By: Patterson, Pete H.B. No. 1754
73R5747 JBN-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to changes of use in open space land appraised as
1-3 qualified agricultural land; providing sanctions and penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Section 23.55, Tax Code, is amended to read as
1-6 follows:
1-7 Sec. 23.55. Change of Use of Land. (a) If the use of land
1-8 that has been appraised as provided by this subchapter changes, an
1-9 additional tax is imposed on the land as provided by Section 23.552
1-10 <equal to the difference between the taxes imposed on the land for
1-11 each of the five years preceding the year in which the change of
1-12 use occurs that the land was appraised as provided by this
1-13 subchapter and the tax that would have been imposed had the land
1-14 been taxed on the basis of market value in each of those years,
1-15 plus interest at an annual rate of seven percent calculated from
1-16 the dates on which the differences would have become due>.
1-17 (b) A tax lien attaches to the land on the date the change
1-18 of use occurs to secure payment of the additional tax and interest
1-19 imposed by this section and Section 23.552 and any penalties
1-20 incurred. The lien exists in favor of all taxing units for which
1-21 the additional tax is imposed.
1-22 (c) The additional tax imposed by this section does not
1-23 apply to a year for which the tax has already been imposed.
1-24 (d) <If the change of use applies to only part of a parcel
2-1 that has been appraised as provided by this subchapter, the
2-2 additional tax applies only to that part of the parcel and equals
2-3 the difference between the taxes imposed on that part of the parcel
2-4 and the taxes that would have been imposed had that part been taxed
2-5 on the basis of market value.>
2-6 <(e)> A determination that a change in use of the land has
2-7 occurred is made by the chief appraiser. The chief appraiser shall
2-8 deliver a notice of the determination to the owner of the land as
2-9 soon as possible after making the determination and shall include
2-10 in the notice an explanation of the owner's right to protest the
2-11 determination. If the owner does not file a timely protest or if
2-12 the final determination of the protest is that the additional taxes
2-13 are due, the assessor for each taxing unit shall prepare and
2-14 deliver a bill for the additional taxes plus interest as soon as
2-15 practicable. The taxes and interest are due and become delinquent
2-16 and incur penalties and interest as provided by law for ad valorem
2-17 taxes imposed by the taxing unit if not paid before the next
2-18 February 1 that is at least 20 days after the date the bill is
2-19 delivered to the owner of the land.
2-20 <(f) The sanctions provided by Subsection (a) of this
2-21 section do not apply if the change of use occurs as a result of a
2-22 sale for right-of-way or a condemnation.>
2-23 <(g) If the use of the land changes to a use that qualifies
2-24 under Subchapter E of this chapter, the sanctions provided by
2-25 Subsection (a) of this section do not apply.>
2-26 <(h) Additional taxes, if any, for a year in which land was
2-27 designated for agricultural use as provided by Subchapter C of this
3-1 chapter (or Article VIII, Section 1-d, of the constitution) are
3-2 determined as provided by that subchapter, and the additional taxes
3-3 imposed by this section do not apply for that year.>
3-4 <(i) The use of land does not change for purposes of
3-5 Subsection (a) of this section solely because the owner of the land
3-6 claims it as part of his residence homestead for purposes of
3-7 Section 11.13 of this code.>
3-8 SECTION 2. Subchapter D, Chapter 23, Tax Code, is amended by
3-9 adding Sections 23.551 and 23.552 to read as follows:
3-10 Sec. 23.551. EXCLUDED OR PARTIAL CHANGES OF USE. (a) The
3-11 additional taxes provided by Section 23.552 do not apply to a
3-12 change of use of land:
3-13 (1) if the change occurs because of a sale for
3-14 right-of-way or a condemnation;
3-15 (2) because the owner of land claims it as part of the
3-16 owner's residence homestead for the purposes of Section 11.13; or
3-17 (3) to a use that qualifies for appraisal under
3-18 Subchapter E.
3-19 (b) Additional taxes, if any, for a year in which land was
3-20 designated for agricultural use as provided by Subchapter C (or
3-21 Article VIII, Section 1-d, of the Texas Constitution) are
3-22 determined as provided by that subchapter, and the additional taxes
3-23 imposed by this section do not apply for that year.
3-24 (c) If the change of use applies to only part of a parcel
3-25 that has been appraised as provided by this subchapter, the
3-26 additional tax applies only to that part of the parcel and equals
3-27 the difference between the taxes imposed on that part of the parcel
4-1 and the taxes that would have been imposed had that part been taxed
4-2 on the basis of market value.
4-3 Sec. 23.552. ADDITIONAL TAXES FOR CHANGE OF USE. (a) The
4-4 amount of the additional tax for each year for which an additional
4-5 tax is imposed under Section 23.55 because of a change of use of
4-6 land is the difference between the amount of tax imposed on the
4-7 land for the year calculated on the value of the land appraised
4-8 under this subchapter and the amount of tax for the year that would
4-9 have been imposed had the land been appraised according to its
4-10 market value for that year, plus interest calculated from the date
4-11 on which the difference would have become due.
