| 1 | 1 | | By: King of Uvalde H.B. No. 3466 |
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| 2 | 2 | | |
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| 3 | 3 | | |
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| 4 | 4 | | A BILL TO BE ENTITLED |
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| 5 | 5 | | AN ACT |
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| 6 | 6 | | relating to the appraisal for ad valorem tax purposes of dealer's |
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| 7 | 7 | | heavy equipment inventory and the prepayment of taxes on that |
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| 8 | 8 | | inventory. |
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| 9 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 10 | 10 | | SECTION 1. Sections 23.1241(a)(1) and (2), Tax Code, are |
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| 11 | 11 | | amended to read as follows: |
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| 12 | 12 | | (1) "Dealer" means a person engaged in the business in |
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| 13 | 13 | | this state of selling, leasing, or renting heavy equipment. The |
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| 14 | 14 | | term does not include a bank, savings bank, savings and loan |
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| 15 | 15 | | association, credit union, or other finance company. In addition, |
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| 16 | 16 | | for purposes of taxation of a person's inventory of heavy equipment |
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| 17 | 17 | | in a tax year, the term does not include a person whose sales from |
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| 18 | 18 | | the person's heavy equipment inventory are made predominately to |
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| 19 | 19 | | dealers [who renders the person's inventory of heavy equipment for |
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| 20 | 20 | | taxation in that tax year by filing a rendition statement or |
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| 21 | 21 | | property report in accordance with Chapter 22]. |
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| 22 | 22 | | (2) "Dealer's heavy equipment inventory" means all |
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| 23 | 23 | | items of heavy equipment that a dealer holds for sale, lease, or |
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| 24 | 24 | | rent in this state during a tax year [12-month period]. |
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| 25 | 25 | | SECTION 2. Section 23.1241, Tax Code, is amended by |
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| 26 | 26 | | amending subsections (b), (b-1), (c), (d), (f) and by adding |
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| 27 | 27 | | subsection (g-1) to read as follows: |
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| 28 | 28 | | (b) For the purpose of the computation of property tax, the |
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| 29 | 29 | | market value of a dealer's heavy equipment inventory on January 1 is |
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| 30 | 30 | | determined by adding the market value of that inventory as |
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| 31 | 31 | | determined by the dealer on the last day of each month of the |
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| 32 | 32 | | preceding tax year to produce a sum, and dividing that sum [the |
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| 33 | 33 | | total annual sales, less sales to dealers, fleet transactions, and |
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| 34 | 34 | | subsequent sales, for the 12-month period corresponding to the |
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| 35 | 35 | | preceding tax year, divided] by 12. |
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| 36 | 36 | | (b-1) A dealer shall determine the [For the purpose of the |
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| 37 | 37 | | computation of property tax on the] market value of [the dealer's |
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| 38 | 38 | | heavy equipment inventory, the sales price of] an item of heavy |
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| 39 | 39 | | equipment for a month in which the item of heavy equipment was part |
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| 40 | 40 | | of the dealer's heavy equipment inventory for only a portion of that |
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| 41 | 41 | | month in the manner provided by this subsection. The dealer shall |
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| 42 | 42 | | multiply the market value of the item of heavy equipment in that |
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| 43 | 43 | | month by a fraction, the numerator of which is the number of days |
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| 44 | 44 | | that the item of heavy equipment was part of the dealer's heavy |
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| 45 | 45 | | equipment inventory in that month, and the denominator of which is |
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| 46 | 46 | | the number of days in that month [that is sold during the preceding |
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| 47 | 47 | | tax year after being leased or rented for a portion of that same tax |
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| 48 | 48 | | year is considered to be the sum of the sales price of the item plus |
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| 49 | 49 | | the total lease and rental payments received for the item in the |
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| 50 | 50 | | preceding tax year]. |
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| 51 | 51 | | (c) For the purpose of the computation of property tax on |
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| 52 | 52 | | the market value of the dealer's heavy equipment inventory of an |
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| 53 | 53 | | owner who was not a dealer on January 1 of the preceding tax year, |
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| 54 | 54 | | the [chief appraiser shall estimate the] market value of the |
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| 55 | 55 | | dealer's heavy equipment inventory is determined by adding the |
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| 56 | 56 | | market value of that inventory as determined by the dealer on the |
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| 57 | 57 | | last day of each month of the preceding tax year in which the person |
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| 58 | 58 | | was a dealer to produce a sum, and dividing that sum by the number of |
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| 59 | 59 | | months in the preceding tax year in which the person was a dealer. |
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| 60 | 60 | | [In making the estimate required by this subsection, the chief |
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| 61 | 61 | | appraiser shall extrapolate using sales data, if any, generated by |
