By Heflin H.B. No. 2621
75R4132 JD-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the appraisal and ad valorem taxation of heavy
1-3 equipment.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Sections 23.12(a) and (f), Tax Code, are amended
1-6 to read as follows:
1-7 (a) Except as provided by Sections 23.121, 23.1241, [23.12A]
1-8 and 23.12D [of this code], the market value of an inventory is the
1-9 price for which it would sell as a unit to a purchaser who would
1-10 continue the business. An inventory shall include residential real
1-11 property which has never been occupied as a residence and is held
1-12 for sale in the ordinary course of a trade or business, provided
1-13 that the residential real property remains unoccupied, is not
1-14 leased or rented, and produces no income.
1-15 (f) The owner of an inventory other than a dealer's motor
1-16 vehicle inventory as that term is defined by [in] Section 23.121, a
1-17 dealer's heavy equipment inventory as that term is defined by
1-18 Section 23.1241, [of this code] or a dealer's vessel and outboard
1-19 motor inventory as that term is defined by [in] Section 23.12D [of
1-20 this code] may elect to have the inventory appraised at its market
1-21 value as of September 1 of the year preceding the tax year to which
1-22 the appraisal applies by filing an application with the chief
1-23 appraiser requesting that the inventory be appraised as of
1-24 September 1. The application must clearly describe the inventory
2-1 to which it applies and be signed by the owner of the inventory.
2-2 The application applies to the appraisal of the inventory in each
2-3 tax year that begins after the next August 1 following the date the
2-4 application is filed with the chief appraiser unless the owner of
2-5 the inventory by written notice filed with the chief appraiser
2-6 revokes the application or the ownership of the inventory changes.
2-7 A notice revoking the application is effective for each tax year
2-8 that begins after the next September following the date the notice
2-9 of revocation is filed with the chief appraiser.
2-10 SECTION 2. Subchapter B, Chapter 23, Tax Code, is amended by
2-11 adding Sections 23.1241 and 23.1242 to read as follows:
2-12 Sec. 23.1241. DEALER'S HEAVY EQUIPMENT INVENTORY; VALUE.
2-13 (a) In this section:
2-14 (1) "Dealer" means a person engaged in the business in
2-15 this state of selling heavy equipment.
2-16 (2) "Dealer's heavy equipment inventory" means all
2-17 items of heavy equipment that a dealer holds for sale at retail.
2-18 (3) "Dealer-financed sale" means the sale at retail of
2-19 an item of heavy equipment in which the dealer finances the
2-20 purchase of the item, is the sole lender in the transaction, and
2-21 retains exclusively the right to enforce the terms of the agreement
2-22 that evidences the sale.
2-23 (4) "Declaration" means a dealer's heavy equipment
2-24 inventory declaration form adopted by the comptroller under this
2-25 section.
2-26 (5) "Fleet transaction" means the sale of five or more
2-27 items of heavy equipment from a dealer's heavy equipment inventory
3-1 to the same person in one calendar year.
3-2 (6) "Heavy equipment" means self-propelled,
3-3 self-powered, or pull-type equipment, including a diesel engine,
3-4 that weighs at least 5,000 pounds and is intended to be used for
3-5 construction, industrial, maritime, mining, or forestry uses. The
3-6 term does not include a motor vehicle that is required by:
3-7 (A) Chapter 501, Transportation Code, to be
3-8 titled; or
3-9 (B) Chapter 502, Transportation Code, to be
3-10 registered.
3-11 (7) "Sales price" means the total amount of money paid
3-12 or to be paid to a dealer for the purchase of an item of heavy
3-13 equipment.
3-14 (8) "Subsequent sale" means a dealer-financed sale of
3-15 an item of heavy equipment that, at the time of the sale, has been
3-16 the subject of a dealer-financed sale from the same dealer's heavy
3-17 equipment inventory in the same calendar year.
3-18 (9) "Total annual sales" means the total of the sales
3-19 price for each sale from a dealer's heavy equipment inventory in a
3-20 12-month period.
3-21 (b) For the purpose of the computation of property tax, the
3-22 market value of a dealer's heavy equipment inventory on January 1
3-23 is the total annual sales, less sales to dealers, fleet
3-24 transactions, and subsequent sales, for the 12-month period
3-25 corresponding to the preceding tax year, divided by 12.
3-26 (c) For the purpose of the computation of property tax on
3-27 the market value of the dealer's heavy equipment inventory of an
4-1 owner who was not a dealer on January 1 of the preceding tax year,
4-2 the chief appraiser shall estimate the market value of the dealer's
4-3 heavy equipment inventory. In making the estimate required by this
4-4 subsection, the chief appraiser shall extrapolate using sales data,
4-5 if any, generated by sales from the dealer's heavy equipment
4-6 inventory in the preceding tax year.
4-7 (d) Except for dealer's heavy equipment inventory, personal
4-8 property held by a dealer is appraised as provided by the other
4-9 sections of this code. In the case of a dealer whose sales from
4-10 the dealer's heavy equipment inventory are made predominately to
4-11 other dealers, the chief appraiser shall appraise the dealer's
4-12 heavy equipment inventory as provided by Section 23.12.