4-12 (b) The annual interest rate for the purpose of Subsection
4-13 (a) is seven percent.
4-14 (c) The number of years preceding the year in which a change
4-15 of use of land occurs under this subchapter for which additional
4-16 taxes are imposed because of the change of use is determined under
4-17 Subsection (d), (e), (f), or (g), as applicable.
4-18 (d) Additional taxes are imposed for the one year preceding
4-19 the year in which the change of use occurs:
4-20 (1) for land that:
4-21 (A) in the year preceding the year that the
4-22 change of use occurs was owned exclusively by an individual,
4-23 including the spouse of an individual, who owned the land each of
4-24 the preceding 19 years; and
4-25 (B) has qualified for appraisal under this
4-26 subchapter or Subchapter C for the five years preceding the year in
4-27 which the change of use occurs;
5-1 (2) for land that:
5-2 (A) in the year preceding the year that the
5-3 change of use occurs was owned by an individual, including the
5-4 spouse of an individual, who owned the land each of the preceding
5-5 nine years, and whose primary occupation is, and whose primary
5-6 source of earned income is from, agricultural production; and
5-7 (B) has qualified for appraisal under this
5-8 subchapter or Subchapter C for the five years preceding the year in
5-9 which the change of use occurs; and
5-10 (3) for land that:
5-11 (A) in the year preceding the year in which the
5-12 change of use occurs was owned by one or more corporations or
5-13 individuals who owned the land for the preceding 14 years, and for
5-14 whom, during each of those 15 years, the primary source of income,
5-15 for a corporation, or earned income, for an individual, was from
5-16 agricultural production; and
5-17 (B) has qualified under this subchapter or
5-18 Subchapter C for the seven years preceding the year in which the
5-19 change of use occurs.
5-20 (e) Additional taxes are imposed for the three years
5-21 preceding the year in which the change of use occurs:
5-22 (1) for land that:
5-23 (A) in the year preceding the year in which the
5-24 change of use occurs was owned by an individual, including the
5-25 spouse of an individual, who owned the land for the preceding nine
5-26 years; and
5-27 (B) has qualified for appraisal under this
6-1 subchapter or Subchapter C for the five years preceding the year in
6-2 which the change of use occurs; or
6-3 (2) for land that:
6-4 (A) in the year preceding the year in which the
6-5 change of use occurs was owned by an S corporation as defined by
6-6 Section 1361, Internal Revenue Code of 1986, and that was owned for
6-7 the preceding nine years by the corporation or a shareholder of the
6-8 corporation, and in each of those 10 years agricultural production
6-9 was the primary source of income, for the corporation, or earned
6-10 income, for the individual, in each of the respective years that
6-11 the land was owned by the corporation or the individual; and
6-12 (B) has qualified under this subchapter or
6-13 Subchapter C for the five years preceding the year in which the
6-14 change of use occurs.
6-15 (f) Additional taxes are imposed for the 10 years preceding
6-16 the year in which the change of use occurs for land that in the
6-17 year preceding the year in which the change of use occurs, or in
6-18 the year in which the change of use occurs, was or is owned by a
6-19 corporation and the land does not qualify under Subsection (d) or
6-20 (e).
6-21 (g) Additional taxes are imposed for the seven years
6-22 preceding the year in which the change of use occurs for any land
6-23 that is not covered by Subsection (d), (e), or (f).
6-24 (h) For the purposes of this section, a change of ownership
6-25 does not occur if:
6-26 (1) the property or an interest in the property is
6-27 transferred between spouses; or
7-1 (2) a widow or widower of a deceased owner takes the
7-2 property or an interest in the property by devise or inheritance or
7-3 in settlement of the deceased's estate.
7-4 (i) In this section, "earned income" means "gross income" as
7-5 defined by Section 61, Internal Revenue Code of 1986, other than:
7-6 (1) interest and dividends received on stocks, bonds,
7-7 certificates of deposit, bank accounts, and annuities;
7-8 (2) pension income;
7-9 (3) alimony and separate maintenance payments; and
7-10 (4) royalties received from the sale of minerals
7-11 produced on the land to which the additional tax applies.
7-12 SECTION 3. This Act takes effect January 1, 1994, and
7-13 applies to the imposition of an additional property tax payable
7-14 under Subchapter D, Chapter 23, Tax Code, as a result of a change
7-15 of use of agricultural land that occurs on or after that date. An
7-16 additional tax imposed for a change of use of agricultural land
7-17 that occurs before the effective date of this Act is governed by
7-18 the law in effect immediately before the effective date of this
7-19 Act, and that law is continued in effect for the purpose of the
7-20 imposition, administration, and collection of that tax, including
7-21 penalties and interest.
7-22 SECTION 4. The importance of this legislation and the
7-23 crowded condition of the calendars in both houses create an
7-24 emergency and an imperative public necessity that the
7-25 constitutional rule requiring bills to be read on three several
7-26 days in each house be suspended, and this rule is hereby suspended.