1-1                                   AN ACT

 1-2     relating to the payment of property taxes pending appeal and to

 1-3     attorney's fees and penalties in a property tax appeal.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Sections 42.08(b) and (c), Tax Code, are amended

 1-6     to read as follows:

 1-7           (b)  Except as provided in Subsection (d), a property owner

 1-8     who appeals as provided by this chapter must pay taxes on the

 1-9     property subject to the appeal in the amount required by this

1-10     subsection before the delinquency date or the property owner

1-11     forfeits the right to proceed to a final determination of the

1-12     appeal.  The amount of taxes the property owner must pay on the

1-13     property before the delinquency date to comply with this subsection

1-14     is the lesser of:

1-15                 (1)  the amount of taxes due on the portion of the

1-16     taxable value of the property that is not in dispute [or the amount

1-17     of taxes imposed on the property in the preceding year, whichever

1-18     is greater]; or

1-19                 (2)  the amount of taxes due on the property under the

1-20     order from which the appeal is taken.

1-21           (c)  A property owner that pays an [the] amount of taxes

1-22     greater than that required by Subsection (b) does not forfeit the

1-23     property owner's right to a final determination of the appeal by

 2-1     making the payment.  If the property owner files a timely appeal

 2-2     under this chapter, taxes paid on the property are considered paid

 2-3     under protest, even if paid before the appeal is filed.

 2-4           SECTION 2.  Section 42.29, Tax Code, is amended to read as

 2-5     follows:

 2-6           Sec. 42.29.  ATTORNEY'S FEES.  (a)  A property owner who

 2-7     prevails in an appeal to the court under Section 42.25 or [Section]

 2-8     42.26 [of this code] may be awarded reasonable attorney's fees.

 2-9     The amount of the award may not [to] exceed the greater of:

2-10                 (1)  $15,000; or

2-11                 (2)  20 percent of the total amount by which the

2-12     property owner's tax liability is reduced as a result of the

2-13     appeal.

2-14           (b)  Notwithstanding Subsection (a), the amount of an [The]

2-15     award of attorney's fees[, however,] may not exceed the lesser of:

2-16                 (1)  $100,000; or

2-17                 (2)  the total amount by which the property owner's tax

2-18     liability is reduced as a result of the appeal.

2-19           SECTION 3.  Section 42.42, Tax Code, is amended by amending

2-20     Subsections (b) and (c) and adding Subsection (d) to read as

2-21     follows:

2-22           (b)  If the final determination of an appeal that increases a

2-23     property owner's tax liability occurs after the property owner has

2-24     paid his taxes, the assessor for each affected taxing unit shall

2-25     prepare and mail a supplemental tax bill in the manner provided by

 3-1     Chapter 31 [of this code] for tax bills generally.  The assessor

 3-2     shall include with the bill a brief explanation of the reason for

 3-3     and effect of the supplemental bill.  The additional tax is due on

 3-4     receipt of the supplemental bill and becomes delinquent if not paid

 3-5     before the delinquency date prescribed by Chapter 31 [of this code]

 3-6     or before the first day of the next month after the date of mailing

 3-7     that will provide at least 21 days for payment of the tax,

 3-8     whichever is later.

 3-9           (c)  If the final determination of an appeal occurs after the

3-10     property owner has paid a portion of the tax finally determined to

3-11     be due as required by Section 42.08 [of this code], the assessor

3-12     for each affected taxing unit shall prepare and mail a supplemental

3-13     tax bill in the form and manner prescribed by Subsection (b) [of

3-14     this section].  The additional tax is due and becomes delinquent as

3-15     provided by Subsection (b), but the property owner is liable for

3-16     penalties and interest on the tax included in the supplemental bill

3-17     calculated as provided by Section 33.01 as if the tax included in

3-18     the  supplemental bill became delinquent on the original

3-19     delinquency date prescribed by Chapter 31 [at the rate prescribed

3-20     by this code for delinquent taxes].

