutional in its

entirety—making the inability-to-pay exception void—and asserted that EBS’s failure to comply

with the full prepayment prerequisites deprived the court of jurisdiction. See Bandag, 18 S.W.3d

at 304. In this Court, EBS argues that the court of appeals’ interpretation of section 112.108 as

amended—that the statute remains unconstitutional and that EBS failed to comply with Chapter

112’s prepayment prerequisites to waive the State’s sovereign immunity and, additionally, did not

seek a declaratory judgment action—deprives it of access to the courts in violation of the Open

Courts Provision. EBS does not contend that the statute as amended itself violates the Open Courts

Provision; rather, EBS argues that the court of appeals’ decision creates an Open Courts violation

because the court refused to recognize the statutory exception that would allow EBS access to the

courts without an unreasonable restraint.

8
1. Open Courts Challenge

When we have reviewed Open Courts challenges to taxing statutes, taxpayers have typically

challenged the constitutionality of the statute in the trial court. See TEX. CONST. art. I, § 13; see,

e.g., Cent. Appraisal Dist. of Rockwall Cty. v. Lall, 924 S.W.2d 686, 692 (Tex. 1996); R Commc’ns,

875 S.W.2d 314; State v. Flag-Redfern Oil Co., 852 S.W.2d 480, 484–85 & n.6 (Tex. 1993); Tex.

Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 450 (Tex. 1993). Unlike in those cases,

however, EBS did not assert in the trial court that any provision in Chapter 112 prevented it from

accessing courts by creating an unreasonable financial barrier. The parties agree that EBS has never

challenged the prepayment prerequisites in sections 112.051 and 112.101, so the constitutionality

of those provisions is not before this Court. The parties also agree that EBS did not challenge

section 112.108 in the trial court, and that section 112.108 as amended itself does not impose any

financial barrier to the courts but only removes financial barriers for qualifying taxpayers.

Instead, EBS brought its suit by relying on section 112.108’s inability-to-pay exception,

which “excuse[s a taxpayer] from the requirement of prepayment of tax as a prerequisite to appeal”

if the court finds that full “prepayment would constitute an unreasonable restraint on the party’s

right of access to the courts.” TEX. TAX CODE § 112.108; see id. §§ 112.051, .101. The trial court

made such a finding and concluded that sovereign immunity was waived because EBS met the

requirements by satisfying section 112.108’s inability-to-pay exception. See id. § 112.108. When

the Comptroller appealed the trial court’s denial of its plea to the jurisdiction, the court of appeals

followed a line of its cases stemming from Bandag “to reaffirm [its] prior holding that section

112.108 [as amended] is invalid” and that EBS should have brought a suit seeking a declaratory

9
judgment. 549 S.W.3d at 858, 863–64 & n.7 (citations omitted). As to the availability of

declaratory relief, the court explained that:

taxpayers who are seeking to challenge assessments may do so by complying with
all of the statutory prerequisites for filing suits under the Tax Code, including the
prepayment obligations for protest suits and for suits seeking injunctive relief, and
taxpayers who are not seeking a return of any tax money paid may pursue a
permissible declaratory-judgment action seeking relief other than a return of money
provided that the suit is not otherwise barred by sovereign immunity.

Id. at 858 (citations omitted). Thus, Bandag stands for the proposition that there are two avenues

for challenging a tax assessment under Chapter 112: (1) file a protest or refund action or seek an

injunction, and satisfy the full prepayment prerequisites; or (2) file a declaratory judgment action

seeking relief other than return of taxes paid, so long as the suit is not otherwise barred by sovereign

immunity. Id.

Acknowledging that the Legislature repeated its prohibition on declaratory relief when it

amended section 112.108, and that the court of appeals itself had “perhaps inartfully suggested

multiple times that suits for declaratory relief pertaining to tax assessments may not be pursued,”

the court remanded for EBS to have the opportunity to amend its pleadings, presumably to seek a

declaratory judgment. Id. at 863–64. In this Court, EBS contends that the court of appeals’

interpretation of the Tax Code creates an Open Courts violation that did not exist previously. That

is, EBS contends that the amendment to section 112.108, which adopted the inability-to-pay

exception, would allow EBS to access the courts by bringing a claim permitted by Chapter 112

without fulfilling the chapter’s prepayment prerequisites, but the court of appeals’ decision that

10
rendered the exception unavailable and required full prepayment of all tax, penalties, and interest

assessed results in an unreasonable financial barrier to access to the courts.2

Because of the court of appeals’ reasoning and decision, the statute’s constitutionality is

inextricably intertwined with the issue of whether EBS satisfied the requirements to waive the

State’s sovereign immunity. See Flag-Redfern Oil Co., 852 S.W.2d at 484 n.6 (considering the

constitutionality of an authorizing statute, even though the trial court confined its ruling to the issues

of statutory construction, because the constitutional question was “intertwined” with its viability).

