A huge tax refund to Texas Instruments has rekindled questions about the conflicts that arise when tax consultants make political contributions to the tax collectors who decide their cases.

Four local governments are on the hook for a total of $31.3 million in taxes overpaid by the Dallas-based tech company, according to state records and to the company. That's their share of a refund from state Comptroller Carole Keeton Strayhorn's agency to the company that, when the state's share is added in, totaled at least $128 million.

Ryan & Company, a Dallas-based tax consultancy, represents Texas Instruments in tax matters in Austin, according to a TI spokeswoman. Ryan is politically hooked up: Its Austin office is headed by former Comptroller John Sharp, who helped Gov. Rick Perry design and enact a new business tax earlier this year. And the company is one of Strayhorn's biggest contributors.

Perry's campaign — while stopping short of saying TI wasn't due the refund it received — says the relationship between Strayhorn and the tax consultants "reeks of corruption." Citing a state auditor's report that was critical of the appearance of such conflicts [1], a Perry spokesman said Strayhorn should be looking for political support elsewhere.

"There's a close enough connection that Texans should be deeply concerned about the comptroller specifically, and certainly about her relationship with her number one contributor," said Ted Royer, a spokesman for Perry's campaign.

Mark Sanders, a spokesman for Strayhorn, said there's no connection. The company overpaid its taxes and was due a refund, he said. Strayhorn "didn't even know about the refund until she read about it." He said the TI case was decided "at the staff level," that it never reached Strayhorn — in spite of the dollar amount, the prominence of the company, and the fact that four local governments were in the crossfire.

He added that, because tax matters are confidential, it's tough to avoid the appearance of a conflict. "The comptroller is always going to be an elected official... they're always going to have opposition, and all the opponents have to do is raise questions about impropriety."

The TI case flared up after the comptroller's office sent letters to the cities of Dallas, Sherman, and Stafford, and to the Dallas Area Rapid Transit Authority in June and July, notifying them that "a large direct pay taxpayer" overpaid its taxes between 1995 and 2003. The letters didn't name the taxpayer. But Texas Instruments disclosed the tax refund in its quarterly financial statements filed with the U.S. Securities and Exchange Commission. Company spokespeople later identified Texas as the source of the sales tax refund.

The $77 million reported in those filings, according to a spokeswoman, is a "net benefit to the company." The amount actually returned to TI by Strayhorn's office was much larger, though the exact amount wasn't revealed by either the company, the comptroller's office, or any of the cities involved. [Editor's note: The company reported $57 million in refunds attributable to taxes on semiconductor sales and another $20 million that was booked to Other Income; we reported the lower number as the total last week, and should have reported the full $77 million.]

When you do the math yourself, though, you'll discover the state refunded Texas Instruments at least $128 million and probably more (we backed into that number, and we'll show our work — just like we did for Mr. Sherwood in 8th grade math — in the sidebar titled Where Our Numbers Came From [2]).

The difference — at least $51 million — covered the company's costs of getting the refund. That would include money paid to tax consultants, lawyers and other professionals who helped the company obtain the refund.

Execs with Ryan & Co. — and the political action committee affiliated with the company — gave Strayhorn a total of $225,000 during the first six months of this year, according to campaign finance reports she filed with the Texas Ethics Commission. Her gubernatorial campaign booked all of those donations on June 27, except for $50,000 from the PAC that came in four days earlier. Another $150,000 was donated by Amanda Ryan — wife of company head G. Brint Ryan — also on June 27. That brought the total to $375,000. The campaign reporting period ended on June 30, and Strayhorn reported total contributions of $3,108,451.

The PAC and the same group of execs — give or take a couple — contributed $401,000 to Strayhorn in the last days of December. All but $1,000 of that came into the campaign on December 29, a couple of days before the end of that campaign reporting period and in about the same time frame that she and other candidates were filing papers to run for office.

Ryan, the company's chief, didn't return calls seeking comment on how and why he and other execs support Strayhorn, or about his views on the "appearance of conflict" problems identified by Perry's campaign or the auditor's report.

The auditor's report, issued almost a year ago, recommended a cleanup while saying it found no dirt: "We are not implying any wrongdoing on the part of any individual or group associated with the information in this report." The recommendations were nevertheless strong: a ban on campaign contributions from taxpayer representatives; required registration for those reps and lawyers; moving the state's tax courts out of the comptroller's office; limits on "management halts," where top tax officials put cases on hold; and reports from the comptroller on the tax assessment numbers at various stages in administrative cases.