Texas Senate Bill SB1143

Texas 2019 - 86th Regular

Caption

Relating to the appraisal for ad valorem tax purposes of tangible personal property held for sale at retail and a franchise tax credit based on the ad valorem taxes paid on such property.

Impact

One significant impact of SB1143 is the amendment of Sections 23.12 and 171 of the Tax Code, which will now require a clear definition and application of how retail inventories are appraised. The bill includes provisions for retailers to elect to have their inventory appraised based on varying market values, with the idea that this will potentially lower the tax burden on businesses that are heavily reliant on retail sales. Such changes are expected to foster a more stable economic environment for retailers, particularly small businesses that might face difficulty due to fluctuating tax valuations.

Summary

SB1143 introduces amendments to the Tax Code of Texas concerning the appraisal of tangible personal property held for sale at retail and establishes a franchise tax credit based on the ad valorem taxes paid on such property. The bill primarily affects how retail inventory is assessed for taxation, proposing a new method for determining its value and allowing retailers to apply for tax credits related to the ad valorem taxes they owe on their inventory. With the intent of making tax assessments more equitable and predictable for retailers, SB1143 seeks to streamline the appraisal process.

Contention

Despite these benefits, there are notable points of contention regarding SB1143. Critics may argue that the changes could lead to disparities in how different types of retailers experience tax burdens. Additionally, the bill places a responsibility on retailers to apply for the appraisal method and tax credits, potentially introducing compliance challenges. Stakeholders who represent other sectors may also express concerns about the implications of tax credits detracting from the state’s overall tax revenue, which could impact public services funded by these taxes. The ramifications of implementing such a bill will likely be closely monitored as it can alter the competitive landscape across the retail sector.