We cannot decide whether EBS invoked the trial court’s jurisdiction without first resolving the issue

of whether EBS may rely on section 112.108’s inability-to-pay exception as a valid mechanism to

avoid the full prepayment prerequisites of sections 112.051, .052, and .101. Similarly, we cannot

consider EBS’s argument that the court of appeals’ interpretation of the Tax Code creates an Open

Courts violation without addressing whether section 112.108 is constitutional given that it retains

its ban on declaratory relief but includes an inability-to-pay provision in light of precedent from this

Court and the court of appeals addressing the constitutionality of prepayment prerequisites and

2
The court of appeals suggested that this Court has approved taxpayer use of declaratory judgment suits under
certain circumstances when relief other than a tax refund is sought, including when challenging the validity of certain
Comptroller tax rules, when attacking the Comptroller’s determination of whether a taxpayer is subject to a tax statute,
when challenging the constitutionality of a statutory prepayment prerequisite, or when challenging agency officials’
actions as ultra vires. 549 S.W.3d at 853–54, 858–59. There is no question that none of those scenarios was at issue
in the trial court, and that EBS seeks to recover taxes it paid before bringing suit, as well as seeking an injunction. The
court of appeals also noted that sovereign immunity has not been waived for declaratory judgment suits in which a
taxpayer seeks a declaration of its rights under a statute or challenges an agency’s actions under a statute. Id. at 859.
At oral argument, EBS’s counsel took the position that any declaratory judgment claim EBS could have brought would
have been barred by sovereign immunity because EBS did not challenge the validity of any statute or allege ultra vires
action; rather, EBS sought to challenge the Comptroller’s actions under the statute. Additionally, as a matter of remedies,
we have held that sovereign immunity is not waived by the state in cases where a taxpayer seeks retrospective monetary
relief in a declaratory judgment action. City of El Paso v. Heinrich, 284 S.W.3d 366, 373 (Tex. 2009).

11
section 112.108. See, e.g., Lall, 924 S.W.2d at 692; R Commc’ns, 875 S.W.2d at 314; Bandag, 18

S.W.3d at 304–05.

Before evaluating the constitutional question here, we note the distinction between facial and

as-applied challenges, although the dividing line between the two may not always be clearly defined.

See Tenet Hosps. Ltd. v. Rivera, 445 S.W.3d 698, 702 & n.7 (Tex. 2014). In a facial challenge, the

party challenging the statute claims that the statute always operates unconstitutionally. Id. at 702

(citing United States v. Salerno, 481 U.S. 739, 745 (1987); Tex. Workers’ Comp. Comm’n v. Garcia,

893 S.W.2d 504, 518 (Tex. 1995)). In an as-applied challenge, however, the statute may be

generally constitutional but the party challenging it claims that it operates unconstitutionally as to

it specifically because of its particular circumstances. Id. & n.8 (citing City of Corpus Christi v.

Pub. Util. Comm’n of Tex., 51 S.W.3d 231, 240 (Tex. 2001); Garcia, 893 S.W.2d at 518 n.16)

(“Because [the plaintiff] contends in neither constitutional challenge that the . . . statute always

operates unconstitutionally, her challenges are as-applied to her circumstances only.”). Here, the

posture is unusual—EBS does not contend that section 112.108 itself is unconstitutional, either

facially or as applied. The Comptroller contends that the court of appeals has declared section

112.108 unconstitutional in its entirety, rendering the inability-to-pay provision inaccessible.

Instead, EBS contends that if the court of appeals is correct and that section 112.108 is invalid and

void then Chapter 112, and particularly its prepayment prerequisites, operate unconstitutionality

because EBS is left with no mechanism to challenge its tax assessment or recover its partial

prepayment of taxes without full prepayment of the tax assessed. As EBS sees it, only under the

court of appeals’ interpretation of the Tax Code does section 112.108 create an Open Courts

12
violation as applied to EBS, because EBS satisfied all jurisdictional requirements for the inability-to-

pay exception and yet is being deprived of access to the courts. This can be interpreted only as an

as-applied challenge.

2. As Applied to EBS

When we evaluate the constitutionality of a statute, we start with the presumption that

statutes enacted by the Legislature comply with both the United States and Texas Constitutions. See

TEX. GOV’T CODE § 311.021(1); Patel v. Tex. Dep’t of Licensing & Regulation, 469 S.W.3d 69, 87

(Tex. 2015). In line with this presumption, if a statute is susceptible to two interpretations—one

constitutional and the other unconstitutional—then the constitutional interpretation will prevail. See

Key W. Life Ins. Co. v. State Bd. of Ins., 350 S.W.2d 839, 849 (Tex. 1961) (“[I]t is the duty of the

courts to construe a statute in such a way as to avoid repugnancy to the Constitution.”). The party

asserting that the statute is unconstitutional bears a “high burden to show unconstitutionality.”

Patel, 469 S.W.3d at 87 (citing Trapp v. Shell Oil Co., 198 S.W.2d 424, 428 (Tex. 1946)).

The Open Courts Provision of the Texas Constitution provides: “All courts shall be open,

and every person for an injury done him, in his lands, goods, person or reputation, shall have remedy

by due course of law.” TEX. CONST. art. I, § 13. We have previous held that

[t]his provision includes at least three separate constitutional guarantees: 1) courts
must actually be open and operating; 2) the Legislature cannot impede access to the
courts through unreasonable financial barriers; and 3) the Legislature may not
abrogate well-established common law causes of action unless the reason for its
action outweighs the litigants’ constitutional right of redress.

13
Lall, 924 S.W.2d at 689 (citing Tex. Ass’n of Bus., 852 S.W.2d at 448). The second guarantee is at

issue here as we consider whether EBS is entitled to rely on section 112.108’s inability-to-pay

exception.