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| 62 | 62 | | sales from the dealer's heavy equipment inventory in the preceding |
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| 63 | 63 | | tax year.] |
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| 64 | 64 | | (d) Except for dealer's heavy equipment inventory, personal |
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| 65 | 65 | | property held by a dealer is appraised as provided by the other |
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| 66 | 66 | | sections of this code. [In the case of a dealer whose sales from the |
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| 67 | 67 | | dealer's heavy equipment inventory are made predominately to other |
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| 68 | 68 | | dealers, the chief appraiser shall appraise the dealer's heavy |
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| 69 | 69 | | equipment inventory as provided by Section 23.12.] |
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| 70 | 70 | | (f) The comptroller by rule shall adopt a dealer's heavy |
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| 71 | 71 | | equipment inventory declaration form. Except as provided by |
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| 72 | 72 | | Section 23.1242(k), not later than February 1 of each year, or, in |
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| 73 | 73 | | the case of a dealer who was not in business on January 1, not later |
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| 74 | 74 | | than 30 days after commencement of business, each dealer shall file |
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| 75 | 75 | | a declaration with the chief appraiser for the appraisal district |
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| 76 | 76 | | in which the dealer's heavy equipment inventory has taxable situs |
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| 77 | 77 | | as determined under Section 21.02 and file a copy with the |
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| 78 | 78 | | collector. The declaration is sufficient to comply with this |
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| 79 | 79 | | subsection if it sets forth: |
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| 80 | 80 | | (1) the name and business address of each location at |
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| 81 | 81 | | which the declarant conducts business; |
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| 82 | 82 | | (2) a statement that the declarant is the owner of a |
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| 83 | 83 | | dealer's heavy equipment inventory; and |
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| 84 | 84 | | (3) the market value of the declarant's heavy |
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| 85 | 85 | | equipment inventory for the current tax year as computed under |
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| 86 | 86 | | Subsection (b) or (c), as applicable. |
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| 87 | 87 | | (g-1) If the chief appraiser determines that the values of |
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| 88 | 88 | | the heavy equipment as reported by the dealer are inaccurate, the |
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| 89 | 89 | | chief appraiser may reappraise the heavy equipment at its market |
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| 90 | 90 | | value, place that value on the appraisal role, and give notices and |
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| 91 | 91 | | opportunity to protest as otherwise provided in this Code. |
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| 92 | 92 | | SECTION 3. Section 23.1242(a)(2), Tax Code, is amended to |
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| 93 | 93 | | read as follows: |
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| 94 | 94 | | (2) "Dealer's heavy equipment inventory," |
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| 95 | 95 | | "declaration," and "dealer[,]" ["sales price," "subsequent sale," |
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| 96 | 96 | | and "total annual sales"] have the meanings assigned those terms by |
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| 97 | 97 | | Section 23.1241. |
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| 98 | 98 | | SECTION 4. Sections 23.1242(b), (d), (e), (f), and (g), Tax |
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| 99 | 99 | | Code, are amended to read as follows: |
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| 100 | 100 | | (b) An [Except for an item of heavy equipment sold to a |
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| 101 | 101 | | dealer, an item of heavy equipment included in a fleet transaction, |
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| 102 | 102 | | an item of heavy equipment that is the subject of a subsequent sale, |
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| 103 | 103 | | or an item of heavy equipment that is subject to a lease or rental, |
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| 104 | 104 | | an] owner or a person who has agreed by contract to pay the owner's |
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| 105 | 105 | | current year property taxes levied against the owner's heavy |
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| 106 | 106 | | equipment inventory shall assign a unit property tax to each item of |
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| 107 | 107 | | [heavy equipment sold from a] dealer's heavy equipment inventory |
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| 108 | 108 | | that is in the dealer's inventory on the last day of the preceding |
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| 109 | 109 | | month. [In the case of a lease or rental, the owner shall assign a |
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| 110 | 110 | | unit property tax to each item of heavy equipment leased or rented.] |
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| 111 | 111 | | The unit property tax of each item of heavy equipment is determined |
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| 112 | 112 | | by multiplying the market value [sales price] of the item [or the |
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| 113 | 113 | | monthly lease or rental payment received for the item, as |
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| 114 | 114 | | applicable,] by the unit property tax factor. If the transaction is |
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| 115 | 115 | | a lease or rental, the owner shall collect the unit property tax |
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| 116 | 116 | | from the lessee or renter at the time the lessee or renter submits |
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| 117 | 117 | | payment for the lease or rental. The owner of the equipment shall |
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| 118 | 118 | | state the amount of the unit property tax assigned as a separate |
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| 119 | 119 | | line item on an invoice. On or before the 10th day of each month the |
