85R6738 LHC-F
By: Campbell S.B. No. 2198
A BILL TO BE ENTITLED
AN ACT
relating to interest that accrues under the Property Tax Code.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 1, Tax Code, is amended by adding
Sections 1.13 and 1.14 to read as follows:
Sec. 1.13. INTEREST RATE. (a) Except as otherwise provided
by this title, for purposes of a provision of this title providing
for the accrual of interest, interest accrues during a calendar
year at an annual rate equal to the lesser of:
(1) 12 percent; or
(2) the sum of two percent and the prime rate quoted
and published by the Federal Reserve Board on the first business day
of the calendar year for which interest is being calculated.
(b) Interest that accrues at an annual rate determined under
Subsection (a) must be computed as simple interest for each
calendar year or part of a calendar year in which the interest
accrues. If interest accrues in more than one calendar year, the
total amount of interest that accrues is equal to the sum of the
interest that accrues in each calendar year for which the interest
is calculated.
(c) The comptroller shall post and maintain on the
comptroller's Internet website the interest rate determined under
Subsection (a) for each calendar year.
Sec. 1.14. WAIVER OF INTEREST BY AGREEMENT. (a)
Notwithstanding any other provision of this title, the parties to a
motion, effort, or appeal described by this subsection may agree to
waive or reduce the interest that accrues on a tax, penalty, or
refund regarding property that is the subject of:
(1) a motion to correct an error in the appraisal roll
under Section 25.25;
(2) an effort to collect a delinquent tax under
Chapter 33, including a suit to collect a delinquent tax under that
chapter; or
(3) an appeal under Chapter 42.
(b) An agreement to waive or reduce interest under this
section must:
(1) be in writing;
(2) be signed by the parties to the motion, effort, or
appeal; and
(3) if the agreement regards property that is the
subject of a suit to collect a delinquent tax under Chapter 33 or an
appeal under Chapter 42, be signed by the parties before the date
the court in which the suit or appeal is pending issues an order
that includes the interest as part of a judgment against any party
to the suit.
(c) A district court in a suit filed under Chapter 33 or an
appeal filed under Chapter 42 may waive or reduce interest that has
accrued as part of a final judgment to the extent the interest is
waived or reduced by an agreement under this section.
SECTION 2. Section 11.135(c), Tax Code, is amended to read
as follows:
(c) If an owner receives an exemption for property under
Section 11.13 under the circumstances described by Subsection (a)
and sells the property before the owner completes construction of a
replacement qualified residential structure on the property, an
additional tax is imposed on the property equal to the difference
between the taxes imposed on the property for each of the years in
which the owner received the exemption and the tax that would have
been imposed had the owner not received the exemption in each of
those years, plus interest as provided by Section 1.13 [at an annual
rate of seven percent] calculated from the dates on which the
differences would have become due.
SECTION 3. Section 11.181(e), Tax Code, is amended to read
as follows:
(e) If the organization that owns improved or unimproved
real property that has been exempted under Subsection (a) sells the
property to a person other than an individual or family satisfying
the organization's low-income or other eligibility requirements, a
penalty is imposed on the property equal to the amount of the taxes
that would have been imposed on the property in each tax year that
the property was exempted from taxation under Subsection (a), plus
interest as provided by Section 1.13 [at an annual rate of 12
percent] calculated from the dates on which the taxes would have
become due.
SECTION 4. Section 11.185(e), Tax Code, is amended to read
as follows:
(e) If the organization that owns improved or unimproved
real property that has been exempted under Subsection (a) sells the
property to a person other than a person described by Section
2306.786(b)(1), Government Code, a penalty is imposed on the
property equal to the amount of the taxes that would have been
imposed on the property in each tax year that the property was
exempted from taxation under Subsection (a), plus interest as
provided by Section 1.13 of this code [at an annual rate of 12
percent] computed from the dates on which the taxes would have
become due.
SECTION 5. Section 11.201(a), Tax Code, is amended to read
as follows:
(a) If land is sold or otherwise transferred to another
person in a year in which the land receives an exemption under
Section 11.20(a)(6), an additional tax is imposed on the land equal
to the tax that would have been imposed on the land had the land been
taxed for each of the five years preceding the year in which the
sale or transfer occurs in which the land received an exemption
under that subdivision [subsection], plus interest as provided by
Section 1.13 [at an annual rate of seven percent] calculated from
the dates on which the taxes would have become due.
SECTION 6. Section 23.46(c), Tax Code, is amended to read as
follows:
(c) If land that has been designated for agricultural use in
any year is sold or diverted to a nonagricultural use, the total
amount of additional taxes for the three years preceding the year in
which the land is sold or diverted, plus interest as [at the rate]
provided by Section 1.13, [for delinquent taxes] becomes due.
Subject to Subsection (f), a determination that the land has been
diverted to a nonagricultural use is made by the chief appraiser.
