By: Creighton S.B. No. 894
(In the Senate - Filed February 19, 2019; March 1, 2019,
read first time and referred to Committee on Property Tax;
April 29, 2019, reported favorably by the following vote: Yeas 5,
Nays 0; April 29, 2019, sent to printer.)
Click here to see the committee vote
A BILL TO BE ENTITLED
AN ACT
relating to the additional tax imposed on land appraised for ad
valorem tax purposes as agricultural, open-space, or timber land if
the land is sold or diverted to a different use.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 23.46(c) and (d), Tax Code, are 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 at the rate
provided 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 other delinquent 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.
(d) A tax lien attaches to the land on the date the sale or
change of use occurs to secure payment of the additional tax [and
interest] imposed by Subsection (c) [of this section] and any
penalties and interest incurred if the tax becomes delinquent. The
lien exists in favor of all taxing units for which the additional
tax is imposed.
SECTION 2. Sections 23.47(c) and (d), Tax Code, are amended
to read as follows:
(c) A provision in an instrument pertaining to a loan
secured by a lien in favor of the lender on land appraised according
to this subchapter that requires the borrower to make a payment to
protect the lender from loss because of the imposition of
additional taxes [and interest] under Section 23.46 is void unless
the provision:
(1) requires the borrower to pay into an escrow
account established by the lender an amount equal to the additional
taxes [and interest] that would be due under Section 23.46 if a sale
or change of use occurred on January 1 of the year in which the loan
is granted or amended;
(2) requires the escrow account to bear interest to be
credited to the account monthly;
(3) permits the lender to apply money in the escrow
account to the payment of a bill for additional taxes [and interest]
under Section 23.46 before the loan is paid and requires the lender
to refund the balance remaining in the escrow account after the bill
is paid to the borrower; and
(4) requires the lender to refund the money in the
escrow account to the borrower on the payment of the loan.
(d) On the request of the borrower or the borrower's
representative, the assessor for each taxing unit shall compute the
additional taxes [and interest] that would be due that taxing unit
under Section 23.46 if a sale or change of use occurred on January 1
of the year in which the loan is granted or amended. The assessor
may charge a reasonable fee not to exceed the actual cost of making
the computation.
SECTION 3. Sections 23.55(a), (b), (e), (f), (m), and (n),
Tax Code, are 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 three [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 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.
(b) A tax lien attaches to the land on the date the change of
use occurs to secure payment of the additional tax [and interest]
imposed by this section and any penalties and interest incurred if
the tax becomes delinquent. The lien exists in favor of all taxing
units for which the additional tax is imposed.
(e) Subject to Section 23.551, a determination that a change
in use of the land has occurred is made by the chief appraiser. 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. 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.
(f) The sanctions provided by Subsection (a) [of this
section] do not apply if the change of use occurs as a result of:
(1) a sale for right-of-way;
(2) a condemnation;
(3) a transfer of the property to the state or a
political subdivision of the state to be used for a public purpose;
or
(4) a transfer of the property from the state, a
political subdivision of the state, or a nonprofit corporation
created by a municipality with a population of more than one million
under the Development Corporation Act (Subtitle C1, Title 12, Local
Government Code) to an individual or a business entity for purposes
of economic development if the comptroller determines that the
economic development is likely to generate for deposit in the
general revenue fund during the next two fiscal bienniums an amount
of taxes and other revenues that equals or exceeds 20 times the
amount of additional taxes [and interest] that would have been
imposed under Subsection (a) had the sanctions provided by that
subsection applied to the transfer.
(m) For purposes of determining whether a transfer of land
qualifies for the exemption from additional taxes provided by
Subsection (f)(4), on an application of the entity transferring or
proposing to transfer the land or of the individual or entity to
which the land is transferred or proposed to be transferred, the
comptroller shall determine the amount of taxes and other revenues
likely to be generated as a result of the economic development for
deposit in the general revenue fund during the next two fiscal
bienniums. If the comptroller determines that the amount of those
revenues is likely to equal or exceed 20 times the amount of
additional taxes [and interest] that would be imposed under
Subsection (a) if the sanctions provided by that subsection applied
to the transfer, the comptroller shall issue a letter to the
applicant stating the comptroller's determination and shall send a
copy of the letter by regular mail to the chief appraiser.