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| 120 | 120 | | owner shall, together with the statement filed by the owner as |
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| 121 | 121 | | required by this section, deposit with the collector an amount |
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| 122 | 122 | | equal to the total of unit property tax assigned to all items of |
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| 123 | 123 | | heavy equipment [sold, leased, or rented] from the dealer's heavy |
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| 124 | 124 | | equipment inventory in the preceding month to which a unit property |
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| 125 | 125 | | tax was assigned. The money shall be deposited by the collector to |
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| 126 | 126 | | the credit of the owner's escrow account for prepayment of property |
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| 127 | 127 | | taxes as provided by this section. An escrow account required by |
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| 128 | 128 | | this section is used to pay property taxes levied against the |
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| 129 | 129 | | dealer's heavy equipment inventory, and the owner shall fund the |
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| 130 | 130 | | escrow account as provided by this subsection. |
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| 131 | 131 | | (d) The [Except as provided by Section 23.1243, the] owner |
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| 132 | 132 | | may not withdraw funds in an escrow account created under this |
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| 133 | 133 | | section. |
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| 134 | 134 | | (e) The comptroller by rule shall adopt a dealer's heavy |
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| 135 | 135 | | equipment inventory tax statement form. Each month, a dealer shall |
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| 136 | 136 | | complete the form [regardless of whether an item of heavy equipment |
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| 137 | 137 | | is sold, leased, or rented]. A dealer may use no other form for that |
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| 138 | 138 | | purpose. The statement may include the information the comptroller |
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| 139 | 139 | | considers appropriate but shall include at least the following: |
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| 140 | 140 | | (1) a description of each item of dealer's heavy |
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| 141 | 141 | | equipment inventory, [sold, leased, or rented] including any unique |
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| 142 | 142 | | identification or serial number affixed to the item by the |
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| 143 | 143 | | manufacturer; |
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| 144 | 144 | | (2) the market value of [sales price of or lease or |
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| 145 | 145 | | rental payment received for] the item of heavy equipment[, as |
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| 146 | 146 | | applicable]; |
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| 147 | 147 | | (3) the unit property tax of the item of heavy |
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| 148 | 148 | | equipment, if any; and |
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| 149 | 149 | | (4) the reason no unit property tax is assigned if no |
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| 150 | 150 | | unit property tax is assigned. |
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| 151 | 151 | | (f) On or before the 10th day of each month, a dealer shall |
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| 152 | 152 | | file with the collector the statement required under Subsection |
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| 153 | 153 | | (e). The statement must include the market value of the dealer's |
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| 154 | 154 | | heavy equipment inventory for [covering the sale, lease, or rental |
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| 155 | 155 | | of each item of heavy equipment sold, leased, or rented by the |
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| 156 | 156 | | dealer in] the preceding month. On or before the 10th day of a month |
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| 157 | 157 | | following a month in which a dealer has no heavy equipment in the |
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| 158 | 158 | | dealer's inventory [does not sell, lease, or rent an item of heavy |
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| 159 | 159 | | equipment], the dealer must file the statement with the collector |
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| 160 | 160 | | and indicate that, during [no sales, leases, or rentals were made |
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| 161 | 161 | | in] the prior month, the dealer had no heavy equipment in the |
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| 162 | 162 | | dealer's inventory. A dealer shall file a copy of the statement |
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| 163 | 163 | | with the chief appraiser and retain any documentation relating to |
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| 164 | 164 | | the market value [disposition] of each item of heavy equipment |
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| 165 | 165 | | included in the statement [sold and the lease or rental of each item |
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| 166 | 166 | | of heavy equipment]. A chief appraiser or collector may examine |
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| 167 | 167 | | documents held by a dealer as provided by this subsection in the |
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| 168 | 168 | | same manner, and subject to the same conditions, as provided by |
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| 169 | 169 | | Section 23.1241(g). |
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| 170 | 170 | | (g) Except as provided by this subsection, Subsection (f) |
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| 171 | 171 | | applies to any dealer, regardless of whether a dealer owes heavy |
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| 172 | 172 | | equipment inventory tax for the current year. A dealer who owes no |
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| 173 | 173 | | heavy equipment inventory tax for the current year because the |
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| 174 | 174 | | dealer was not in business on January 1: |
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| 175 | 175 | | (1) shall file the statement required by this section |
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| 176 | 176 | | showing the information required by this section for each month |