Although the prepayment prerequisites in Chapter 112 have not been directly challenged in

this case, we note that this Court has, in previous cases, addressed statutes that condition judicial

review upon prepayment. In striking section 112.108’s ban on declaratory relief as a means of

remedying the Open Courts problem in R Communications, we stated that “[w]e do not mandate an

unconditional right to declaratory relief, but only direct that [taxpayers have] some constitutionally

adequate means of judicial review not dependent on prior payment be[ing] provided.” 875 S.W.2d

at 318 n.8. A statute that “requir[es] taxpayers to pay any portion of the disputed amount as a

condition for judicial review” will undermine this interest. Lall, 924 S.W.2d at 692. Our decisions

have historically addressed facial challenges to statutes conditioning judicial review on an

unreasonable financial barrier rather than as-applied challenges in which taxpayers seek relief from

a financial barrier. See Lall, 924 S.W.2d at 688; R Commc’ns, 875 S.W.2d at 318–19; Tex. Ass’n

of Bus., 852 S.W.2d at 443. Nevertheless, the principles we have discussed are relevant here.

While section 112.108’s predecessor was in effect, this Court considered the constitutionality

of a forfeiture provision requiring full prepayment of fees in Texas Association of Business v. Texas

Air Control Board. 852 S.W.2d at 443 (discussing prepayment and forfeiture provisions in TEX.

HEALTH & SAFETY CODE §§ 361.252, 382.089 and TEX. WATER CODE § 26.136). The plaintiff

association on behalf of its members brought a declaratory judgment suit challenging the

constitutionality of statutes that conditioned judicial review of civil penalties levied by two state

14
agencies on prepayment or posting of a supersedeas bond. Id. This Court concluded that the

“forfeiture provision [was] an unreasonable restriction on access to the courts” and thus was

unconstitutional on its face even if some of the taxpayers would have been able to afford full

prepayment. Id. at 450 & n.18. In essence, the Court rejected the argument that the ability to afford

the tax assessment is the hallmark of making a full prepayment prerequisite reasonable. See id. at

450. This is because whether prepayment creates an unreasonable financial barrier is determined

not by the reasonableness of the amount owed but by the reasonableness of the loss of judicial

review—requiring prepayment to seek judicial review can still be unreasonable if a taxpayer can

afford it. See id. & n.18 (“The guarantee of constitutional rights should not depend on the balance

in one’s bank account.”). The statutes at issue provided no alternative means for a taxpayer to seek

judicial review. Id. Thus, because the statute conditioned judicial review on payment without any

relief or exception to that condition, and the taxpayer had no constitutionally adequate alternative,

we declared it unconstitutional. See id. at 449–50; see also R Commc’ns, 875 S.W.2d at 318 n.8.

Against the backdrop of Texas Association of Business, this Court later considered section

112.108’s predecessor, which lacked an inability-to-pay exception. R Commc’ns, 875 S.W.2d at

318. As the court of appeals discussed, in R Communications this Court declared the original

version of section 112.108 unconstitutional, holding that the statutory scheme governing judicial

review of a tax assessment impeded taxpayers’ ability to access courts. 549 S.W.3d at 854–55

(discussing R Commc’ns, 875 S.W.2d at 318). It was the combination of the prepayment

prerequisite, ban on declaratory relief in section 112.108, and inadequacy of awaiting the

Comptroller’s filing of a collection suit that led this Court to conclude that taxpayers were

15
financially restricted in their ability to get to court. R Commc’ns, 875 S.W.2d at 317–19 (holding

section 112.108 unconstitutional and void “insofar as it would preclude a taxpayer from obtaining

judicial review of its tax liability by means of a declaratory action”). By invalidating section

112.108’s predecessor and granting the taxpayer the ability to seek declaratory relief, R

Communications sought to provide a constitutionally adequate means of judicial review not

conditioned on prepayment. See id. & n.8 (stating that the Open Courts Provision does not

guarantee the right to seek declaratory relief per se, but that declaratory relief provided a

constitutionally adequate means of judicial review in that instance). Thus, although the Court in R

Communications implied that there might have been other ways to ensure that taxpayers would have

access to judicial review of tax assessments without unreasonable restraint, the Court focused solely

on restoring the right to seek declaratory relief—a right the Legislature again revoked when it

enacted the amended version of section 112.108.

After the Legislature amended section 112.108 to include the inability-to-pay exception, this

Court decided Central Appraisal District of Rockwall County v. Lall, which addressed the

constitutionality of a statutory scheme with provisions similar to section 112.108 as amended. See

924 S.W.2d at 688 (analyzing TEX. TAX CODE § 42.08). Under the statutory scheme at issue in that

case, a taxpayer would forfeit the right to judicial review of its ad valorem tax assessment by failing

to prepay taxes, but the statute allowed a taxpayer to avoid the prepayment prerequisites if it

qualified for an inability-to-pay exception. Id. In that consolidated case, separate plaintiff taxpayers

brought protest suits to challenge the appraisal review board’s denial of their property tax

exemptions. Id. But the taxpayers did not make their required prepayments—the jurisdictional

