1-1 By: Heflin (Senate Sponsor - Brown) H.B. No. 2940
1-2 (In the Senate - Received from the House May 8, 1995;
1-3 May 9, 1995, read first time and referred to Committee on Finance;
1-4 May 17, 1995, reported favorably by the following vote: Yeas 11,
1-5 Nays 0; May 17, 1995, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to the appraisal and ad valorem taxation of certain types
1-9 of personal property; providing penalties.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Section 23.12(a), Tax Code, is amended to read as
1-12 follows:
1-13 (a) Except as provided by Sections <Section> 23.12A and
1-14 23.12D of this code, the market value of an inventory is the price
1-15 for which it would sell as a unit to a purchaser who would continue
1-16 the business. An inventory shall include residential real property
1-17 which has never been occupied as a residence and is held for sale
1-18 in the ordinary course of a trade or business, provided that the
1-19 residential real property remains unoccupied, is not leased or
1-20 rented, and produces no income.
1-21 SECTION 2. Section 23.12(f), Tax Code, is amended to read as
1-22 follows:
1-23 (f) The owner of an inventory other than an applicable
1-24 inventory as that term is defined in Section 23.12A of this code or
1-25 a dealer's vessel and outboard motor inventory as that term is
1-26 defined in Section 23.12D of this code may elect to have the
1-27 inventory appraised at its market value as of September 1 of the
1-28 year preceding the tax year to which the appraisal applies by
1-29 filing an application with the chief appraiser requesting that the
1-30 inventory be appraised as of September 1. The application must
1-31 clearly describe the inventory to which it applies and be signed by
1-32 the owner of the inventory. The application applies to the
1-33 appraisal of the inventory in each tax year that begins after the
1-34 next August 1 following the date the application is filed with the
1-35 chief appraiser unless the owner of the inventory by written notice
1-36 filed with the chief appraiser revokes the application or the
1-37 ownership of the inventory changes. A notice revoking the
1-38 application is effective for each tax year that begins after the
1-39 next September following the date the notice of revocation is filed
1-40 with the chief appraiser.
1-41 SECTION 3. Subchapter B, Chapter 23, Tax Code, is amended by
1-42 adding Section 23.12D to read as follows:
1-43 Sec. 23.12D. DEALER'S VESSEL AND OUTBOARD MOTOR INVENTORY;
1-44 VALUE. (a) In this section:
1-45 (1) "Chief appraiser" means the chief appraiser for
1-46 the appraisal district in which a dealer's vessel and outboard
1-47 motor inventory is located.
1-48 (2) "Collector" means the county tax
1-49 assessor-collector in the county in which a dealer's vessel and
1-50 outboard motor inventory is located.
1-51 (3) "Dealer" means a person who holds a dealer's and
1-52 manufacturer's number issued by the Parks and Wildlife Department
1-53 under the authority of Section 31.041, Parks and Wildlife Code, or
1-54 is authorized by law or interstate reciprocity agreement to
1-55 purchase vessels or outboard motors in Texas without paying the
1-56 sales tax. The term does not include a person who is principally
1-57 engaged in manufacturing vessels or outboard motors or an entity
1-58 that is owned or controlled by such a person.
1-59 (4) "Dealer's vessel and outboard motor inventory"
1-60 means all vessels and outboard motors held for sale by a dealer.
1-61 (5) "Dealer-financed sale" means the sale of a vessel
1-62 or outboard motor in which the seller finances the purchase of the
1-63 vessel or outboard motor, is the sole lender in the transaction,
1-64 and retains exclusively the right to enforce the terms of the
1-65 agreement evidencing the sale.
1-66 (6) "Declaration" means the dealer's vessel and
1-67 outboard motor inventory declaration form promulgated by the
1-68 comptroller as required by this section.
2-1 (7) "Fleet transaction" means the sale of five or more
2-2 vessels or outboard motors from a dealer's vessel and outboard
2-3 motor inventory to the same business entity within one calendar
2-4 year.
2-5 (8) "Outboard motor" has the meaning given it by
2-6 Section 31.003, Parks and Wildlife Code.
2-7 (9) "Owner" means a dealer who owes current year
2-8 vessel and outboard motor inventory taxes levied against a dealer's
2-9 vessel and outboard motor inventory.