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| 177 | 177 | | that the dealer is in business; and |
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| 178 | 178 | | (2) may not assign a unit property tax to an item of |
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| 179 | 179 | | heavy equipment [sold by the dealer] or remit money with the |
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| 180 | 180 | | statement except in compliance with the terms of a contract as |
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| 181 | 181 | | provided by Subsection (k). |
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| 182 | 182 | | SECTION 5. Section 41.44(a), Tax Code, is amended to read as |
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| 183 | 183 | | follows: |
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| 184 | 184 | | (a) Except as provided by Subsections (b), (b-1), (c), |
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| 185 | 185 | | (c-1), and (c-2), to be entitled to a hearing and determination of a |
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| 186 | 186 | | protest, the property owner initiating the protest must file a |
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| 187 | 187 | | written notice of the protest with the appraisal review board |
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| 188 | 188 | | having authority to hear the matter protested: |
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| 189 | 189 | | (1) before May 1 or not later than the 30th day after |
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| 190 | 190 | | the date that notice to the property owner was delivered to the |
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| 191 | 191 | | property owner as provided by Section 25.19, if the property is a |
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| 192 | 192 | | single-family residence that qualifies for an exemption under |
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| 193 | 193 | | Section 11.13, whichever is later; |
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| 194 | 194 | | (2) before June 1 or not later than the 30th day after |
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| 195 | 195 | | the date that notice was delivered to the property owner as provided |
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| 196 | 196 | | by Section 25.19 in connection with any other property, whichever |
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| 197 | 197 | | is later; |
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| 198 | 198 | | (3) in the case of a protest of a change in the |
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| 199 | 199 | | appraisal records ordered as provided by Subchapter A of this |
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| 200 | 200 | | chapter or by Chapter 25, not later than the 30th day after the date |
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| 201 | 201 | | notice of the change is delivered to the property owner; or |
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| 202 | 202 | | (4) in the case of a determination that a change in the |
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| 203 | 203 | | use of land appraised under Subchapter C, D, E, or H, Chapter 23, |
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| 204 | 204 | | has occurred, not later than the 30th day after the date the notice |
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| 205 | 205 | | of the determination is delivered to the property owner[; or |
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| 206 | 206 | | [(5) in the case of a determination of eligibility for |
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| 207 | 207 | | a refund under Section 23.1243, not later than the 30th day after |
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| 208 | 208 | | the date the notice of the determination is delivered to the |
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| 209 | 209 | | property owner]. |
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| 210 | 210 | | SECTION 6. Section 42.01(a), Tax Code, is amended to read as |
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| 211 | 211 | | follows: |
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| 212 | 212 | | (a) A property owner is entitled to appeal: |
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| 213 | 213 | | (1) an order of the appraisal review board |
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| 214 | 214 | | determining: |
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| 215 | 215 | | (A) a protest by the property owner as provided |
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| 216 | 216 | | by Subchapter C of Chapter 41; |
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| 217 | 217 | | (B) a [determination of an appraisal review board |
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| 218 | 218 | | on a] motion filed under Section 25.25; or |
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| 219 | 219 | | (C) [a determination of an appraisal review |
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| 220 | 220 | | board] that the property owner has forfeited the right to a final |
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| 221 | 221 | | determination of a motion filed under Section 25.25 or of a protest |
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| 222 | 222 | | under Section 41.411 for failing to comply with the prepayment |
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| 223 | 223 | | requirements of Section 25.26 or 41.4115, as applicable; or |
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| 224 | 224 | | [(D) a determination of an appraisal review board |
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| 225 | 225 | | of eligibility for a refund requested under Section 23.1243; or] |
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| 226 | 226 | | (2) an order of the comptroller issued as provided by |
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| 227 | 227 | | Subchapter B, Chapter 24, apportioning among the counties the |
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| 228 | 228 | | appraised value of railroad rolling stock owned by the property |
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| 229 | 229 | | owner. |
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| 230 | 230 | | SECTION 7. The following provisions of the Tax Code are |
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| 231 | 231 | | repealed: |
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| 232 | 232 | | (1) Sections 23.1241(a)(3), (5), (7), (8), and (9); |
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| 233 | 233 | | (2) Section 23.1243; and |
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| 234 | 234 | | (3) Section 41.47(c-1). |
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| 235 | 235 | | SECTION 8. This Act applies only to ad valorem taxes imposed |
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| 236 | 236 | | for a tax year beginning on or after the effective date of this Act. |
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| 237 | 237 | | SECTION 9. This Act takes effect January 1, 2018. |
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