16
requirement—or allege inability to pay, instead challenging the constitutionality of the statutory

scheme. Id. Without focusing on the inability-to-pay exception, as the taxpayers did not seek to

invoke the trial court’s jurisdiction through the exception, this Court declared unconstitutional on

its face the portion of the statute requiring prepayment of contested taxes as a condition of judicial

review. Id. at 692. But this Court also held that conditioning judicial review on prepayment of an

uncontested portion of a tax assessment is not unconstitutional. Id. at 692–93. The Court concluded

that “it is reasonable to require a solvent taxpayer to pay the taxes which are admittedly due before

challenging the disputed portion.” Id. at 690. This practice was in line with “the common law rule

that a person judicially challenging a property tax must tender at least the amount conceded to be

owed in order to maintain the action.” Id. (citing State v. Hoffman, 201 S.W. 653, 654 (Tex. 1918);

Zglinski v. Hackett, 552 S.W.2d 933, 936 (Tex. Civ. App.—Austin 1977, writ ref’d n.r.e.)). Thus,

the taxpayer had a constitutionally adequate means of judicial review of the contested assessment

because that portion of the statute only required that the taxpayer pay what it admitted it owed. See

id.

However, this Court declared unconstitutional the statutory provision that conditioned

judicial review on the payment of the contested portion of the assessment, despite an inability-to-pay

provision in the statute. Id. In contrast to the statutes in Texas Association of Business and

R Communications, which required full prepayment of the contested portion of the assessment to

gain access to the courts, the portion of the statute this Court declared unconstitutional in Lall did

not require payment of “the entire disputed amount.” See id. at 690, 692; see also R Commc’ns, 875

S.W.2d at 314–15; Tex. Ass’n of Bus., 852 S.W.2d at 443. But we held that distinction did not save

17
the prepayment prerequisite in the property tax statute. See Lall, 924 S.W.2d at 692. Instead,

“requiring taxpayers to pay any portion of the disputed amount as a condition for judicial review for

the assessment violates the guarantee of open courts.” Id. We declared that such a statute, which

conditions the ability to seek judicial review on the prepayment of any portion of the contested tax

assessment, “facially violates the [O]pen [C]ourts [P]rovision.” Id. at 693. In other words, a

taxpayer’s right to open courts is violated when its only means of access to courts is by relying on

a statute that requires prepayment of the contested portion of a tax assessment.3

Thus, in the context of this precedent, our question today is whether section 112.108 as

amended, which gives trial courts discretion to grant certain taxpayers relief from the Tax Code’s

prepayment prerequisites, see TEX. TAX CODE §§ 112.001, .101, .051, .108, is unconstitutional as

applied to EBS given our suggestion in Lall that an inability-to-pay exception did not cure an

unconstitutional prepayment prerequisite. Stated differently, does section 112.108 as amended,

which may provide EBS an avenue to access the courts that is not conditioned on prepayment,

violate the constitution’s guarantee of access to courts without unreasonable financial barriers?

In holding that EBS’s failure to make full prepayment deprived the trial court of jurisdiction,

the court of appeals relied on its opinion in Bandag, which followed Lall, to hold that the current

version of section 112.108—with the inability-to-pay-exception and ban on declaratory relief—was

3
We additionally stated in Lall that “[b]ecause [the prepayment] provision imposes an unreasonable financial
barrier to court access . . . it violates the [O]pen [C]ourts [P]rovision . . . regardless of any [inability-to-pay provision].”
924 S.W.2d at 692 (citations omitted). The inability-to-pay provision was irrelevant in Lall because the taxpayers in Lall
did not rely on it. See id. (“[T]he taxpayers in these consolidated cases do not contend that they were financially unable
to make the payment required.”). Here, however, even though we said in Lall that the prepayment prerequisites were
unconstitutional despite the inability-to-pay exception, EBS claims that it is actually unable to prepay and thus—unlike
the taxpayers in Lall—seeks to rely on the inability exception rather than challenge the prepayment prerequisites
themselves.

18
unconstitutional. 549 S.W.3d at 856–57, 863–64 (discussing Bandag, 18 S.W.3d at 298, 303–04).

“[R]eaffirm[ing] [its] prior holding that section 112.108 is invalid,” the court concluded that EBS

could not rely on the inability-to-pay exception as a waiver of the State’s sovereign immunity. See

id. at 856, 863 & n.7 (citing Bandag, 18 S.W.3d at 304–05). But neither Bandag nor any of the

cases from this Court on which Bandag relied—Lall, Texas Association of Business, or

R Communications—addressed an as-applied challenge in which a taxpayer actually attempted to

avail itself of the benefits of an inability-to-pay exception to access the courts. Lall, 924 S.W.2d at

692; R Commc’ns, 875 S.W.2d at 315–16; Tex. Ass’n of Bus., 852 S.W.2d at 450; Bandag, 18

S.W.3d at 298, 303–04; see also EBS Sols. Inc., 549 S.W.3d at 854–59 (discussing R

Communications, Lall, and Bandag, and referencing Texas Association of Business). But see

Richmont Aviation, 2013 WL 5272834, at *2–3 (raising issue of section 112.108’s inability-to-pay

exception and remanding injunction claim for further proceedings). We cannot ignore this

distinction. A facial challenge brought by a taxpayer who can pay but seeks to invalidate the

prepayment prerequisites themselves is different from an as-applied challenge involving a taxpayer

who seeks to avail itself of the inability-to-pay exception that the Legislature enacted to provide it

access to the courts rather than challenge the prepayment prerequisites as an unreasonable financial

barrier of access to courts.