2-10 (10) "Person" means a natural person, corporation,
2-11 partnership, or other legal entity.
2-12 (11) "Sales price" means the total amount of money
2-13 paid or to be paid for the purchase of:
2-14 (A) a vessel as set forth as "sales price" in
2-15 the form entitled "Application for Texas Certificate of
2-16 Number/Title for Boat/Seller, Donor or Trader's Affidavit"
2-17 promulgated by the Parks and Wildlife Department; or
2-18 (B) an outboard motor as set forth as "sales
2-19 price" in the form entitled "Application for Texas Certificate of
2-20 Title for an Outboard Motor/Seller, Donor or Trader's Affidavit"
2-21 promulgated by the Parks and Wildlife Department.
2-22 In a transaction involving a vessel or an outboard motor that
2-23 does not involve the use of either form, the term means an amount
2-24 of money that is equivalent, or substantially equivalent, to the
2-25 amount that would appear as "sales price" on either the Application
2-26 for Texas Certificate of Number/Title for Boat/Seller, Donor or
2-27 Trader's Affidavit or the Application for Texas Certificate of
2-28 Title for an Outboard Motor/Seller, Donor or Trader's Affidavit if
2-29 either form were involved.
2-30 (12) "Subsequent sale" means a dealer-financed sale of
2-31 a vessel or outboard motor that, at the time of the sale, has been
2-32 the subject of a dealer-financed sale from the same dealer's vessel
2-33 and outboard motor inventory in the same calendar year.
2-34 (13) "Total annual sales" means the total of the sales
2-35 price from every sale from a dealer's vessel and outboard motor
2-36 inventory for a 12-month period.
2-37 (14) "Vessel" has the meaning given it by Section
2-38 31.003, Parks and Wildlife Code, except such term shall not
2-39 include:
2-40 (A) vessels of more than 65 feet in length,
2-41 measured from end to end over the deck, excluding sheer; and
2-42 (B) canoes, kayaks, punts, rowboats, rubber
2-43 rafts, or other vessels under 14 feet in length when paddled,
2-44 poled, oared, or windblown.
2-45 (b) For the purpose of the computation of property tax, the
2-46 market value of a dealer's vessel and outboard motor inventory on
2-47 January 1 is the total annual sales from the dealer's vessel and
2-48 outboard motor inventory, less sales to dealers, fleet
2-49 transactions, and subsequent sales, for the 12-month period
2-50 corresponding to the prior tax year, divided by 12.
2-51 (c) For the purpose of the computation of property tax on
2-52 the market value of a dealer's vessel and outboard motor inventory
2-53 of an owner who was not a dealer on January 1 of the prior tax
2-54 year, the chief appraiser shall estimate the market value of the
2-55 dealer's vessel and outboard motor inventory. In making the
2-56 estimate required by this subsection, the chief appraiser shall
2-57 extrapolate using sales data, if any, generated by sales from the
2-58 dealer's vessel and outboard motor inventory in the prior tax year.
2-59 (d) Except for the dealer's vessel and outboard motor
2-60 inventory, personal property held by a dealer is appraised as
2-61 provided by other sections of this code. In the case of a dealer
2-62 whose sales from the dealer's vessel and outboard motor inventory
2-63 are made predominantly to dealers, the chief appraiser shall
2-64 appraise the dealer's vessel and outboard motor inventory as
2-65 provided by Section 23.12 of this code.
2-66 (e) A dealer is presumed to be an owner of a dealer's vessel
2-67 and outboard motor inventory on January 1 if, in the 12-month
2-68 period ending on December 31 of the immediately preceding year, the
2-69 dealer sold a vessel or outboard motor to a person other than a
2-70 dealer. The presumption created by this subsection is not rebutted
3-1 by the fact that a dealer has no vessels or outboard motors
3-2 physically on hand for sale from a dealer's vessel and outboard
3-3 motor inventory on January 1.
