BILL ANALYSIS
H.B. 2624
By: Craddick (Sponsor)
Finance
05-05-95
Senate Committee Report (Amended)
BACKGROUND
With the passage of S.B. 878, the 73rd Legislature added two new
sections of the Tax Code 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. Regarding appraisal of a motor vehicle
inventory, current law provides a uniform, sales-based appraisal
formula. Furthermore, current law does two things concerning to
tax administration in the context of motor vehicle inventories.
First it provides a mechanism by which the taxpayer attaches a
property tax to each vehicle at the time of sale. Second, it
requires the taxpayer to accumulate 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
As proposed, H.B. 2624 amends the appraisal and taxation for motor
vehicle inventories.
RULEMAKING AUTHORITY
It is the committee's opinion that this bill does not grant any
additional rulemaking authority to a state officer, institution, or
agency.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 23.12(f), Tax Code, to authorize the
owner of an inventory other than a dealer's motor vehicle inventory
as that term is defined in Section 23.121 of this code to elect to
have the inventory appraised at its market value as of September 1
of the year preceding the tax year to which the appraisal applies
by filing an application with the chief appraiser requesting that
the inventory be appraised as of September 1.
SECTION 2. Amends Section 23.121, Tax Code, as follows:
Sec. 23.121. New heading: DEALER'S MOTOR VEHICLE INVENTORY;
VALUE. (a) Defines "chief appraiser," "collector," "dealer,"
"dealer's motor vehicle inventory," "dealer-financed sale,"
"declaration," "fleet transaction," "motor vehicle," "owner,"
"person," "subsequent sale," and "total annual sales."
Deletes definitions of "applicable inventory," "excluded
inventory," "special inventory," and "towable recreational
vehicle."
(b) Sets forth the formula for the market value of a
dealer's motor vehicle inventory on January 1.
(c) Requires, rather than authorizes, the chief appraiser
to estimate the market value of the dealer's motor vehicle
inventory. Makes conforming changes.
(d) Provides that personal property held by a dealer is
appraised as provided by other sections of this code, except
for dealer's motor vehicle inventory. Requires the chief
appraiser to appraise the dealer's motor vehicle inventory
as provided by Section 23.12 of this code in the case of a
dealer whose sales from dealer's motor vehicle inventory are
made predominately to dealers.
(e) Provides that a dealer is presumed to be an owner of a
dealer's motor vehicle inventory on January 1, if, in the
12-month period ending on December 31 of the immediately
preceding year, the dealer sold a motor vehicle to a person
other than a dealer. Provides that the presumption created
by this subsection is not rebutted by the fact that a dealer
has no motor vehicles physically on hand for sale from
dealer's motor vehicle inventory on January 1.
(f) Requires the comptroller to promulgate a form entitled
Dealer's Motor Inventory Declaration. Requires each dealer
to file a declaration with the chief appraiser and file a
copy with the collector except as provided by Section
23.122(1) of this code, not later than February 1 of each
year, not later than 30 days after commencement of business.
Provides that the declaration is sufficient to comply with
this subsection if it sets forth certain information.
(g) Authorizes the chief appraiser to examine the books and
records of the holder of a general distinguishing number
issued by the Texas Department of Transportation
(department) under the terms provided by this subsection.
Requires a request made under this subsection to be made in
writing, delivered personally to the custodian of the
records at the location for which the general distinguishing
number has been issued to provide a period not less than 15
days for the person to respond to the request, and to state
that the person to whom it is addressed has the right to
seek judicial relief from compliance with the request.
Authorizes the chief appraiser to examine certain documents
and records in a request made under this section.
(h) Requires the chief appraiser to report to the
department the sale of fewer than five motor vehicles in the
prior year.
(i) Provides that a dealer who fails to file a declaration
required by this section commits an offense. Provides that
an offense under this subsection is a misdemeanor punishable
by a fine not to exceed $500. Provides that each day during
which a dealer fails to comply with the terms of this
subsection is a separate violation.
(j) Provides that a dealer who violates Subsection (g) of
this section commits an offense. Provides that an offense
under this subsection is a misdemeanor punishable by a fine
not to exceed $500. Provides that each day during which a
dealer fails to comply with the terms of this subsection is
a separate violation.
(k) Requires a dealer who fails to file a declaration
required by this section to forfeit a penalty in addition to
other penalties provided by law. Provides that a tax lien
attaches to the dealer's business personal property to
secure payment of the penalty. Requires the appropriate
district attorney, criminal district attorney, or county
attorney to collect the penalty established by this section
in the name of the chief appraiser or collector. Provides
that venue of an action brought under this subsection is in
the county in which the violation occurred or in the county
in which the owner maintains his principal place of business
or residence. Provides that 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 Section 23.122, Tax Code, as follows:
Sec. 23.122. PREPAYMENT OF TAXES BY CERTAIN TAXPAYERS. (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." Deletes the definitions of "county aggregate tax
rate" and "special inventory."
(b) Requires a vehicle included in a fleet transaction, or
a vehicle that is the subject of a subsequent sale, an owner
or a person who has agreed by contract to pay the owner's
current year property taxes levied against the owner's motor
vehicle inventory to assign a unit property tax to each
motor vehicle sold from a dealer's motor vehicle inventory.