Because of the unique posture of this case—a taxpayer prepaid some of the taxes due but is

also attempting to avail itself of the inability-to-pay exception to seek an injunction and return of

tax monies paid, rather than seeking to have the prepayment scheme declared

unconstitutional—competing interpretations of “inability to pay” become relevant. The importance

19
of the meaning of “inability to pay” in this context is highlighted by the legal landscape that now

exists after R Communications reinstated a taxpayer’s ability to challenge its tax assessment through

a declaratory judgment action, curing the original section 112.108’s Open Courts defect. 875

S.W.2d at 315–16. In response to R Communications, the Legislature amended section 112.108 to

again remove a taxpayer’s ability to seek declaratory relief but provided a different avenue for some

taxpayers to access the courts to challenge their tax assessment—the inability-to-pay exception.

TEX. TAX CODE §112.108. Later, Bandag relied on Lall to hold section 112.108 as amended

retained an Open Courts problem. Lall, 924 S.W.2d at 692; Bandag, 18 S.W.3d at 303–04. The

court of appeals in this case then held that the inability-to-pay provision was not a valid waiver of

sovereign immunity because in Bandag the court had concluded that section 112.108 was

unconstitutional and that the statute in its entirety violated the Open Courts Provision. 549 S.W.3d

at 858–59 (citing Bandag, 18 S.W.3d at 303–04). Given this legal landscape, to determine whether

section 112.108 as amended operates unconstitutionally as applied to EBS, we must consider the

meaning of “inability to pay” within the context of Chapter 112.

EBS does not claim that it is unable to pay any of the taxes allegedly owed; in fact, EBS paid

$150,000 of the assessed taxes. EBS claims that it cannot afford to pay all of the taxes allegedly

owed, and that requiring prepayment of the entire sum of tax, penalties, and interest assessed would

unreasonably restrain its access to the courts. If we can interpret “inability to pay” in a reasonable

manner that gives effect to the Legislature’s attempt to cure the constitutional defect consistent with

our precedent regarding open courts, then we must do so. See Barshop v. Medina Cty. Underground

Water Conservation Dist., 925 S.W.2d 618, 629 (Tex. 1996) (citations omitted) (“When possible,

20
we are to interpret legislative enactments in a manner to avoid constitutional infirmities.”); Tex.

State Bd. of Barber Exam’rs v. Beaumont Barber Coll., Inc., 454 S.W.2d 729, 732 (Tex. 1970)

(citations omitted) (“Legislative enactments will not be held unconstitutional and invalid unless it

is absolutely necessary to so hold.”).

The Legislature left “inability to pay” undefined. EBS argues this term means inability to

pay any part of the tax, penalties, and interest assessed, which would allow a taxpayer to avail itself

of the exception when it pays part of the sum due but cannot pay the remainder. In contrast, the

Comptroller suggests that Chapter 112 is clear and partial prepayment is prohibited. See TEX. TAX

CODE §§ 112.051, .101, .151. When terms are undefined, we will use the plain and ordinary

meaning of the term and interpret it within the context of the statute. See TGS-NOPEC Geophysical

Co. v. Combs, 340 S.W.3d 432, 441 (Tex. 2011). To ascertain this plain and ordinary meaning, we

start with dictionaries and “then consider the term’s usage in other statutes, court decisions, and

similar authorities.” Tex. State Bd. of Exam’rs of Marriage & Family Therapists, 511 S.W.3d at 35.

“Inability” is defined as “the quality or state of being unable” such as a “lack of sufficient power,

strength, resources, or capacity.” WEBSTER’S THIRD NEW INT’L DICTIONARY (2002). And what the

taxpayer is unable to do—or lacks sufficient resources or capacity to do—under the statute, is “pay

the tax, penalties, and interest due.” TEX. TAX CODE § 112.108. However, the statute does not

specify whether a taxpayer may file an oath if it is unable to pay all or only any of “the tax,

penalties, and interest due.” Id. Reading it to mean all, a taxpayer could file an inability-to-pay

affidavit if it lacks resources to make a single payment for the entire sum of assessed tax, penalties,

and interest. Reading the statute to mean any, a taxpayer could file an inability-to-pay affidavit only

21
if the taxpayer could afford to pay none of the sum assessed. Thus, under a broad reading of the

term—the former (all)—a taxpayer would be excused from the prepayment prerequisite if it could

afford to pay some part of the amount assessed, but under a narrow reading of the term—the latter

(any)—a taxpayer would have to satisfy the full prepayment prerequisite if it could afford to pay

some part of the amount assessed.

