BILL ANALYSIS
H.B. 2940
By: Heflin (Brown)
Finance
5-18-95
Senate Committee Report (Unamended)
BACKGROUND
The 73rd Legislature passed S.B. 878 which added Sections 23.12A
(Special Inventory) and 23.12B (Prepayment of Taxes by Certain
Taxpayers) to the Tax Code. These sections implemented a new
valuation and tax payment method for automobile, recreational
vehicle, and motorcycle inventories held for resale.
PURPOSE
As proposed, H.B. 2940 includes inventories of small boats (under
65 feet in length) within the provisions of Chapter 23, Tax Code,
providing for inventory appraisal based on prior year sales.
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(a), Tax Code, to provide that the
market value of an inventory is the price for which it would sell
as a unit to a purchaser who would continue the business, except as
provided by Sections 23.12A and 23.12D of this code.
SECTION 2. Amends Section 23.12(f), Tax Code, to authorize the
owner of an inventory other than an applicable inventory as that
term is defined in Section 23.12A of this code or a dealer's vessel
and outboard motor inventory as that term is defined in Section
23.12D 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 3. Amends Chapter 23B, Tax Code, by adding Section 23.12D,
as follows:
Sec. 23.12D. DEALER'S VESSEL AND OUTBOARD MOTOR INVENTORY;
VALUE. (a) Defines "chief appraiser," "collector," "dealer,"
"dealer's vessel and outboard motor inventory," "dealer-financed sale," "declaration," "fleet transaction," "outboard
motor," "owner," "person," "sales price," "subsequent sale,"
"total annual sales," and "vessel."
(b) Sets forth the market value of a dealer's vessel and
outboard motor inventory on January 1 for the purpose of the
computation of property tax.
(c) Requires the chief appraiser to estimate the market
value of the dealer's vessel and outboard motor inventory
for the purpose of the computation of property tax on the
market value of a dealer's vessel and outboard motor
inventory of an owner who was not a dealer on January 1 of
the prior tax year. Requires the chief appraiser to
extrapolate using sales data, if any, generated by sales
from the dealer's vessel and outboard motor inventory in the
prior tax year in making the estimate required by this
subsection.
(d) Provides that personal property held by a dealer is
appraised as provided by other sections of this code, except
for the dealer's vessel and outboard motor inventory.
Requires the chief appraiser to appraise the dealer's vessel
and outboard motor inventory as provided by Section 23.12 of
this code in the case of a dealer whose sales from the
dealer's vessel and outboard motor inventory are made
predominantly to dealers.
(e) Provides that a dealer is presumed to be an owner of a
dealer's vessel and outboard motor inventory on January 1
if, in the 12-month period ending on December 31 of the
immediately preceding year, the dealer sold a vessel or
outboard motor 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 vessels or
outboard motors physically on hand for sale from a dealer's
vessel and outboard motor inventory on January 1.
(f) Requires the comptroller to promulgate a form entitled
"Dealer's Vessel and Outboard Motor Inventory Declaration."
Requires each dealer to file a declaration with the chief
appraiser and file a copy with the collector by February 1
of each year or, in the case of a dealer who was not in
business on January 1, by 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 dealer's and manufacturer's
number issued by the Parks and Wildlife 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, 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 information in a request made under this
section.
(h) Requires the chief appraiser to report to the Parks and
Wildlife Department if a dealer fails to file a declaration
required by this section, or if, on the declaration required
by this section, a dealer reports the sale of fewer than
five vessels or outboard motors 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 person who violates Subsection (h) of
this section commits an offense. Provides an offense under
this subsection is a misdemeanor punishable by a fine not to
exceed $500. Provides that each day during which a person
fails to comply with the terms of Subsection (h) of this
section is a separate violation.
(k) Requires a dealer who fails to file a declaration
required by this section to forfeit a penalty. 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 4. Amends Chapter 23B, Tax Code, by adding Section 23.12E,
as follows:
Sec. 23.12E. PREPAYMENT OF TAXES BY CERTAIN TAXPAYERS. (a)
Defines "aggregate tax rate," "chief appraiser," "collector,"
"declaration," "owner," "relevant taxing unit," "sales price,"
"statement," "subsequent sale," "total annual sales," and
"unit property tax factor."
(b) Requires a vessel or outboard motor included in a fleet
transaction, or a vessel or outboard motor 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 vessel and outboard motor
inventory to assign a unit property tax to each vessel and
outboard motor sold from a dealer's vessel and outboard
motor inventory. Sets forth the formula for the unit
property tax of each vessel or outboard motor. Requires the
owner, together with the statement filed by the owner as
provided by this section, to deposit a certain sum.
