Texas Senate Bill SB641

Texas 2011 - 82nd Regular

• Out of Senate Committee: 4/18/11
• Introduced: 2/14/11
• Refer: 2/23/11
• Report Pass: 4/18/11

Caption

Relating to the calculation of interest on certain ad valorem tax refunds.

Impact

The ramifications of SB641 are significant for both taxpayers and local taxing authorities. By modifying the interest calculation on tax refunds, the bill aims to expedite the process for taxpayers who are owed refunds due to successful appeals. It promises a fairer calculation of interest, potentially benefiting those waiting for long periods for their refunds while imposing a controlled cap to protect local governments from excessive payouts in interest claims. The law change will only apply to appeals finalized after the bill's enactment date, thus setting a forward-looking adjustment in the tax policy landscape.

Summary

Senate Bill 641 addresses the calculation of interest on certain ad valorem tax refunds in Texas. Specifically, it amends existing provisions in the Tax Code to adjust how interest is determined for refunds that arise from tax appeals. The bill introduces a formula that adds a two percent baseline to the most recent prime rate set by the Federal Reserve, ensuring that the interest on refunds does not surpass an annual cap of eight percent. This modification is aimed at providing clarity and potentially more favorable outcomes for taxpayers awaiting refunds following appeals.

Contention

While the bill seeks to enhance the tax refund process, there may be discussions regarding its implications for local tax authorities who could face higher costs if interest payments rise. Local officials might express concern over the financial burden this change could create, especially in instances where numerous refunds are required after tax appeals. As a result, while the bill is crafted to enhance the taxpayer experience, it may foster ongoing debates among policymakers about balancing taxpayer rights and local government fiscal responsibilities.