3-4 (f) The comptroller shall promulgate a form entitled
3-5 "Dealer's Vessel and Outboard Motor Inventory Declaration." Except
3-6 as provided by Section 23.12E(l) of this code, not later than
3-7 February 1 of each year or, in the case of a dealer who was not in
3-8 business on January 1, not later than 30 days after commencement of
3-9 business, each dealer shall file a declaration with the chief
3-10 appraiser and file a copy with the collector. The declaration is
3-11 sufficient to comply with this subsection if it sets forth the
3-12 following information:
3-13 (1) the name and business address of each location at
3-14 which the dealer owner conducts business;
3-15 (2) each of the dealer's and manufacturer's numbers
3-16 issued by the Parks and Wildlife Department;
3-17 (3) a statement that the dealer owner is the owner of
3-18 a dealer's vessel and outboard motor inventory; and
3-19 (4) the market value of the dealer's vessel and
3-20 outboard motor inventory for the current tax year as computed under
3-21 Subsection (b) of this section.
3-22 (g) Under the terms provided by this subsection, the chief
3-23 appraiser may examine the books and records of the holder of a
3-24 dealer's and manufacturer's number issued by the Parks and Wildlife
3-25 Department. A request made under this subsection must be made in
3-26 writing, delivered personally to the custodian of the records, must
3-27 provide a period not less than 15 days for the person to respond to
3-28 the request, and must state that the person to whom it is addressed
3-29 has the right to seek judicial relief from compliance with the
3-30 request. In a request made under this section the chief appraiser
3-31 may examine:
3-32 (1) the document issued by the Parks and Wildlife
3-33 Department showing the person's dealer's and manufacturer's number;
3-34 (2) documentation appropriate to allow the chief
3-35 appraiser to ascertain the applicability of this section and
3-36 Section 23.12E of this code to the person;
3-37 (3) sales records to substantiate information set
3-38 forth in the dealer's declaration filed by the person.
3-39 (h) If a dealer fails to file a declaration required by this
3-40 section, or if, on the declaration required by this section, a
3-41 dealer reports the sale of fewer than five vessels or outboard
3-42 motors in the prior year, the chief appraiser shall report that
3-43 fact to the Parks and Wildlife Department.
3-44 (i) A dealer who fails to file a declaration required by
3-45 this section commits an offense. An offense under this subsection
3-46 is a misdemeanor punishable by a fine not to exceed $500. Each day
3-47 during which a dealer fails to comply with the terms of this
3-48 subsection is a separate violation.
3-49 (j) A person who violates Subsection (h) of this section
3-50 commits an offense. An offense under this subsection is a
3-51 misdemeanor punishable by a fine not to exceed $500. Each day
3-52 during which a person fails to comply with the terms of Subsection
3-53 (h) of this section is a separate violation.
3-54 (k) In addition to other penalties provided by law, a dealer
3-55 who fails to file a declaration required by this section shall
3-56 forfeit a penalty. A tax lien attaches to the dealer's business
3-57 personal property to secure payment of the penalty. The
3-58 appropriate district attorney, criminal district attorney, or
3-59 county attorney shall collect the penalty established by this
3-60 section in the name of the chief appraiser or collector. Venue of
3-61 an action brought under this subsection is in the county in which
3-62 the violation occurred or in the county in which the owner
3-63 maintains his principal place of business or residence. A penalty
3-64 forfeited under this subsection is $1,000 for each month or part of
3-65 a month in which a declaration is not filed after it is due.
3-66 SECTION 4. Subchapter B, Chapter 23, Tax Code, is amended by
3-67 adding Section 23.12E to read as follows:
3-68 Sec. 23.12E. PREPAYMENT OF TAXES BY CERTAIN TAXPAYERS. (a)
3-69 In this section:
3-70 (1) "Aggregate tax rate" means the combined tax rates
4-1 of all relevant taxing units authorized by law to levy property
4-2 taxes against a dealer's vessel and outboard motor inventory.
4-3 (2) "Chief appraiser" has the meaning given it in
4-4 Section 23.12D of this code.
4-5 (3) "Collector" has the meaning given it in Section
4-6 23.12D of this code.
4-7 (4) "Dealer's vessel and outboard motor inventory" has
4-8 the meaning given it in Section 23.12D of this code.
4-9 (5) "Declaration" has the meaning given it in Section
4-10 23.12D of this code.
4-11 (6) "Owner" has the meaning given it in Section 23.12D
4-12 of this code.
4-13 (7) "Relevant taxing unit" means a taxing unit,
4-14 including the county, authorized by law to levy property taxes
4-15 against a dealer's vessel and outboard motor inventory.