Normally, when a term within a statute is susceptible to either a broad or a narrow meaning,

we will presume that the broader meaning of the term is intended, being sensitive to the term’s

context in the statute. See Cadena Comercial USA Corp. v. Tex. Alcoholic Beverage Comm’n, 518

S.W.3d 318, 327 (Tex. 2017) (citation omitted) (“If an undefined word used in a statute has multiple

and broad definitions, we presume—unless there is clear statutory language to the contrary—that

the Legislature intended to have equally broad applicability.”). More importantly, when two

reasonable interpretations of a statute exist, including one which would lead a court to invalidate the

statute as unconstitutional, courts should apply the constitutional meaning. See Key W. Life Ins. Co.,

350 S.W.2d at 849. The fact that the Tax Code otherwise requires full prepayment of the entire sum

assessed, see TEX. TAX CODE §§ 112.051, .101(a), .151., and section 112.108’s exception grants

taxpayers relief from that full prepayment prerequisite supports a broad reading of “inability to pay.”

Section 112.108’s use of “the tax, penalties, and interest due,” together, likewise supports a broad

reading, as it indicates that the exception applies to a taxpayer who cannot make the full payment

encompassing the “tax, penalties, and interest” assessed. Id. § 112.108. Nothing in the statute

indicates that we must read “inability to pay” narrowly. See State v. Dyer, 200 S.W.2d 813, 815

(1947) (citation omitted) (“A too literal construction of a statute, which would prevent the

22
enforcement of it according to its intent, should be avoided.”). And given the language of the

exception, we believe it would be nonsensical to read “inability to pay” to mean that a taxpayer who

can afford to pay some part of the sum assessed cannot access the courts unless it pays the entire

sum assessed. See Union Carbide Corp. v. Synatzske, 438 S.W.3d 39, 54 (Tex. 2014); Sharp v.

House of Lloyd, Inc., 815 S.W.2d 245, 249 (Tex. 1991).

Further, interpreting “inability to pay” narrowly to apply only to those who could not afford

to pay any of the tax, penalties, and interest assessed would preclude almost all taxpayers from

receiving its benefit. Here, a narrow interpretation of “inability to pay” would deprive a taxpayer

like EBS, who could pay some but not all of the sum assessed, a “constitutionality adequate means

of judicial review not dependent on prior payment.” R Commc’ns, 875 S.W.2d at 318 n.8. Without

the availability of the inability-to-pay exception, EBS and similarly situated taxpayers would have

to rely on the normal procedures that make full prepayment a prerequisite to judicial review, which

we have previously said is a violation of the Open Courts Provision. See TEX. TAX CODE §§

112.051, .101, .151; Tex. Ass’n of Bus., 852 S.W.2d at 450. And, like its predecessor statute that we

declared unconstitutional in R Communications, those same taxpayers could not seek declaratory

relief under section 112.108 as amended. See TEX. TAX CODE § 112.108; R Commc’ns, 875 S.W.2d

at 318–19. Thus, similar to Texas Association of Business, the narrow interpretation would

condition judicial review of a tax assessment on prepayment of the full amount for those taxpayers

who can afford to prepay some but not all of their tax assessment. See 852 S.W.2d at 449–50. Such

a condition would be more severe than the statute we held unconstitutional in Lall, which required

partial payment of a portion of the disputed amount of taxes, and would fail to provide a

23
“constitutionally adequate means of judicial review not dependent on prior payment be[ing]

provided.” R Commc’ns, 875 S.W.2d at 318 n.8; see TEX. TAX CODE § 112.108; Lall, 924 S.W.2d

at 692.

However, the solution we employed in R Communications—making declaratory relief

available to a taxpayer who seeks to challenge its tax assessment without full prepayment of all

assessed tax, penalties, and interest—is not the only solution that can provide a “constitutionality

adequate means of judicial review not dependent on prior payment be[ing] provided.” R Commc’ns,

875 S.W.2d at 318 n.8. Interpreting “inability to pay” broadly achieves the same objective, as

applied to taxpayers who seek to challenge their tax assessment but lack the resources for full

prepayment—that is, for that category of taxpayers who qualify under the inability-to-pay exception

and seek to rely on the exception. This interpretation comports with our understanding of “inability

to pay” as used in other statutes. See Tex. State Bd. of Exam’rs of Marriage & Family Therapists,

511 S.W.3d at 35 (ascertaining the meaning of a statute by considering the statute’s term in a variety

of sources including other statutes and court decisions). In Griffin Industries, Inc. v. Honorable

Thirteenth Court of Appeals, 934 S.W.2d 349 (Tex. 1996), we considered whether the trial court

abused its discretion when it sustained a contest to an inability-to-pay affidavit. See id. There, the

plaintiff filed an oath of inability to pay costs with her appeal after the trial court entered a directed

verdict in favor of the defendant, Griffin Industries. See id. at 350. In holding that the trial court

abused its discretion by granting the defendant’s contest to her inability-to-pay affidavit, this Court

stated that a party makes a prima facie case for inability to pay the costs owed “if [it] really wanted

to and made a good-faith effort to do so.” Id. at 351 (quoting Allred v. Lowry, 597 S.W.2d 353, 355

24
(Tex. 1980)). The Court held that the defendant’s evidence did not negate the plaintiff’s evidence,

which was statutorily recognized to make out a prima facie case for inability to pay, because it was

pointless, irrelevant, presumptuous, or would lead to an Open Courts problem. See id. at 351–54.

