A taxpayer’s payments to another company could not be excluded from the taxpayer’s total revenue for Texas franchise tax purposes as flow-through funds, because there was insufficient evidence to establish that the taxpayer had a fiduciary duty to make payments to the company on behalf of customers. Under Texas law, flow-through funds that are mandated by law or fiduciary duty to be distributed to other entities may be excluded from a taxpayer’s total revenue. Here, the contract, banks statements, and schedules did not provide evidence of a fiduciary relationship between the taxpayer and the company or between taxpayer and the customers during the period at issue.

Also, the taxpayer did not meet its burden of proof to demonstrate that certain purchases constituted deductible costs of goods sold. The Tax Division staff could not verify that certain purchases were shipped to or received by the taxpayer. The taxpayer maintained that the lack of shipping or delivery verification for the invoices should not determine whether the purchases could be applied as costs of goods sold. However, the taxpayer did not cite any specific invoices that remained in dispute or evidence of purchase and receipt in support of its argument.