4-16 (8) "Sales price" has the meaning given it in Section
4-17 23.12D of this code.
4-18 (9) "Statement" means the dealer's vessel and outboard
4-19 motor inventory tax statement filed on a form promulgated by the
4-20 comptroller as required by this section.
4-21 (10) "Subsequent sale" has the meaning given it in
4-22 Section 23.12D of this code.
4-23 (11) "Total annual sales" has the meaning given it in
4-24 Section 23.12D of this code.
4-25 (12) "Unit property tax factor" means a number equal
4-26 to one-twelfth of the prior year aggregate tax rate at the location
4-27 where a dealer's vessel and outboard motor inventory is located on
4-28 January 1 of the current year.
4-29 (b) Except for a vessel or outboard motor sold to a dealer,
4-30 a vessel or outboard motor included in a fleet transaction, or a
4-31 vessel or outboard motor that is the subject of a subsequent sale,
4-32 an owner or a person who has agreed by contract to pay the owner's
4-33 current year property taxes levied against the owner's vessel and
4-34 outboard motor inventory shall assign a unit property tax to each
4-35 vessel and outboard motor sold from a dealer's vessel and outboard
4-36 motor inventory. The unit property tax of each vessel or outboard
4-37 motor is determined by multiplying the sales price of the vessel or
4-38 outboard motor by the unit property tax factor. On or before the
4-39 10th day of each month the owner shall, together with the statement
4-40 filed by the owner as provided by this section, deposit with the
4-41 collector a sum equal to the total of unit property tax assigned to
4-42 all vessels and outboard motors sold from the dealer's vessel and
4-43 outboard motor inventory in the prior month to which a unit
4-44 property tax was assigned. The money shall be deposited by the
4-45 collector in or otherwise credited by the collector to the owner's
4-46 escrow account for prepayment of property taxes as provided by this
4-47 section. An escrow account required by this section is used to pay
4-48 property taxes levied against the dealer's vessel and outboard
4-49 motor inventory, and the owner shall fund the escrow account as
4-50 provided by this subsection.
4-51 (c) The collector shall maintain the escrow account for each
4-52 owner in the county depository. The collector is not required to
4-53 maintain a separate account in the depository for each escrow
4-54 account created as provided by this section but shall maintain
4-55 separate records for each owner. The collector shall retain any
4-56 interest generated by the escrow account to defray the cost of
4-57 administration of the prepayment procedure established by this
4-58 section. Interest generated by an escrow account created as
4-59 provided by this section is the sole property of the collector, and
4-60 that interest may be used by no entity other than the collector.
4-61 Interest generated by an escrow account may not be used to reduce
4-62 or otherwise affect the annual appropriation to the collector that
4-63 would otherwise be made.
4-64 (d) The owner may not withdraw funds in an escrow account
4-65 created pursuant to this section.
4-66 (e) The comptroller shall promulgate a form entitled
4-67 "Dealer's Vessel and Outboard Motor Inventory Tax Statement." A
4-68 dealer shall complete the form with respect to each vessel and
4-69 outboard motor sold. A dealer may use no other form for that
4-70 purpose. The statement may include the information the comptroller
5-1 deems appropriate but shall include at least the following:
5-2 (1) a description of the vessel or outboard motor
5-3 sold;
5-4 (2) the sales price of the vessel or outboard motor;
5-5 (3) the unit property tax of the vessel or outboard
5-6 motor, if any; and
5-7 (4) the reason no unit property tax is assigned if no
5-8 unit property tax is assigned.
5-9 (f) On or before the 10th day of each month a dealer shall
5-10 file with the collector the statement covering the sale of each
5-11 vessel or outboard motor sold by the dealer in the prior month. A
5-12 dealer shall file a copy of the statement with the chief appraiser
5-13 and retain documentation relating to the disposition of each vessel
5-14 and outboard motor sold. A chief appraiser or collector may
5-15 examine documents held by a dealer as provided by this subsection
5-16 in the same manner, and subject to the same provisions, as are set
5-17 forth in Section 23.12D(g) of this code.
