BILL ANALYSIS
C.S.H.B. 2624
By: Craddick
03-24-95
Committee Report (Substituted)
BACKGROUND
With the passage of S.B. 878 (by Montford/Oliveira) in the 73rd
Regular Session, the Legislature added two new Sections to the Tax
Code (§§23.12A and 23.12B) that effectively created a new system
for the appraisal and property taxation of motor vehicle
inventories held for sale.
The property tax system created by S.B. 878 affects the property
taxation of motor vehicle inventories in two ways: appraisal and
tax administration. With respect to appraisal of a motor vehicle
inventory, the current law provides a uniform, sales-based
appraisal formula.
With respect to tax administration in the context of motor vehicle
inventories, the current law does two things. First, it provides a
mechanism by which the taxpayer attaches a property tax to each
vehicle at the time of sale. Second, it requires that the taxpayer
accumulate that tax money and remit it monthly to the county tax
assessor-collector who is then responsible for the payment of the
motor vehicle inventory taxes to all local taxing units when due at
year's end.
PURPOSE
This bill amends the appraisal and taxation system for motor
vehicle inventories.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency, or institution.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends §23.12(f), Tax Code, to change the term
"applicable inventory" to "dealer's motor vehicle
inventory".
SECTION 2. Amends §23.12A, Tax Code.
The title is changed from "SPECIAL INVENTORY; VALUE" to
"DEALER'S MOTOR VEHICLE INVENTORY; VALUE."
(a) Definitions: "chief appraiser," "collector,"
"dealer," "dealer's motor vehicle inventory," "dealer-financed sale," "declaration," "fleet transaction,"
"motor vehicle," "owner," "person," "sales price,"
"subsequent sale," and "total annual sales."
Deletes definitions of "applicable inventory," "excluded
inventory," and "special inventory."
(b) Establishes the computation of market value of a
dealer's motor vehicle inventory for property tax
purposes.
(c) Substitutes "dealer's motor vehicle inventory" for
"special inventory." Also requires the chief appraiser
to estimate the dealer's motor vehicle inventory by
using sales from the dealer's motor vehicle inventory.
(d) Establishes that a dealer's personal property (motor
vehicle inventory excluded) is appraised as provided by
other sections of the Tax Code. In the case of a dealer
whose sales are primarily to dealers, the chief
appraiser shall appraise the dealer's motor vehicle
inventory as provided by §23.12, Tax Code.
(e) Establishes that a dealer is presumed to own a
dealer's motor vehicle inventory on January 1, if the
dealer sold a vehicle to a person other than a dealer
in the preceding 12 months, regardless of whether or not
the dealer has any vehicles physically on hand for sale.
(f) Requires the comptroller to promulgate a form
entitled "Dealer's Motor Vehicle Inventory Declaration."
With the exception of §23.12B, dealers are required to
file a declaration with the chief appraiser and the
collector containing: (1) the name and the address of
each location which the dealer conducts business; (2)
each of the dealer's general distinguishing numbers
issued by TxDoT; (3) a statement that the dealer owner
is the owner of a dealer's motor vehicle inventory; and
(4) the market value of the dealer's motor vehicle
inventory for the current tax year as computed under
§23.12A(b).
(g) Authorizes the chief appraiser, upon written and
delivered request, to inspect the books and records of
a holder of a general distinguishing number from TxDoT.
Provides a 15 day response period, and must state that
the person to whom the request is made, has the right
to seek judicial relief. The chief appraiser may
examine: (1) the document from TxDoT showing the
person's general distinguishing number; (2)
documentation appropriate to allow the chief appraiser
to ascertain the applicability of this Section and
§23.12B of this code to the person; and (3)
documentation necessary to substantiate information set
forth in the dealer's declaration filed by the person.
(h) Establishes that if a dealer fails to file a
declaration, or if on the declaration, a dealer reports
the sale of fewer than five motor vehicles in the prior
year, the chief appraiser shall report that to TxDoT.