For purposes of this subsection, the chief appraiser may not
consider any period during which land is owned by the state in
determining whether the land has been diverted to a nonagricultural
use. The chief appraiser shall deliver a notice of the
determination to the owner of the land as soon as possible after
making the determination and shall include in the notice an
explanation of the owner's right to protest the determination. If
the owner does not file a timely protest or if the final
determination of the protest is that the additional taxes are due,
the assessor for each taxing unit shall prepare and deliver a bill
for the additional taxes plus interest as soon as practicable after
the change of use occurs. If the additional taxes are due because
of a sale of the land, the assessor for each taxing unit shall
prepare and deliver the bill as soon as practicable after the sale
occurs. The taxes and interest are due and become delinquent and
incur penalties and interest as provided by law for ad valorem taxes
imposed by the taxing unit if not paid before the next February 1
that is at least 20 days after the date the bill is delivered to the
owner of the land.
SECTION 7. Section 23.55(a), Tax Code, is amended to read as
follows:
(a) If the use of land that has been appraised as provided by
this subchapter changes, an additional tax is imposed on the land
equal to the difference between the taxes imposed on the land for
each of the five years preceding the year in which the change of use
occurs that the land was appraised as provided by this subchapter
and the tax that would have been imposed had the land been taxed on
the basis of market value in each of those years, plus interest as
provided by Section 1.13 [at an annual rate of seven percent]
calculated from the dates on which the differences would have
become due. For purposes of this subsection, the chief appraiser
may not consider any period during which land is owned by the state
in determining whether a change in the use of the land has occurred.
SECTION 8. Section 23.76(a), Tax Code, is amended to read as
follows:
(a) If the use of land that has been appraised as provided by
this subchapter changes, an additional tax is imposed on the land
equal to the difference between the taxes imposed on the land for
each of the five years preceding the year in which the change of use
occurs that the land was appraised as provided by this subchapter
and the tax that would have been imposed had the land been taxed on
the basis of market value in each of those years, plus interest as
provided by Section 1.13 [at an annual rate of seven percent]
calculated from the dates on which the differences would have
become due.
SECTION 9. Section 23.86(a), Tax Code, is amended to read as
follows:
(a) If land that has been appraised under this subchapter is
no longer subject to a deed restriction or is diverted to a use
other than recreational, park, or scenic uses, an additional tax is
imposed on the land equal to the difference between the taxes
imposed on the land for each of the five years preceding the year in
which the change of use occurs or the deed restriction expires that
the land was appraised as provided by this subchapter and the tax
that would have been imposed had the land not been restricted to
recreational, park, or scenic uses in each of those years, plus
interest as provided by Section 1.13 [at an annual rate of seven
percent] calculated from the dates on which the differences would
have become due.
SECTION 10. Section 23.96(a), Tax Code, is amended to read
as follows:
(a) If airport property that has been appraised under this
subchapter is no longer subject to a deed restriction, an
additional tax is imposed on the property equal to the difference
between the taxes imposed on the property for each of the five years
preceding the year in which the deed restriction expires that the
property was appraised as provided by this subchapter and the tax
that would have been imposed had the property not been restricted to
use as public access airport property in each of those years, plus
interest as provided by Section 1.13 [at an annual rate of seven
percent] calculated from the dates on which the differences would
have become due.
SECTION 11. Sections 23.9807(a) and (b), Tax Code, are
amended to read as follows:
(a) If the use of land that has been appraised as provided by
this subchapter changes to a use that qualifies the land for
appraisal under Subchapter E, an additional tax is imposed on the
land equal to the sum of:
(1) the difference between:
(A) the taxes imposed on the land for each of the
five years preceding the year in which the change of use occurs that
the land was appraised as provided by this subchapter; and
(B) the taxes that would have been imposed had
the land been appraised under Subchapter E in each of those years;
and
(2) interest as provided by Section 1.13 [at an annual
rate of seven percent] calculated from the dates on which the
differences would have become due.
(b) If the use of land that has been appraised as provided by
this subchapter changes to a use that does not qualify the land for
appraisal under Subchapter E or under this subchapter, an
additional tax is imposed on the land equal to the sum of:
(1) the difference between:
(A) the taxes imposed on the land for each of the
five years preceding the year in which the change of use occurs that
the land was appraised as provided by this subchapter; and
(B) the taxes that would have been imposed had
the land been taxed on the basis of market value in each of those
years; and
(2) interest as provided by Section 1.13 [at an annual
rate of seven percent] calculated from the dates on which the
differences would have become due.
SECTION 12. Section 26.09(d), Tax Code, is amended to read
as follows:
(d) If a property is subject to taxation for a prior year in
which it escaped taxation, the assessor shall calculate the tax for
each year separately. In calculating the tax, the assessor shall
use the assessment ratio and tax rate in effect in the unit for the
year for which back taxes are being imposed. Except as provided by
Subsection (d-1), the amount of back taxes due incurs interest
calculated as [at the rate] provided by Section 1.13 [33.01(c)]
from the date the tax would have become delinquent had the tax been
imposed in the proper tax year.