(n) Within one year of the conclusion of the two fiscal
bienniums for which the comptroller issued a letter as provided
under Subsection (m), the board of directors of the appraisal
district, by official board action, may direct the chief appraiser
to request the comptroller to determine if the amount of revenues
was equal to or exceeded 20 times the amount of taxes [and interest]
that would have been imposed under Subsection (a). The comptroller
shall issue a finding as to whether the amount of revenue met the
projected increases. The chief appraiser shall review the results
of the comptroller's finding and shall make a determination as to
whether sanctions under Subsection (a) should be imposed. If the
chief appraiser determines that the sanctions provided by
Subsection (a) shall be imposed, the sanctions shall be based on the
date of the transfer of the property under Subsection (f)(4).
SECTION 4. Sections 23.58(c) and (d), Tax Code, are amended
to read as follows:
(c) A provision in an instrument pertaining to a loan
secured by a lien in favor of the lender on land appraised according
to this subchapter that requires the borrower to make a payment to
protect the lender from loss because of the imposition of
additional taxes [and interest] under Section 23.55 is void unless
the provision:
(1) requires the borrower to pay into an escrow
account established by the lender an amount equal to the additional
taxes [and interest] that would be due under Section 23.55 if a
change of use occurred on January 1 of the year in which the loan is
granted or amended;
(2) requires the escrow account to bear interest to be
credited to the account monthly;
(3) permits the lender to apply money in the escrow
account to the payment of a bill for additional taxes [and interest]
under Section 23.55 before the loan is paid and requires the lender
to refund the balance remaining in the escrow account after the bill
is paid to the borrower; and
(4) requires the lender to refund the money in the
escrow account to the borrower on the payment of the loan.
(d) On the request of the borrower or the borrower's
representative, the assessor for each taxing unit shall compute the
additional taxes [and interest] that would be due that taxing unit
under Section 23.55 if a change of use occurred on January 1 of the
year in which the loan is granted or amended. The assessor may
charge a reasonable fee not to exceed the actual cost of making the
computation.
SECTION 5. Sections 23.76(a), (b), and (e), Tax Code, are
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 three [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 at an annual rate of seven percent calculated from the
dates on which the differences would have become due].
(b) A tax lien attaches to the land on the date the change of
use occurs to secure payment of the additional tax [and interest]
imposed by this section and any penalties and interest incurred if
the tax becomes delinquent. The lien exists in favor of all taxing
units for which the additional tax is imposed.
(e) A determination that a change in use of the land has
occurred is made by the chief appraiser. 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 [and interest] as soon as
practicable after the change of use 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 6. Sections 23.9807(a), (b), (c), and (f), 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:
(1) [(A)] the taxes imposed on the land for each of the
three [five] years preceding the year in which the change of use
occurs that the land was appraised as provided by this subchapter;
and
(2) [(B)] the taxes that would have been imposed had
the land been appraised under Subchapter E in each of those years[;
and
[(2) interest 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:
(1) [(A)] the taxes imposed on the land for each of the
three [five] years preceding the year in which the change of use
occurs that the land was appraised as provided by this subchapter;
and
(2) [(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 at an annual rate of seven percent
calculated from the dates on which the differences would have
become due].
(c) A tax lien attaches to the land on the date the change of
use occurs to secure payment of the additional tax [and interest]
imposed by this section and any penalties and interest incurred if
the tax becomes delinquent. The lien exists in favor of all taxing
units for which the additional tax is imposed.
(f) A determination that a change in use of the land has
occurred is made by the chief appraiser. 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 [and interest] as soon as
practicable after the change of use 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. Sections 23.46(c) and (d), Tax Code, as amended
by this Act, apply only to a sale or diversion to a nonagricultural
use of land appraised under Subchapter C, Chapter 23, Tax Code, that
occurs on or after the effective date of this Act.
SECTION 8. Sections 23.47(c) and (d), Tax Code, as amended
by this Act, apply only to a loan secured by a lien on land
designated for agricultural use that is contracted for on or after
the effective date of this Act.
SECTION 9. Sections 23.55(a), (b), (e), (f), (m), and (n),
Tax Code, as amended by this Act, apply only to a change of use of
land appraised under Subchapter D, Chapter 23, Tax Code, that
occurs on or after the effective date of this Act.
SECTION 10. Sections 23.58(c) and (d), Tax Code, as amended
by this Act, apply only to a loan secured by a lien on open-space
land that is contracted for on or after the effective date of this
Act.
SECTION 11. Sections 23.76(a), (b), and (e), Tax Code, as
amended by this Act, apply only to a change of use of land appraised
under Subchapter E, Chapter 23, Tax Code, that occurs on or after
the effective date of this Act.
SECTION 12. Sections 23.9807(a), (b), (c), and (f), Tax
Code, as amended by this Act, apply only to a change of use of land
appraised under Subchapter H, Chapter 23, Tax Code, that occurs on
or after the effective date of this Act.
SECTION 13. This Act takes effect September 1, 2019.
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