5-18 (g) Except as provided by this subsection, the requirements
5-19 of Subsection (f) of this section apply to all dealers, without
5-20 regard to whether or not the dealer owes vessel and outboard motor
5-21 inventory tax for the current year. A dealer who owes no vessel
5-22 and outboard motor inventory tax for the current year because he
5-23 was not in business on January 1:
5-24 (1) shall file the statement required by this section
5-25 showing the information required by this section for each month
5-26 during which the dealer is in business; and
5-27 (2) may neither assign a unit property tax to a vessel
5-28 or outboard motor sold by the dealer nor remit money with the
5-29 statement unless pursuant to the terms of a contract as provided by
5-30 Subsection (l) of this section.
5-31 (h) A collector may establish a procedure, voluntary or
5-32 mandatory, by which the unit property tax of a vessel or outboard
5-33 motor is paid and deposited into an owner's escrow account at the
5-34 time of processing the transfer of title to the vessel or outboard
5-35 motor.
5-36 (i) A relevant taxing unit shall, on its tax bill prepared
5-37 for the owner of a dealer's vessel and outboard motor inventory,
5-38 separately itemize the taxes levied against the dealer's vessel and
5-39 outboard motor inventory. When the tax bill is prepared by a
5-40 relevant taxing unit for a dealer's vessel and outboard motor
5-41 inventory, the assessor for the relevant taxing unit, or an entity,
5-42 if any, other than the collector, that collects taxes on behalf of
5-43 the taxing unit, shall provide the collector a true and correct
5-44 copy of the tax bill sent to the owner, including taxes levied
5-45 against a dealer's vessel and outboard motor inventory. The
5-46 collector shall apply the money in the owner's escrow account to
5-47 the taxes imposed and deliver a tax receipt to the owner. The
5-48 collector shall apply the amount to each relevant taxing unit in
5-49 proportion to the amount of taxes levied, and the assessor of each
5-50 relevant taxing unit shall apply the funds received from the
5-51 collector to the taxes owed by the owner.
5-52 (j) If the amount in the escrow account is not sufficient to
5-53 pay the taxes in full, the collector shall apply the money to the
5-54 taxes and deliver to the owner a tax receipt for the partial
5-55 payment and a tax bill for the amount of the deficiency together
5-56 with a statement that the owner must remit to the collector the
5-57 balance of the total tax due.
5-58 (k) The collector shall remit to each relevant taxing unit
5-59 the total amount collected by the collector in deficiency payments.
5-60 The assessor of each relevant taxing unit shall apply those funds
5-61 to the taxes owed by the owner. Taxes that are due but not
5-62 received by the collector on or before January 31 are delinquent.
5-63 Not later than February 15, the collector shall distribute to
5-64 relevant taxing units in the manner set forth in this section all
5-65 funds collected pursuant to the authority of this section and held
5-66 in escrow by the collector as provided by this section. This
5-67 section does not impose a duty on a collector to collect delinquent
5-68 taxes that the collector is not otherwise obligated by law or
5-69 contract to collect.
5-70 (l) A person who acquires the business or assets of an owner
6-1 may, by contract, agree to pay the current year vessel and outboard
6-2 motor inventory taxes owed by the owner. The owner who owes the
6-3 current year tax and the person who acquires the business or assets
6-4 of the owner shall jointly notify the chief appraiser and the
6-5 collector of the terms of the agreement and of the fact that the
6-6 other person has agreed to pay the current year vessel and outboard
6-7 motor inventory taxes owed by the dealer. The chief appraiser and
6-8 the collector shall adjust their records accordingly.
6-9 Notwithstanding the terms of Section 23.12D of this code, a person
6-10 who agrees to pay current year vessel and outboard motor inventory
6-11 taxes as provided by this subsection is not required to file a
6-12 declaration until the year following the acquisition. This
6-13 subsection does not relieve the selling owner of the tax liability.
6-14 (m) A dealer who fails to file a statement as required by
6-15 this section commits an offense. An offense under this subsection
6-16 is a misdemeanor punishable by a fine not to exceed $100. Each day
6-17 during which a dealer fails to comply with the terms of this
6-18 subsection is a separate violation.