Similarly, in Goffney v. Lowry, 554 S.W.2d 157 (Tex. 1977), we rejected a trial court’s findings that

a relator could have attempted to sell, mortgage, or pawn a television or stereo to assist in paying

court costs when rejecting her inability-to-pay affidavit. See id. at 159. Additionally, we disagreed

that the relator should have accepted a loan from her cousin or sought out a loan from a legal

foundation to assist in affording the court costs. See id. at 159–60. Thus, it is not the party’s ability

to obtain the costs by any means necessary that determines whether it is unable to pay, but rather

whether the party can afford to pay all the costs presently owed “if [it] really wanted to [pay the

costs] and made a good-faith effort to do so.” Griffin Indust., 934 S.W.2d at 351. Consistent with

our recognition that a party meets the inability-to-pay qualification if it cannot pay the full sum of

all monies owed, we will apply the same approach here.

We conclude that section 112.108 as amended allows EBS to seek access to the courts

through an oath of inability to pay if it is unable to pay some part of the total sum of tax, penalties,

and interest assessed. Having concluded that nothing in section 112.108 prohibits partial

prepayment, or precludes an oath of inability to make a partial prepayment, we hold that EBS could

seek access to the courts through section 112.108’s inability-to-pay exception by filing an oath of

inability to pay the unpaid portion of tax, penalties, and interest assessed.4 Thus, section 112.108

4
This is not to say that a taxpayer must always make a partial prepayment before relying on the inability-to-pay
exception. Rather, the statute requires that after a taxpayer shows that it cannot afford full prepayment, the trial court
decides whether mandating full prepayment would create an unreasonable restraint on a taxpayer’s access to court. See

25
as amended is constitutional as applied to EBS and allows it to seek judicial review of its tax

assessment without full prepayment of taxes, so long as it satisfies the jurisdictional requirements

of the inability-to-pay exception.5 See R Commc’ns, 875 S.W.2d at 318 n.8.

C. Waiver of Sovereign Immunity

Under section 112.108, a taxpayer is excused from the prepayment prerequisites otherwise

required to waive the State’s sovereign immunity only if: (1) the taxpayer files an oath of inability

to pay the tax, penalties, and interest due; (2) a hearing is set and notice provided; (3) the trial court

conducts a hearing; and (4) the trial court finds that “prepayment would constitute an unreasonable

restraint on the party’s right of access to the courts.” TEX. TAX CODE § 112.108.

In the trial court, EBS properly filed its oath of inability to pay describing the effect

prepayment would have on EBS. See id. EBS set its oath of inability to pay for hearing and noticed

a hearing. See id. The trial court conducted a hearing, at which the Comptroller appeared. See id.

The Comptroller did not contest EBS’s allegations of inability to pay, nor did the Comptroller

challenge the prepayment prerequisites themselves. The trial court made the necessary finding to

excuse EBS from the full prepayment prerequisite—“such prepayment would constitute an

unreasonable restraint on the party’s right of access to the courts.” Id. As such, the record supports

that the jurisdictional requirements of section 112.108’s inability-to-pay exception were satisfied.

TEX. TAX CODE § 112.108.

5
To be clear, our opinion is limited to the narrow issue presented in this case—EBS’s ability to rely on the
inability-to-pay exception in section 112.108 as amended to access the courts to pursue an injunction and seek to recover
tax monies prepaid in protest. We express no opinion on the constitutionality of section 112.108 as amended, or Chapter
112’s prepayment prerequisites, as it applies to taxpayers who do not seek access to the courts through the inability-to-
pay exception, as that issue is not before us today.

26
And when undisputed jurisdictional facts establish that the State has waived sovereign immunity,

a trial court possesses jurisdiction. See Miranda, 133 S.W.3d at 227.

Admitting that it had an opportunity but did not contest EBS’s claim of inability to pay

during the hearing in the trial court, the Comptroller asks that we nevertheless remand this case to

the trial court to give it another opportunity to challenge the jurisdictional facts. The Comptroller

argues that because sovereign immunity is ultimately a question about the trial court’s subject matter

jurisdiction and subject matter jurisdiction can always be challenged, see id., then it is entitled to a

remand for a hearing that would allow it to challenge whether sufficient jurisdictional facts exist

under section 112.108. The Comptroller is correct that section 112.108 implicates a court’s

jurisdiction and that the trial court must base its decision on a factual assessment of the effect full

prepayment would have on the taxpayer. But the statute provides an opportunity to contest those

jurisdictional facts during a required hearing. See TEX. TAX CODE § 112.108. Specifically, the

statute creates a process that affords the Comptroller an opportunity to argue that, on the facts

presented, requiring full prepayment would not have the effect required for the taxpayer to qualify

for section 112.108’s exception. The court can then “consider evidence as necessary to resolve any

dispute over those [jurisdictional] facts.” Mission Consol. Indep. Sch. Dist. v. Garcia, 372 S.W.3d

629, 635 (Tex. 2012) (citation omitted).

Here, the Comptroller did not challenge EBS’s jurisdictional facts, even as the trial court

developed the record as to EBS’s ability to qualify for the exception under section 112.108. In both

the plea to the jurisdiction and the hearing on EBS’s oath of inability to pay, the Comptroller was

silent as to whether EBS was actually unable to pay the unpaid tax, penalties, and interest and

27
whether requiring full payment would unreasonably restrain EBS’s access to the courts. Instead,

the Comptroller argued only that EBS’s oath of inability to pay and the hearing on the oath were

unnecessary because the statute had been declared unconstitutional by the court of appeals. The

Comptroller made a strategic litigation decision not to challenge the substance of EBS’s oath, and

we reject its arguments in favor of a remand.

