ACCEPTED
                                                                                                                                                        03-14-00397-CV
                                                                                                                                                              14388158
                                                                                                                                             THIRD COURT OF APPEALS
                                                                                                                                                        AUSTIN, TEXAS
                                                                                                                                                  12/20/2016 4:09:42 PM
                                                                                                                                                      JEFFREY D. KYLE
                                                                                                                                                                 CLERK




                                                                                                                          FILED IN
                                                                                                                   3rd COURT OF APPEALS
                                                                                                                        AUSTIN, TEXAS
                                                                                                                   12/20/2016 4:09:42 PM
                                                          December 20, 2016                                            JEFFREY D. KYLE
                                                                                                                            Clerk
Jeffrey D. Kyle                                                                                                          Via EFileTexas.gov
Clerk of the Court
Third Court of Appeals
209 West 14th Street, Room 101
Austin, Texas 78701

       Re:         03-14-00397-CV; American Multi-Cinema, Inc. v. Glenn Hegar, Comptroller of
                   Public Accounts of the State of Texas, and Ken Paxton, Attorney General of the
                   State of Texas

Dear Mr. Kyle:

        By this letter, Appellees/Cross-appellants Comptroller Glenn Hegar and Attorney General
Ken Paxton (together, the Comptroller) notify the Court of developments bearing on the pending
motion for rehearing and reconsideration en banc, filed on June 5, 2015. Please file this letter and
circulate it to the Court.

        On pages 9–10 of his Motion for Rehearing and for Reconsideration en Banc, and pages 7-8
of his Reply in Support of Motion for Rehearing and for Reconsideration en Banc, the Comptroller
warned that the panel opinion’s construction of “tangible personal property” might lead to tax-
exemption claims for the “sale” of experiences such as sporting events, music concerts, art
exhibitions, rodeos, and carnivals, and claims of “costs of goods sold” for the cost of providing
services such as examination rooms, lawyer’s offices, sporting facilities, and the like. There are
now three cases pending in Travis County district courts in which taxpayers are claiming to have
sold tangible personal property when patrons were provided admission to events where they had
sensory experiences:

       1.          Dallas World Aquarium Corp. v. Glenn Hegar, Comptroller of Public Accounts
                   of the State of Texas and Ken Paxton, Attorney General of the State of Texas;
                   Cause No. D-1-GN-15-004255; 345th District Court, Travis County: Plaintiff
                   claims that it is selling “tangible personal property” to patrons when it provides
                   admission because the patrons sense the animals and atmosphere as they pass
                   through the aquarium/zoo.

       2.          Hollywood Theaters, Inc. v. Glenn Hegar, Comptroller of Public Accounts of
                   the State of Texas and Ken Paxton, Attorney General of the State of Texas;
                   Cause No. D-1-GN-15-002935; 345th District Court, Travis County. Like
                   AMC, plaintiff claims that it is selling “tangible personal property” by
                   providing admission to the exhibition of movies.

         P os t Offic e B ox 12548 , Au stin , Texa s 7 8 7 1 1 - 2 5 4 8 • ( 5 1 2 ) 4 6 3 - 2 1 0 0 • www. t exa sa tt or n eygen era l. gov
Jeffrey D. Kyle, Clerk of the Court
Texas Third Court of Appeals
03-14-00397-CV; Post-Submission Letter
December 20, 2016
Page 2




       3.          Colonial Country Club v. Glenn Hegar, Comptroller of Public Accounts of the State
                   of Texas and Ken Paxton, Attorney General of the State of Texas; Cause No. D-1-
                   GN-16-005464; 201st District Court, Travis County: Plaintiff claims that it is
                   selling “tangible personal property” when it sells spectator tickets to an annual PGA
                   golf tournament.

       Of these cases, the first two have been abated pending the outcome of this case. The third
case, which was very recently filed, is currently pending.

                                                             Very truly yours,


                                                              /s/ Cynthia A. Morales
                                                             Cynthia A. Morales
                                                             Texas Bar No. 14417420
                                                             Assistant Attorney General
                                                             Financial Litigation and Charitable Trusts Division
                                                             Tel: (512) 475-4470
                                                             cynthia.morales@oag.texas.gov

CAM:lje

Cc:    Doug Sigel                                                                                                        Via EFileTexas.gov
       Ryan Law Firm, LLP


                                               CERTIFICATE OF SERVICE

       On December 20, 2016, the foregoing document was served on Appellant/Cross-Appellee
through its attorney of record, Doug Sigel via EFileTexas.gov and by email at
doug.sigel@ryanlawllp.com.

                                                              /s/ Cynthia A. Morales
                                                             Cynthia A. Morales
                                                             Assistant Attorney General




         P os t Offic e B ox 12548 , Au stin , Texa s 7 8 7 1 1 - 2 5 4 8 • ( 5 1 2 ) 4 6 3 - 2 1 0 0 • www. t exa sa tt or n eygen era l. gov