3-21           (d)  If the property owner did not pay any portion of the

3-22     taxes imposed on the property because the court found that payment

3-23     would constitute an unreasonable restraint on the owner's right of

3-24     access to the courts as provided by Section 42.08(d), after the

3-25     final determination of the appeal the assessor for each affected

 4-1     taxing unit shall prepare and mail a supplemental tax bill in the

 4-2     form and manner prescribed by Subsection (b).  The additional tax

 4-3     is due and becomes delinquent as provided by Subsection (b), but

 4-4     the property owner is liable for interest on the tax included in

 4-5     the supplemental bill calculated as provided by Section 33.01 as if

 4-6     the tax included in the supplemental bill became delinquent on the

 4-7     delinquency date prescribed by Chapter 31.

 4-8           SECTION 4.  (a)  The changes in law made by Sections 1 and 2

 4-9     of this Act apply only to an appeal filed under Chapter 42, Tax

4-10     Code, as amended by this Act, on or after the effective date of

4-11     this Act.  An appeal filed under Chapter 42, Tax Code, as amended

4-12     by this Act, before the effective date of this Act is governed by

4-13     the law in effect when the appeal was filed, and that law is

4-14     continued in effect for that purpose.

4-15           (b)  Except as provided by Subsection (c) of this section,

4-16     the change in law made by this Act to Section 42.42(c), Tax Code,

4-17     applies only to the accrual of penalties and interest on taxes on

4-18     property subject to an appeal that are paid on or after the

4-19     effective date of this Act or for which the supplemental tax bill

4-20     is mailed under Section 42.42(c), Tax Code, on or after the

4-21     effective date of this Act.  For taxes on property subject to an

4-22     appeal for which the original delinquency date prescribed by

4-23     Chapter 31, Tax Code, occurred before the effective date of this

4-24     Act and that are paid on or after the effective date of this Act or

4-25     for which the supplemental tax bill is sent under Section 42.42(c),

 5-1     Tax Code, on or after the effective date of this Act, penalties

 5-2     imposed as provided by Section 42.42(c), Tax Code, as amended by

 5-3     this Act, on the additional tax paid on or after the effective date

 5-4     of this Act or included in the supplemental tax bill sent on or

 5-5     after that date are calculated as provided by Section 33.01, Tax

 5-6     Code, as if the delinquency date for those taxes is the first day

 5-7     of the first calendar month that begins on or after the 21st day

 5-8     after the effective date of this Act.

 5-9           (c)  The accrual of penalties and interest on taxes for which

5-10     a supplemental tax bill is sent as provided by Section 42.42(c),

5-11     Tax Code, before the effective date of this Act is governed by

5-12     Section 42.42(c), Tax Code, as that section existed when the

5-13     supplemental tax bill was mailed, and that law is continued in

5-14     effect for that purpose.

5-15           (d)  Section 42.42(d), Tax Code, as added by this Act,

5-16     applies only to the accrual of interest on unpaid taxes covered by

5-17     that subsection on or after the effective date of this Act.  The

5-18     accrual of penalties and interest on those taxes before the

5-19     effective date of this Act is governed by the applicable law in

5-20     effect before the effective date of this Act.

5-21           SECTION 5.  The importance of this legislation and the

5-22     crowded condition of the calendars in both houses create an

5-23     emergency and an imperative public necessity that the

5-24     constitutional rule requiring bills to be read on three several

5-25     days in each house be suspended, and this rule is hereby suspended,

 6-1     and that this Act take effect and be in force from and after its

 6-2     passage, and it is so enacted.

         _______________________________     _______________________________

             President of the Senate              Speaker of the House

               I certify that H.B. No. 2201 was passed by the House on April

         11, 1997, by the following vote:  Yeas 133, Nays 0, 1 present, not

         voting; and that the House concurred in Senate amendments to H.B.

         No. 2201 on May 14, 1997, by the following vote:  Yeas 141, Nays 0,

         3 present, not voting.

                                             _______________________________

                                                 Chief Clerk of the House

               I certify that H.B. No. 2201 was passed by the Senate, with

         amendments, on May 12, 1997, by the following vote:  Yeas 31, Nays

         0.

                                             _______________________________

                                                 Secretary of the Senate

         APPROVED:  _____________________

                            Date

                    _____________________

                          Governor