The Comptroller urges us to set workable parameters to assist trial courts in determining

whether a taxpayer qualifies for the exception—parameters that would presumably require EBS to

adduce more evidence to substantiate its claim of inability to pay some part of the tax, penalties, and

interest assessed. The Comptroller is concerned that if we rule that section 112.108 can operate

constitutionally as applied to a taxpayer who cannot pay the entire sum assessed, then trial courts

will allow taxpayers to avoid the statutory prepayment prerequisites simply by filing an oath of

inability to pay. In essence, the Comptroller warns that taxpayers are likely to rely pretextually on

section 112.108’s generosity, especially if a taxpayer can avoid the prepayment prerequisites simply

by showing that it cannot afford to pay some small part of the sum assessed.

The Comptroller’s argument assumes that the trial court may automatically excuse a taxpayer

from the prepayment prerequisites after receiving that taxpayer’s oath. But that is not how section

112.108 operates. Section 112.108 as amended can lead to a waiver of sovereign immunity only

after the appropriate notice is provided, a hearing occurs, and the trial court determines that the

normal prepayment prerequisites “would constitute an unreasonable restraint on a party’s right of

access to the courts.” TEX. TAX CODE § 112.108; see id. §§ 112.051, .101. The oath simply leads

to the next steps in the process, culminating in the trial court’s determination of whether, as to the

28
particular taxpayer at issue, prepayment would pose the unreasonable restriction on access to courts

that concerned us in R Communications, Lall, and Texas Association of Business. See id. § 112.108;

Lall, 924 S.W.2d at 692–93; R Commc’ns, 875 S.W.2d at 318–19; Tex. Ass’n of Bus., 852 S.W.2d

at 449–50. It is not this Court’s role to add caveats or parameters to the statute. If we were to

interpret the statute so as to add limitations to the availability of the inability-to-pay exceptions, we

would undermine the Legislature’s intent that trial courts perform a discretionary, gateway function

in administering the exception. See Lutheran Soc. Servs., Inc. v. Meyers, 460 S.W.2d 887, 890–91

(Tex. 1970) (citing Davis v. Collins, 216 S.W.2d 807, 811–12 (Tex. 1949)) (describing the deference

trial courts should receive when “statutory provisions are indicative of the wide discretion the

Legislature has granted the courts to act”).

We hold that EBS satisfied the jurisdictional requirements of section 112.108’s inability-to-

pay exception, and the State’s sovereign immunity was therefore waived as to EBS’s injunction and

tax protest suit challenging its tax assessment and seeking recovery of taxes prepaid.6

IV. Conclusion

6
In its plea to the jurisdiction, the Comptroller also suggests that sovereign immunity was not waived because
EBS originally relied on sections 112.052 and 112.101 in challenging the tax assessment. Because EBS failed to meet
the prepayment prerequisite in those statutes, the Comptroller asserts, EBS may not attempt to invoke the trial court’s
jurisdiction by employing section 112.108 after the litigation process has begun. However, reading sections 112.108,
112.052, and 112.101 together, we see no such limitation. When a taxpayer elects to rely on section 112.108, and the
trial court finds that full prepayment would constitute an unreasonable barrier of access to courts, then the trial court
“may grant such relief as may be reasonably required by the circumstances.” Id. § 112.108; see id. §§ 112.052, .101(a).
Nothing in the text of the statute suggests that the Legislature intended to limit section 112.108 to situations in which
the taxpayer invokes the inability-to-pay provision prior to making any payment or seeking judicial review of its tax
assessment; rather, the plain language of the inability-to-pay exception indicates that a taxpayer can be excused from
the prepayment prerequisite by convincing the trial court, after notice and hearing, that full prepayment would
unreasonably restrain the taxpayer’s right of access to the courts. See id. § 112.108. Although EBS initially relied on
sections 112.052 and .101 in filing its lawsuit, nothing in the statute prohibits EBS from later relying on section 112.108
it if was unable to pay the total amount of tax, penalties, and interest allegedly owed.

29
We hold that section 112.108 of the Texas Tax Code, as applied to EBS, does not create an

unreasonable financial barrier of access to the courts, but instead allows EBS to exercise its right

to access the courts to seek judicial review of its tax assessment. See TEX. CONST. art. I, § 13.

Because the inability-to-pay exception applies broadly to any taxpayer who is unable to pay any part

of assessed tax, penalties, and interest, allowing for partial payment, section 112.108 as amended

allows EBS access to the courts without unreasonable restraint. Further, because EBS does not

challenge the constitutionality of the prepayment prerequisites, we need not decide whether those

prerequisites are constitutional even with an inability-to-pay exception. By satisfying the

jurisdictional requirements of section 112.108 as amended, EBS has invoked the trial court’s

jurisdiction and can proceed in its injunction and tax protest suit challenging the Comptroller’s tax

assessment. Because the trial court correctly denied the Comptroller’s plea to the jurisdiction, we

reverse the judgment of the court of appeals and remand to the trial court for further proceedings.

_________________________________
Paul W. Green
Justice

OPINION DELIVERED: May 8, 2020

30

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10485018. Public record. Not legal advice.