Requires the money to be deposited by the collector in or
otherwise credited by the collector to the owner's escrow
account for prepayment of property taxes as provided by this
section. Provides that an escrow account required by this
section is used to pay property taxes levied against the
dealer's vessel and outboard motor inventory, and requires
the owner to fund the escrow account as provided by this
subsection.
(c) Requires the collector to maintain the escrow account
for each owner in the county depository. Provides that the
collector is not required to maintain a separate account in
the depository for each escrow account created as provided
by this section but shall maintain separate records for each
owner. Requires the collector to retain any interest
generated by the escrow account to defray the cost of
administration of the prepayment procedure established by
this section. Provides that interest generated by an escrow
account created as provided by this section is the sole
property of the collector, and that interest may be used by
no entity other than the collector. 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) Requires the comptroller to promulgate a form entitled
"Dealer's Vessel and Outboard Motor Inventory Tax
Statement." Requires a dealer to complete the form with
respect to each vessel and outboard motor sold. Prohibits
a dealer from using any other form for that purpose.
Authorizes the statement to include the information the
comptroller deems appropriate but shall include at least
certain information.
(f) Requires a dealer to file, on or before the 10th day of
each month, with the collector the statement covering the
sale of each vessel or outboard motor sold by the dealer in
the prior month. Requires a dealer to file a copy of the
statement with the chief appraiser and retain documentation
relating to the disposition of each vessel and outboard
motor sold. Authorizes a 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 23.12D(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 vessel and outboard motor inventory
tax for the current year. Sets forth certain obligations
for a dealer who owes no vessel and outboard motor inventory
tax for the current year because he was not in business on
January 1.
(h) Authorizes a collector to establish a procedure,
voluntary or mandatory, by which the unit property tax of a
vessel or outboard motor is paid and deposited into an
owner's escrow account at the time of processing the
transfer of title to the vessel or outboard motor.
(i) Requires relevant taxing unit, on its tax bill prepared
for the owner of a dealer's vessel and outboard motor
inventory, to separately itemize the taxes levied against
the dealer's vessel and outboard motor inventory. Requires
the assessor for the relevant taxing unit, or an entity, if
any, other than the collector, that collects taxes on behalf
of the taxing unit, to provide the collector a true and
correct copy of the tax bill sent to the owner, including
taxes levied against a dealer's vessel and outboard motor
inventory when the tax bill is prepared by a relevant taxing
unit for a dealer's vessel and outboard motor inventory.
Requires the collector to apply the money in the owner's
escrow account to the taxes imposed and deliver a tax
receipt to the owner. Requires the collector to apply the
amount to each relevant taxing unit in proportion to the
amount of taxes levied, and requires the assessor of each
relevant taxing unit to apply the funds received from the
collector to the taxes owed by the owner.
(j) Requires the collector to apply the money to the taxes
and deliver to the owner a tax receipt for the partial
payment and a tax bill for the amount of the deficiency
together with a statement that the owner must remit to the
collector the balance of the total tax due if the amount in
the escrow account is not sufficient to pay the taxes in
full.
(k) Requires the collector to remit to each relevant taxing
unit the total amount collected by the collector in
deficiency payments. Requires the assessor of each relevant
taxing unit to apply those funds to the taxes owed by the
owner. Provides that taxes that are due but not received by
the collector on or before January 31 are delinquent.
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.
(l) Authorizes a person who acquires the business or assets
of an owner, by contract, to agree to pay the current year
vessel and outboard motor 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 vessel and outboard motor
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 vessel and outboard 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.
(m) Provides that a dealer who fails to file a statement as
required by this section commits an offense. Provides that
an offense under this subsection is a misdemeanor punishable
by a fine not to exceed $100. Provides that each day during
which a dealer fails to comply with the terms of this
subsection is a separate violation.
(n) Requires a dealer who fails to file a statement as
required by this section to forfeit a penalty. 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 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 $500 for each
month or part of a month in which a statement is not filed
after it is due.
(o) Requires an owner who fails to remit unit property
taxes due as required by this section to pay a penalty of
five percent of the amount due. Requires the owner to pay
an additional penalty of five percent of the amount due if
the amount is not paid within 10 days after the due date.
Provides that unit property taxes paid on or before January
31 of the year following the date on which they are due are
not delinquent. Requires the collector, the collector's
designated agent, or the county or district attorney to
enforce the terms of this subsection. Provides that a
penalty under this subsection is in addition to any other
penalty provided by law of the owner's taxes are delinquent.
(p) Requires fines and penalties collected pursuant to the
authority of this section to be deposited in the county
depository to the credit of the general fund.
SECTION 5. Amends Chapter 23B, Tax Code, by adding Section 23.12F,
as follows:
Sec. 23.12F. 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 23.12D
or Section 23.12E 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 under certain conditions.
(d) Provides that a person who knowingly permits inspection
of a declaration or 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 6. Effective date: January 1, 1996.
SECTION 7. Emergency clause.