(i) Establishes that a dealer who fails to file a
declaration as required by this Section, commits an
offense. The crime is a misdemeanor punishable by a
fine not to exceed $500. Each day a dealer fails to
comply is a separate violation.
(j) Establishes that a person who violates Subsection
(h) commits an offense. The crime is a misdemeanor
punishable by a fine not to exceed $500. Each day a
person fails to comply is a separate violation.
(k) Provides additional penalties for failing to file
a declaration. A tax lien attaches to the dealer's
business personal property to secure payment of the
penalty. The appropriate district attorney, criminal
district attorney, or county attorney shall collect the
penalty established by this Section in the name of the
chief appraiser or collector. Venue of an action
brought under this Subsection is the county in which the
owner maintains his principal place of business or
residence. A penalty forfeited under this Subsection
is $1,000 for each month or part of a month in which a
declaration is not filed after it is due.
SECTION 3. Amends §23.12B, Tax Code.
(a) Defines "aggregate tax rate," "chief appraiser,"
"collector," "dealer's motor vehicle inventory,"
"declaration," "owner," "relevant taxing unit," "sales
price," "statement," "subsequent sale," "total annual
sales," and "unit property tax factor."
(b) Establishes that an owner or the person paying the
owner's tax, shall assign a unit property tax to each
motor vehicle sold from a dealer's inventory.
Exceptions being vehicles sold to a dealer, included in
a fleet transaction, or a vehicle that is the subject
of a subsequent sale. The unit property tax is
determined by multiplying the sales price by the unit
property tax factor. On or before the 10th day of each
month, the owner shall deposit the statement and the
property tax assigned to all motor vehicles sold from
the dealer's motor vehicle inventory in the prior month.
The collector shall credit the owner's escrow account
to pay taxes against the dealer's motor vehicle
inventory.
(c) Provides that interest generated by an escrow
account may not be used to reduce or otherwise affect
the annual appropriation to the collector that would
otherwise be made.
(d) Provides that an owner may not withdraw funds in an
escrow account created pursuant to this Section.
(e) Requires the Comptroller to promulgate a form
entitled "Dealers Motor Vehicle Inventory Tax
Statement," which shall be completed by the dealer for
each motor vehicle sold. The form must at least
include: (1) a description of the motor vehicle sold;
(2) the sales price of the motor vehicle; (3) the unit
property tax of the motor vehicle if any; and (4) the
reason for any lack of assigned unit property tax.
(f) Establishes that a dealer shall file monthly with
the collector and the chief appraiser, the statement of
all motor vehicles sold by the dealer in the prior
month.
(g) Establishes that all dealers shall file under
Subsection (f). Also establishes that for new dealers,
they may neither assign a unit property tax to a motor
vehicle, nor remit money with the statement unless
pursuant to terms of a contract as provided by
Subsection (l).
(h) A collector may establish procedures by which the
unit property tax of a vehicle is paid and deposited
into an owner's escrow account at the time of processing
the transfer of title to the motor vehicle.
(i) Substitutes "dealer's motor vehicle inventory" for
"special inventory."
(j) Establishes that the collector shall bill the owner
for the amount of tax deficiency caused by shortages of
the escrow account
(k) Establishes deadlines for remitting taxes to the
collector. Also establishes deadlines for the collector
to distribute all funds to the taxing units. No duty
of collection shall be imposed on the collector that is
not otherwise obligated by law or contract.
Language in current Subsections (j) and (k) are deleted.
(l) Establishes that a person who acquires the business
or assets of an owner may, by contract, agree to pay the
current year vehicle inventory taxes owed by the owner.
The owner and the buyer of the business shall jointly
notify the chief appraiser and the collector of the
terms of the agreement. A person who agrees to pay
current year vehicle inventory taxes as provided by this
Subsection is not required to file a declaration until
the year following the acquisition. This Subsection
does not relieve the selling owner of the tax liability.
(m) A dealer who fails to file a statement as required
by this Section commits an offense. An offense under
this Subsection is a misdemeanor punishable by a fine
not to exceed $100 per day.