6-19 (n) In addition to other penalties provided by law, a dealer
6-20 who fails to file a statement as required by this section shall
6-21 forfeit a penalty. A tax lien attaches to the owner's business
6-22 personal property to secure payment of the penalty. The
6-23 appropriate district attorney, criminal district attorney, or
6-24 county attorney shall collect the penalty established by this
6-25 section in the name of the chief appraiser or collector. Venue of
6-26 an action brought under this subsection is in the county in which
6-27 the violation occurred or in the county in which the owner
6-28 maintains his principal place of business or residence. A penalty
6-29 forfeited under this subsection is $500 for each month or part of a
6-30 month in which a statement is not filed after it is due.
6-31 (o) An owner who fails to remit unit property taxes due as
6-32 required by this section shall pay a penalty of five percent of the
6-33 amount due. If the amount is not paid within 10 days after the due
6-34 date, the owner shall pay an additional penalty of five percent of
6-35 the amount due. Notwithstanding the terms of this section, unit
6-36 property taxes paid on or before January 31 of the year following
6-37 the date on which they are due are not delinquent. The collector,
6-38 the collector's designated agent, or the county or district
6-39 attorney shall enforce the terms of this subsection. A penalty
6-40 under this subsection is in addition to any other penalty provided
6-41 by law if the owner's taxes are delinquent.
6-42 (p) Fines and penalties collected pursuant to the authority
6-43 of this section shall be deposited in the county depository to the
6-44 credit of the general fund.
6-45 SECTION 5. Subchapter B, Chapter 23, Tax Code, is amended by
6-46 adding Section 23.12F to read as follows:
6-47 Sec. 23.12F. DECLARATIONS AND STATEMENTS CONFIDENTIAL. (a)
6-48 In this section:
6-49 (1) "Collector" has the meaning given it in Section
6-50 23.12D of this code.
6-51 (2) "Chief appraiser" has the meaning given it in
6-52 Section 23.12D of this code.
6-53 (3) "Dealer" has the meaning given it in Section
6-54 23.12D of this code.
6-55 (4) "Declaration" has the meaning given it in Section
6-56 23.12D of this code.
6-57 (5) "Owner" has the meaning given it in Section 23.12D
6-58 of this code.
6-59 (6) "Statement" has the meaning given it in Section
6-60 23.12D of this code.
6-61 (b) Except as provided by this section, a declaration or
6-62 statement filed with a chief appraiser or collector as required by
6-63 Section 23.12D or Section 23.12E of this code is confidential and
6-64 not open to public inspection. A declaration or statement and the
6-65 information contained in either may not be disclosed to anyone
6-66 except an employee of the appraisal office who appraises the
6-67 property or to an employee of the county tax assessor-collector
6-68 involved in the maintenance of the owner's escrow account.
6-69 (c) Information made confidential by this section may be
6-70 disclosed:
7-1 (1) in a judicial or administrative proceeding
7-2 pursuant to a lawful subpoena;
7-3 (2) to the person who filed the declaration or
7-4 statement or to that person's representative authorized by the
7-5 person in writing to receive the information;
7-6 (3) to the comptroller or an employee of the
7-7 comptroller authorized by the comptroller to receive the
7-8 information;
7-9 (4) to a collector or chief appraiser;
7-10 (5) to a district attorney, criminal district
7-11 attorney, or county attorney involved in the enforcement of a
7-12 penalty imposed pursuant to Section 23.12D or Section 23.12E of
7-13 this code;
7-14 (6) for statistical purposes if in a form that does
7-15 not identify specific property or a specific property owner; or
7-16 (7) if and to the extent that the information is
7-17 required for inclusion in a document or record that the appraisal
7-18 or collection office is required by law to prepare or maintain.
7-19 (d) A person who knowingly permits inspection of a
7-20 declaration or statement by a person not authorized to inspect the
7-21 declaration or statement or who discloses confidential information
7-22 contained in the declaration or statement to a person not
7-23 authorized to receive the information commits an offense. An
7-24 offense under this subsection is a Class B misdemeanor.
7-25 SECTION 6. This Act takes effect January 1, 1996.
7-26 SECTION 7. The importance of this legislation and the
7-27 crowded condition of the calendars in both houses create an
7-28 emergency and an imperative public necessity that the
7-29 constitutional rule requiring bills to be read on three several
7-30 days in each house be suspended, and this rule is hereby suspended.
7-31 * * * * *