(1) Should a dispute arise between the purchaser and seller as to whether or not any sale, service, or commodity is exempt from taxation pursuant to this part 7, nevertheless the seller shall collect and the purchaser shall pay the tax, and the seller shall thereupon issue to the purchaser a receipt showing the tax paid. (2) (a) (Deleted by amendment, L. 2011, (HB 11-1265), ch. 228, p. 978, § 3, effective May 27, 2011.) (b) The right of any person to a refund under this article shall not be assignable, and, except as provided in paragraph (c) of this subsection (2) and subsection (2.5) of this section, such application for refund shall be made by the same person who purchased the goods and paid the tax thereon as shown in the invoice of the sale. (c) A refund shall be made or a credit allowed by the executive director of the department of revenue to any person entitled to an exemption where the person establishes: That a tax was paid by another on a purchase made on behalf of such person; that a refund has not been granted to the person making the purchase; and that the person entitled to exemption paid or reimbursed the purchaser for such tax. No such refund shall be made or credit allowed in an amount greater than the tax paid. (c.5) The executive director of the department of revenue shall make a refund or allow a credit to any person who establishes that he or she has overpaid the tax due pursuant to this article 26. No such refund shall be made or credit allowed in an amount greater than the tax paid. (d) [Editor's note: This version of subsection (2)(d) is effective until July 1, 2025.] An application for refund under subsection (2)(c) or (2)(c.5) of this section must be made within the applicable deadline and must be made on forms prescribed and furnished by the executive director of the department of revenue, which form must contain, in addition to the foregoing information, such other pertinent data, information, or documentation as the executive director prescribes by rules promulgated in accordance with article 4 of title 24. Except as set forth in sections 29-2-106.1 (5)(b) and 39-26-734 (4)(d), the deadline for a sales tax refund or a refund of any use tax collected by a vendor is three years after the twentieth day of the month following the date of purchase and the deadline for any other use tax refund is three years after the twentieth day of the month following the initial date of the storage, use, or consumption in the state by the person applying for the refund. (d) [Editor's note: This version of subsection (2)(d) is effective July 1, 2025.] An application for refund under subsection (2)(c) or (2)(c.5) of this section must be made within the applicable deadline and must be made on forms prescribed and furnished by the executive director of the department of revenue, which form must contain, in addition to the foregoing information, such other pertinent data, information, or documentation as the executive director prescribes by rules promulgated in accordance with article 4 of title 24. Except as set forth in sections 39-26-734 (4)(d), 29-2-208 (2)(a)(III), and 29-2-302 (5)(b), the deadline for a sales tax refund or a refund of any use tax collected by a vendor is three years after the twentieth day of the month following the date of purchase and the deadline for any other use tax refund is three years after the twentieth day of the month following the initial date of the storage, use, or consumption in the state by the person applying for the refund. (d.5) Upon receipt of the application and proof of the matters contained therein, the executive director of the department of revenue shall give notice to the applicant by order in writing of the executive director's decision. Aggrieved applicants, within thirty days after such decision is mailed to them, may petition the executive director for a hearing on the claim in the manner provided in section 39-21-103 and may appeal to the district courts in the manner provided in section 39-21-105. (e) The proceeds of any claim for refund shall first be applied by the department of revenue to any tax deficiencies or liabilities existing against the claimant before allowance of the claim by the department; except that, if such excess payment of tax moneys in any period is discovered as a result of audit by the department and deficiencies are discovered and assessed against the taxpayer as a result of the audit, the excess moneys shall be first applied against any deficiencies outstanding to the date of the assessment but shall not be applied to any future tax liabilities. (2.5) (a) [Editor's note: This version of subsection (2.5)(a) is effective until July 1, 2025.] Except as set forth in section 29-2-106.1 (5)(b), within three years after the due date of the return showing the overpayment or one year after the date of overpayment, whichever is later, a vendor shall file any claim for refund with the executive director of the department of revenue. The executive director shall promptly examine such claim and shall make a refund or allow a credit to any vendor who establishes that such vendor overpaid the tax due pursuant to this article. (2.5) (a) [Editor's note: This version of subsection (2.5)(a) is effective July 1, 2025.] Except as set forth in sections 29-2-208 (2)(a)(III) and 29-2-302 (5)(b), within three years after the due date of the return showing the overpayment or one year after the date of overpayment, whichever is later, a vendor shall file any claim for refund with the executive director of the department of revenue. The executive director shall promptly examine such claim and shall make a refund or allow a credit to any vendor who establishes that such vendor overpaid the tax due pursuant to this article 26. (b) (I) A vendor may claim a refund on behalf of any purchaser of the vendor if: (A) The purchaser could timely file a claim for a refund on his or her own behalf; and (B) The vendor establishes to the satisfaction of the executive director of the department of revenue that the amount claimed, including any interest payable pursuant to section 39-21- 110, has been or will actually be paid by the vendor to the purchaser. (II) Nothing in this paragraph (b) shall prohibit a vendor from taking a credit that the vendor believes to be due on a subsequent period return for an overpayment or for tax collected in error and subsequently refunded to a purchaser; except that such credit shall be subject to audit and shall not bear any interest pursuant to section 39-21-110. (c) No vendor shall be compelled by any party to file a refund claim pursuant to paragraph (b) of this subsection (2.5). It shall be a complete defense to any claim by a purchaser against a vendor for tax collected in error that the vendor has paid the tax over to the department of revenue. Any action by a purchaser for tax collected by a vendor in error that has been remitted to the department must be made pursuant to subsection (2) of this section and section 39-21-108. (3) If any person is convicted under the provisions of section 39-21-118, the convictions shall be prima facie evidence that all refunds received by the person during the current year were obtained unlawfully, and the executive director of the department of revenue is empowered to bring appropriate action for recovery of such refunds. A brief summary statement of the above mentioned penalties shall be printed on each form application for refund. (4) The burden of proving that sales, services, and commodities on which tax refunds are claimed are exempt from taxation under this part 7, or were not at retail, shall be on the one making such claim under such reasonable requirements of proof as the executive director of the department of revenue prescribes. Should the applicant for refund be aggrieved at the final decision of the executive director, the applicant may proceed to have the same reviewed by the district courts in the manner provided for review of other decisions of the executive director as provided in section 39-21-105. (5) (a) (I) If a purchaser files a claim for refund of tax paid described in subsection (5)(b) of this section and pursuant to this article 26 to a vendor on or after July 1, 2022, but before July 1, 2026, the executive director of the department of revenue shall assess and collect, in addition to other penalties provided by law, a civil penalty as follows: (A) Five percent of the total refund claimed if the claim is found to be materially incomplete; and (B) Ten percent of the amount of the refund claim that is found to be duplicative or lacking a reasonable basis in law or in fact. (II) The civil penalty imposed by this subsection (5) applies only to claims totaling five thousand dollars or more. (III) The executive director of the department of revenue shall assess and collect, in the same manner as a sales or use tax deficiency, the civil penalty imposed by this subsection (5) from the purchaser unless the claim for refund is prepared, in whole or in part, by a person other than the purchaser, in which case the penalty is imposed on that person. The executive director shall give the person against whom the penalty is assessed written notice of the penalty in accordance with section 39-21-105.5. Within thirty days after such notice is mailed, the person against whom the penalty was assessed may petition the executive director for a hearing on the notice in the manner provided in section 39-21-103 and may appeal to the district court in the manner provided in section 39-21-105. (b) A claim for refund is subject to the penalty under this subsection (5) if: (I) It is incomplete; (II) It includes a purchase for which an earlier claim for refund has already been filed; or (III) It, or any part of it, lacks a reasonable basis in law or in fact. (c) (I) A claim for refund is incomplete if it does not include the form and substantially all of the pertinent data, information, and documentation required by subsection (2)(d) of this section and the rules promulgated thereunder. (II) Prior to assessing a penalty for a claim for refund due to incompleteness under subsection (5)(b)(I) of this section, the executive director shall notify the purchaser or the preparer of the claim, if any, that the claim appears to be incomplete. The notification must specify the pertinent data, information, and documentation that appears to be missing and must state that failure to either correct the omission or withdraw the claim for refund within sixty days of the date of the notice, plus such additional time allowed by the executive director for reasonable cause shown, will result in the assessment and collection of the civil penalty allowed under this subsection (5). Correcting the omission requires the purchaser or preparer to provide the missing data, information, and documentation and to demonstrate why the claim is not incomplete. (d) If an application for refund is identified at the time of filing as a protective claim filed in order to preserve the right to a refund prior to the expiration of the statute of limitations, the executive director shall determine if the claim for refund is subject to the penalty under this subsection (5) after the claim for refund is perfected. (e) The executive director of the department of revenue may waive the civil penalty imposed by this subsection (5) if the person against whom the penalty is assessed: (I) Establishes that a duplicate claim was not intentional and was either minimal or immaterial; or (II) Demonstrates other good cause for waiver of the civil penalty. (f) This subsection (5) is repealed, effective July 1, 2030.
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