BILL ANALYSIS C.S.S.B. 642 By: Montford Finance 04-04-95 Committee Report (Substituted) BACKGROUND Each year, the Comptroller of Public Accounts evaluates those areas of state law administered by that agency. Due to the many changes made in the Property Tax Code each session, adjustments are often necessary. The Comptroller's Office has identified a number of recommendations that would simplify the collection, enforcement, and administration of ad valorem taxes for taxpayers, tax collectors, and the Comptroller's Office. PURPOSE As proposed, C.S.S.B. 642 provides for the appraisal of property for ad valorem taxation and the assessment and collection of ad valorem taxes. 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 17.091(a), (b), and (e), Civil Practice and Remedies Code, as follows: (a) Provides that the secretary of state, rather than the comptroller, is an agent in a suit growing out of property taxation by the state or a legal subdivision of the state in which a person who is a defendant is a nonresident, for service of process on that defendant if the defendant owned, had, or claimed a taxable interest in property in this state on the first day of a tax year for which taxes have not been paid. (b) Makes a conforming change. (e) Requires service of process on the secretary of state, rather than the comptroller, under this section to be accompanied by the fee provided by Section A(20), Article 10.01 (Texas Business Corporation Act). Deletes the provision that the fee for the comptroller's certification of the service of process on the defendant or of any other matter related to the service of process is $10. Makes conforming changes. SECTION 2. Amends Section 11.86(d), Education Code, to authorize the comptroller, on request of the commissioner of education or a school district, to audit a school district to determine the total taxable value of property in the school district. Requires the Comptroller to certify the findings of the audit to the Commissioner of Education. SECTION 3. Amends Section 825.405(i), Government Code, to require the comptroller, no later than seven days after the final date the comptroller certifies to the commissioner of education changes to the property value study conducted under Section 11.86, Education Code, to certify to the Teacher Retirement System of Texas certain effective tax rates. SECTION 4. Amends Section 23.53, Tax Code, as follows: Sec. 23.53. CAPITALIZATION RATE. Provides that the capitalization rate to be used in determining the appraised value of qualified open-space land as provided by this subchapter is 10 percent or the interest rate specified by the Farm Credit Bank of Texas or its successor, rather than the Federal Land Bank of Houston, on December 31 of the preceding year plus 2 1/2 percentage points, whichever percentage is greater. SECTION 5. Amends Section 23.74, Tax Code, to make a conforming change. SECTION 6. Amends Section 23.75(j), Tax Code, to require the chief appraiser, if the chief appraiser discovers that appraisal has been erroneously allowed in any one of the five preceding years because the person whose land was allowed appraisal failed to give notice that its eligibility had ended, to add the difference between the appraised value of the land and the market value of the land to the appraisal roll. SECTION 7. Amends Section 23.84(e), Tax Code, to make conforming changes. SECTION 8. Amends Section 23.94(e), Tax Code, to make conforming changes. SECTION 9. Amends Section 25.06, Tax Code, to delete the exception provided by Section 25.15 of this code, from the requirement that property encumbered by a leasehold or other possessory interest or by a mortgage, deed of trust, or other interest securing payment or performance of an obligation be listed in the name of the owner of the property so encumbered. SECTION 10. Amends Section 32.07(b), Tax Code, to make a conforming change. SECTION 11. Amends Section 31.015, Tax Code, which is transferred to Section 33.011, Tax Code, as Subsections (b)-(g) of that section, as follows: Sec. 33.011. WAIVER OF PENALTIES AND INTEREST. (a) Deletes the requirement of a request for a waiver of penalties under this section to be made within six months of the delinquency date. (b) Redesignates existing Section 31.015, regarding certain tax bills: penalty and interest excluded. Requires the governing body of a taxing unit, if a tax bill is returned undelivered to the taxing unit by the U.S. Postal Service, to waive penalties and interest if the taxing unit does not send another tax bill on the property in question at least 21 days before the delinquency date to the current mailing address furnished by the taxpayer, rather than the property owner. Makes conforming changes. (c) Makes a conforming change. (d) Requires a request for a waiver of penalties and interest under this section to be made before 181 days after, rather than within six months of, the delinquency date. (e) Redesignates existing Subsection (d). (f) Redesignates existing Subsection (e). Makes nonsubstantive and conforming changes. (g) Makes conforming changes. SECTION 12. Makes application of this Section 1 of this Act prospective. SECTION 13. Effective date: January 1, 1996. SECTION 14. Emergency clause.