Texas Codes

Tex. Tax Code § 111.0042 (2026)

Sampling In Auditing; Projecting Assessments

✓ current as of May 2026

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Sec. 111.0042. SAMPLING IN AUDITING; PROJECTING ASSESSMENTS. (a) Repealed by Acts 1983, 68th Leg., p. 982, ch. 234, Sec. 1, eff. May 25, 1983.

(b) Sampling auditing methods are appropriate if:

(1) the taxpayer's records are so detailed, complex, or voluminous that an audit of all detailed records would be unreasonable or impractical;

(2) the taxpayer's records are inadequate or insufficient, so that a competent audit for the period in question is not otherwise possible; or

(3) the cost of an audit of all detailed records to the taxpayer or to the state will be unreasonable in relation to the benefits derived, and sampling procedures will produce a reasonable result.

(c) Before using a sample technique to establish a tax liability, the comptroller or his designee must notify the taxpayer in writing of the sampling procedure to be used.

(d) The sample must reflect as nearly as possible the normal conditions under which the business was operated during the period to which the audit applies. If a taxpayer can demonstrate that a transaction in a sample period is not representative of the taxpayer's business operations, the transaction shall be eliminated from the sample and be separately assessed in the audit. If records are inadequate to reflect accurately the business operations of the taxpayer, the comptroller or his designee shall determine the best information available and base his audit report on that information.

(e) If the taxpayer demonstrates that any sampling method used by the comptroller was not in accordance with generally recognized sampling techniques, the audit will be dismissed as to that portion of the audit established by projection based upon the sampling method, and a new audit may be performed.

Acts 1981, 67th Leg., p. 1496, ch. 389, Sec. 1, eff. Jan. 1, 1982. Amended by Acts 1983, 68th Leg., p. 982, ch. 234, Sec. 1, eff. May 25, 1983.

Notes of Decisions

Cited in 7 cases, 2011–2020 · leading case: Sanadco Inc., a Texas Corp. Mahmoud Ahmed Isba Broadway Grocery, Inc. & Shariz, Inc. v. Glenn Hegar, in His Individual & Off. Capacity as Comptroller of Pub. Accounts Off. of Comptroller of Pub. Accounts for the State of Texas & Ken Paxton, in His Off. Capacity as Attorney Gen. of the State of Texas (Tex. App. 2015).

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Sanadco Inc., a Texas Corp. Mahmoud Ahmed Isba Broadway Grocery, Inc. & Shariz, Inc. v. Glenn Hegar, in His Individual & Off. Capacity as Comptroller of Pub. Accounts Off. of Comptroller of Pub. Accounts for the State of Texas & Ken Paxton, in His Off. Capacity as Attorney Gen. of the State of Texas (Tex. App. 2015). · cites it 5× “Tex. Tax Code Ann. § 111.0042 . 20. The Comptroller subsequently notifies Plaintiffs that they have been assessed a deficiency determination, including interest, and, if proven by clear and convincing evidence, an additional 50% fraud penalty and/or an additional 10% jeopardy…”

Off. of the Comptroller of Pub. Accounts for the State of Texas Glenn Hegar, Individually & in His Off. Capacity as Comptroller of Pub. Accounts of the State of Texas & Ken Paxton, Attorney Gen. of Texas v. Farshid Enter., L.L.C. & Abul Hasnat (Tex. App. 2017). · cites it 2× “Appellees also challenged the constitutionality of Texas Tax Code sections 111.0042, 111.022, 112.”

Glenn Hegar, Comptroller of Pub. Accounts of the State of Texas & Ken Paxton, Attorney Gen. of the State of Texas v. Gulf Copper & Mfg. Corp. (Tex. 2020). · cites it 2× “TEX. TAX CODE § 111.0042. Based on that method, the Comptroller estimated Gulf Copper’s subtractable cost of goods sold to be fifty percent of Gulf Copper’s overall costs at its Galveston and Port Arthur facilities and five percent of Gulf Copper’s costs at its Corpus Christi…”

Saeed Khan v. State (Tex. App. 2011). · cites it 3× “" Tex. Tax Code Ann. § 111.0042 (b)(2); see id .”

Saeed Khan v. State (Tex. App. 2011). · cites it 3× “” Tex. Tax Code Ann. § 111.0042 (b)(2); see id.”

Sanadco Inc., a Texas Corp. Mahmoud A. Isba, A/K/A Mahmoud Ahmed Abuisba, A/K/A Mike Isba Walid Abderrahman Majic Investments, Inc. Faisal Kahn Isra Enter., Inc. Hattab Al-Shudifat Haifa Enter., Inc. v. the Off. of the Comptroller of Pub. Accounts of the State of Texas Glenn Hegar, Individually & in His Off. Capacity as Comptroller of Pub. Accounts of the State of Texas & Ken Paxton in His Off. Capacity as Attorney Gen. (Tex. App. 2013). · cites it 3× “” See Tex. Tax Code §§ 111.0042, .008; see also El Paso Cnty.”

FM Express Food Mart, Inc. & Fouad Hanna Mekdessi v. Susan Combs, Comptroller of Pub. Accounts of the State of Texas, & Greg Abbott, Attorney Gen. of the State of Texas (Tex. App. 2013). · cites it 3× “” See Tex. Tax Code Ann. § 111.0042 (West 2008) (describing circumstances under which sampling audit is appropriate);4 34 Tex.”

— Tex. Tax Code § 111.0042(b) — 1 case

Glenn Hegar, Comptroller of Pub. Accounts of the State of Texas & Ken Paxton, Attorney Gen. of the State of Texas v. Gulf Copper & Mfg. Corp. (Tex. 2020). “TEX. TAX CODE § 111.0042. Based on that method, the Comptroller estimated Gulf Copper’s subtractable cost of goods sold to be fifty percent of Gulf Copper’s overall costs at its Galveston and Port Arthur facilities and five percent of Gulf Copper’s costs at its Corpus Christi…”

— Tex. Tax Code § 111.0042(d) — 1 case

Sanadco Inc., a Texas Corp. Mahmoud Ahmed Isba Broadway Grocery, Inc. & Shariz, Inc. v. Glenn Hegar, in His Individual & Off. Capacity as Comptroller of Pub. Accounts Off. of Comptroller of Pub. Accounts for the State of Texas & Ken Paxton, in His Off. Capacity as Attorney Gen. of the State of Texas (Tex. App. 2015). “Tex. Tax Code Ann. § 111.0042 . 20. The Comptroller subsequently notifies Plaintiffs that they have been assessed a deficiency determination, including interest, and, if proven by clear and convincing evidence, an additional 50% fraud penalty and/or an additional 10% jeopardy…”

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