Makes conforming changes.
(c) Prohibits interest generated by an escrow account from
being used to reduce or otherwise affect the annual
appropriation to the collector that would otherwise be made.
(d) Prohibits the owner from withdrawing funds in an escrow
account created pursuant to this section.
(e) Makes conforming changes.
(f) Authorizes the chief appraiser or collector to examine
documents held by a dealer as provided by this subsection in
the same manner, and subject to the same provisions, as are
set forth in Section 23.121(g) of this code.
(g) Provides that the requirements of Subsection (f) of
this section apply to all dealers, without regard to whether
or not the dealer owes vehicle inventory tax for the current
year. Provides that a dealer who owes no vehicle inventory
tax for the current year because he was not in business on
January 1 shall file the statement required by this section
showing the information required by this section for each
month during which the dealer is in business; and may
neither assign a unit property tax to a motor vehicle sold
by the dealer nor remit money with the statement unless
pursuant to the terms of a contract as provided by
Subsection (1) of this section.
(h) Authorizes a collector to establish a procedure,
voluntary or mandatory, 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) Makes conforming changes.
(j) Redesignates existing Subsection (h) and makes
conforming changes.
(k) Requires the collector to distribute to relevant taxing
units in the manner set forth in this section all funds
collected pursuant to the authority of this section and held
in escrow by the collector as provided by this section.
Provides that this section does not impose a duty on a
collector to collect delinquent taxes that the collector is
not otherwise obligated by law or contract to collect.
Makes a conforming change. Deletes text regarding the
requirement of the collector's distribution of funds to
relevant taxing units. Deletes existing Subsections (j) and
(k).
(l) Authorizes a person who acquires the business or assets
of an owner, by contract, to agree to pay the current year
vehicle inventory taxes owed by the owner. Requires the
owner who owes the current year tax and the person who
acquires the business or assets of the owner to jointly
notify the chief appraiser and the collector of the terms of
the agreement and of the fact that the other person has
agreed to pay the current year vehicle inventory taxes owned
by the dealer. Requires the chief appraiser and the
collector to adjust their records accordingly. Provides
that 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. Provides that this subsection does not relieve
the selling owner of the tax liability. Deletes existing
subsection.
(m) Makes conforming changes. Deletes authorization to use
a fine to defray the cost of enforcing this section.
(n) Requires a dealer who fails to file a statement as
required by this section to forfeit a penalty in addition to
other penalties provided by law. Provides that a tax lien
attaches to the owner's business personal property to secure
payment of the penalty. Requires the appropriate district
attorney, criminal district attorney, or county attorney to
collect the penalty established by this section in than name
of the chief appraiser or collector. Provides that venue of
an action brought under this subsection is in the county in
which the owner maintains his principal place of business or
residence. Provides that 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) Provides that unit property taxes paid on or before
January 31 of the year following the date on which they due
are not delinquent. Makes conforming changes.
(p) Requires fines collected pursuant to the authority of
this section to be deposited in the county depository to the
credit of the general fund. Provides that penalties
collected pursuant to the authority of this section are the
sole property of the collector, may be used by no entity
other than the collector, and may not be used to reduce or
otherwise affect the annual appropriation to the collector
that would otherwise be made.
SECTION 4. Amends Chapter 23B, Tax Code, by adding Section 23.123,
as follows:
Sec. 23.123. DECLARATIONS AND STATEMENTS CONFIDENTIAL. (a)
Defines "collector," "chief appraiser," "dealer,"
"declaration," "owner," and "statement."
(b) Provides that a declaration or statement filed with a
chief appraiser or collector as required by Section 23.121
or Section 23.122 of this code is confidential and not open
to public inspection, except as provided by this section.
Prohibits a declaration or statement and the information
contained in either from being disclosed to anyone except an
employee of the appraisal office who appraises the property
or to an employee of the county tax assessor-collector
involved in the maintenance of the owner's escrow account.
(c) Authorizes information made confidential by this
section to be disclosed in a judicial or administrative
proceeding pursuant to a lawful subpoena; to the person who
filed the declaration or statement or to the person's
representative authorized by the person in writing to
receive the information; to the comptroller or an employee
of the comptroller authorized by the comptroller to receive
the information; to a collector or chief appraiser; to a
district attorney, criminal district attorney or county
attorney involved in the enforcement of a penalty imposed
pursuant to Section 23.121 or Section 23.122 of this code;
for statistical purposes if in a form that does not identify
specific owner; or 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) Provides that a person who knowingly permits inspection
of a declaration statement by a person not authorized to
inspect the declaration or statement or who discloses
confidential information contained in the declaration or
statement to a person not authorized to receive the
information commits an offense. Provides that an offense
under this subsection is a Class B misdemeanor.
SECTION 5. Amends Section 152.002(b), Tax Code, to include in the
definition of "total consideration," among others, the motor
vehicle inventory tax.
SECTION 6. Effective date: January 1, 1996.
SECTION 7. Emergency clause.