SECTION 13. Section 31.12(a), Tax Code, is amended to read
as follows:
(a) If a refund of a tax provided by Section 11.431(b),
26.07(g), 26.15(f), 31.11, or 31.111 is paid on or before the 60th
day after the date the liability for the refund arises, no interest
is due on the amount refunded. If not paid on or before that 60th
day, the amount of the tax to be refunded accrues interest as
provided by Section 1.13 [at a rate of one percent for each month or
part of a month that the refund is unpaid], beginning with the date
on which the liability for the refund arises.
SECTION 14. Section 33.01(c), Tax Code, is amended to read
as follows:
(c) A delinquent tax accrues interest as provided by Section
1.13 [at a rate of one percent for each month or portion of a month
the tax remains unpaid]. Interest payable under this section is to
compensate the taxing unit for revenue lost because of the
delinquency. A delinquent tax continues to accrue interest under
this subsection as long as the tax remains unpaid, regardless of
whether a judgment for the delinquent tax has been rendered.
SECTION 15. Section 33.06(d), Tax Code, is amended to read
as follows:
(d) A tax lien remains on the property and interest
continues to accrue during the period collection of taxes is
deferred or abated under this section. Interest accrues [The
annual interest rate] during the deferral or abatement period as
provided by Section 1.13 [is eight percent instead of the rate
provided by Section 33.01]. Interest and penalties that accrued or
that were incurred or imposed under Section 33.01 or 33.07 before
the date the individual files the deferral affidavit under
Subsection (b) or the date the judgment abating the suit is entered,
as applicable, are preserved. A penalty under Section 33.01 is not
incurred during a deferral or abatement period. The additional
penalty under Section 33.07 may be imposed and collected only if the
taxes for which collection is deferred or abated remain delinquent
on or after the 181st day after the date the deferral or abatement
period expires. A plea of limitation, laches, or want of
prosecution does not apply against the taxing unit because of
deferral or abatement of collection as provided by this section.
SECTION 16. Section 33.065(g), Tax Code, is amended to read
as follows:
(g) A tax lien remains on the property and interest
continues to accrue during the period collection of delinquent
taxes is deferred or abated under this section. Interest accrues
[The annual interest rate] during the deferral or abatement period
as provided by Section 1.13 [is eight percent instead of the rate
provided by Section 33.01]. Interest and penalties that accrued or
that were incurred or imposed under Section 33.01 or 33.07 before
the date the individual files the deferral affidavit under
Subsection (c) or the date the judgment abating the suit is entered,
as applicable, are preserved. A penalty is not incurred on the
delinquent taxes for which collection is deferred or abated during
a deferral or abatement period. The additional penalty under
Section 33.07 may be imposed and collected only if the delinquent
taxes for which collection is deferred or abated remain delinquent
on or after the 91st day after the date the deferral or abatement
period expires. A plea of limitation, laches, or want of
prosecution does not apply against the taxing unit because of
deferral or abatement of collection as provided by this section.
SECTION 17. Sections 42.42(c) and (d), Tax Code, are
amended to read as follows:
(c) If the final determination of an appeal occurs after the
property owner has paid a portion of the tax finally determined to
be due as required by Section 42.08, the assessor for each affected
taxing unit shall prepare and mail a supplemental tax bill in the
form and manner prescribed by Subsection (b). The additional tax is
due and becomes delinquent as provided by Subsection (b), but the
property owner is liable for penalties [and interest] on the tax
included in the supplemental bill calculated as provided by Section
33.01 and interest on the tax included in the supplemental bill
calculated as provided by Section 1.13 as if the tax included in the
supplemental bill became delinquent on the original delinquency
date prescribed by Chapter 31.
(d) If the property owner did not pay any portion of the
taxes imposed on the property because the court found that payment
would constitute an unreasonable restraint on the owner's right of
access to the courts as provided by Section 42.08(d), after the
final determination of the appeal the assessor for each affected
taxing unit shall prepare and mail a supplemental tax bill in the
form and manner prescribed by Subsection (b). The additional tax is
due and becomes delinquent as provided by Subsection (b), but the
property owner is liable for interest on the tax included in the
supplemental bill calculated as provided by Section 1.13 [33.01] as
if the tax included in the supplemental bill became delinquent on
the delinquency date prescribed by Chapter 31.
SECTION 18. The comptroller shall post and maintain on the
comptroller's Internet website as required by Section 1.13(c), Tax
Code, as added by this Act, the interest rates determined under
Section 1.13(a), Tax Code, as added by this Act, beginning with the
2018 calendar year.
SECTION 19. The changes in law made by this Act apply only
to interest that accrues on or after the effective date of this Act.
Interest that accrued before the effective date of this Act is
governed by the law in effect when the interest accrued, and that
law is continued in effect for that purpose.
SECTION 20. This Act takes effect September 1, 2017.