(n) Provides additional penalties for failing to file
a statement. A tax lien attaches to the owner's
business personal property to secure payment of the
penalty. The appropriate district attorney, criminal
district attorney, or county attorney shall collect the
penalty established by this Section in the name of the
chief appraiser or collector. Venue of an action
brought under this Subsection is the county in which the
violation occurred or in which the owner maintains his
principal place of business or residence. A penalty
forfeited under this Subsection is $500 for each month
or part of a month in which a statement is not filed
after it is due.
(o) Establishes that an owner who fails to remit unit
property taxes due as required by this Section shall pay
a penalty of five percent of the amount due. Unit
property taxes paid on or before January 31, of the year
following the date on which they are due are not
delinquent. The collector, the collector's designated
agent or the county or district attorney shall enforce
this Subsection.
(p) Fines and penalties collected pursuant to the
authority of this Section shall be deposited in the
county depository to the credit of the general fund.
SECTION 4. Amends Chapter 23, Subchapter, B, Tax Code, by adding
§23.12C DECLARATIONS AND STATEMENTS CONFIDENTIAL.
(a) Defines "collector," "chief appraiser," "dealer,"
"declaration," "owner," and "statement."
(b) Establishes that declarations or statements filed
with a chief appraiser or collector are confidential and
not open to public inspection.
(c) The confidential information in this Section may be
disclosed: (1) pursuant to a lawful subpoena; (2) to the
person who filed the declaration or statement; (3) to
the comptroller or his employees at his discretion; (4)
to a collector or chief appraiser; (5) to a district
attorney, criminal district attorney, or county attorney
in the enforcement of a penalty imposed pursuant to
§23.12A or §23.12B; (6) for statistical purposes in a
form that does not identify specific property or a
specific property owner; or (7) if and to the extent
that the information is required for inclusion in a
public document or record that the appraisal or
collection office is required by law to prepare or
maintain.
(d) Establishes that a person who knowingly permits
inspection of a confidential document, or discloses
confidential information commits an offense. An offense
under this Subsection is a Class B misdemeanor.
SECTION 5. Effective date: January 1, 1996.
SECTION 6. Emergency Clause.
COMPARISON OF ORIGINAL TO SUBSTITUTE
The substitute clarifies the intent of the bill, and corrects
drafting errors in the bill as filed.
Substantive differences of C.S.H.B. 2624 from the bill:
The definition of "comptroller" is deleted throughout the
substitute because of redundancy elsewhere in the Tax Code.
In case of a dealer who's sales from dealer's motor vehicle
inventory are made predominately to dealers, the chief appraiser
shall appraise the dealer's motor vehicle inventory as provided by
§23.12 of the code. The original bill is permissive and allows the
chief appraiser to decide whether to use §23.12 or not.
The computation of a dealer's motor vehicle inventory is changed
to subtract sales made to dealer's, fleet sales, and subsequent
sales from the dealer's total annual sales from the dealer's motor
vehicle inventory instead of subtracting from the dealer's total
sales. The remaining amount is then divided by 12. This change
complies with the "unit property tax" in §23.12B.
A dealer's personal property (motor vehicle inventory excluded)
is appraised as provided by other sections of the Tax Code. The
original bill stipulates that a dealer's personal property is
appraised according to §23.12(a), which may not be broad enough to
accomplish that objective.
SUMMARY OF COMMITTEE ACTION
Public notice was posted in accordance with the rules, and a public
hearing was held on March 21, 1995. Representative Craddick
explained the bill. Without objection, the committee adopted
C.S.H.B. 2624 by Craddick. By a record vote of 7 ayes, 0 nays, 0
present not voting and 4 absent, the committee voted to report H.B.
2624 to the House as substituted with the recommendation that it be
sent to the Local & Consent Calendar, and that it do pass.
Testimony received in favor of the bill:
Gene Fondren, representing the Texas Automobile Dealers
Assn.
Jim Robinson, representing himself
John Ramsey, representing himself and the Tax Assessor
Collectors Assn. of TX