4-13 (e) A dealer is presumed to be an owner of a dealer's heavy
4-14 equipment inventory on January 1 if, in the 12-month period ending
4-15 on December 31 of the preceding year, the dealer sold an item of
4-16 heavy equipment to a person other than a dealer. The presumption
4-17 is not rebutted by the fact that a dealer has no item of heavy
4-18 equipment physically on hand for sale from the dealer's heavy
4-19 equipment inventory on January 1.
4-20 (f) The comptroller by rule shall adopt a dealer's heavy
4-21 equipment inventory declaration form. Except as provided by
4-22 Section 23.1242(k), not later than February 1 of each year, or, in
4-23 the case of a dealer who was not in business on January 1, not
4-24 later than 30 days after commencement of business, each dealer
4-25 shall file a declaration with the chief appraiser and file a copy
4-26 with the collector. The declaration is sufficient to comply with
4-27 this subsection if it sets forth:
5-1 (1) the name and business address of each location at
5-2 which the declarant conducts business;
5-3 (2) a statement that the declarant is the owner of a
5-4 dealer's heavy equipment inventory; and
5-5 (3) the market value of the declarant's heavy
5-6 equipment inventory for the current tax year as computed under
5-7 Subsection (b).
5-8 (g) As provided by this subsection, the chief appraiser may
5-9 examine the books and records of a dealer. A request made under
5-10 this subsection must be made in writing, must be delivered
5-11 personally to the custodian of the records at a location at which
5-12 the dealer conducts business, must provide a period of not less
5-13 than 15 days for the person to respond to the request, and must
5-14 state that the person to whom the request is addressed has the
5-15 right to seek judicial relief from compliance with the request. In
5-16 a request made under this section, the chief appraiser may examine:
5-17 (1) documentation appropriate to allow the chief
5-18 appraiser to ascertain the applicability of this section and
5-19 Section 23.1242 to the person; and
5-20 (2) sales records to substantiate information set
5-21 forth in the declaration filed by the dealer.
5-22 (h) If a dealer fails to file a declaration as required by
5-23 Subsection (f), or if, on the declaration required by Subsection
5-24 (f), a dealer reports the sale of fewer than five items of heavy
5-25 equipment in the preceding year, the chief appraiser shall report
5-26 that fact to the comptroller.
5-27 (i) A dealer who fails to file a declaration as required by
6-1 Subsection (f) commits an offense. An offense under this
6-2 subsection is a misdemeanor punishable by a fine not to exceed
6-3 $500. Each day that a person fails to file the declaration as
6-4 required by Subsection (f) is a separate violation.
6-5 (j) In addition to other penalties provided by law, a dealer
6-6 who fails to file a declaration required by Subsection (f) shall
6-7 forfeit a penalty. A tax lien attaches to the dealer's business
6-8 personal property to secure payment of the penalty. The
6-9 appropriate district attorney, criminal district attorney, or
6-10 county attorney shall collect the penalty established by this
6-11 section in the name of the chief appraiser or collector. Venue of
6-12 an action brought under this subsection is in the county in which
6-13 the violation occurred or in the county in which the owner
6-14 maintains the owner's principal place of business or residence. A
6-15 penalty forfeited under this subsection is $1,000 for each month or
6-16 part of a month in which a declaration is not filed after it is
6-17 due.
6-18 Sec. 23.1242. PREPAYMENT OF TAXES BY HEAVY EQUIPMENT
6-19 DEALERS. (a) In this section:
6-20 (1) "Aggregate tax rate" means the combined tax rates
6-21 of all appropriate taxing units authorized by law to levy property
6-22 taxes against a dealer's heavy equipment inventory.
6-23 (2) "Dealer's heavy equipment inventory,"
6-24 "declaration," "dealer," "sales price," "subsequent sale," and
6-25 "total annual sales" have the meanings assigned those terms by
6-26 Section 23.1241.
6-27 (3) "Statement" means the dealer's heavy equipment
7-1 inventory tax statement filed on a form adopted by the comptroller
7-2 under this section.
7-3 (4) "Unit property tax factor" means a number equal to
7-4 one-twelfth of the preceding year's aggregate ad valorem tax rate
7-5 at the location where a dealer's heavy equipment inventory is
7-6 located on January 1 of the current year.
7-7 (b) Except for an item of heavy equipment sold to a dealer,
7-8 an item of heavy equipment included in a fleet transaction, or an
7-9 item of heavy equipment that is the subject of a subsequent sale,
7-10 an owner or a person who has agreed by contract to pay the owner's
7-11 current year property taxes levied against the owner's heavy
7-12 equipment inventory shall assign a unit property tax to each item
7-13 of heavy equipment sold from a dealer's heavy equipment inventory.
7-14 The unit property tax of each item of heavy equipment is determined
7-15 by multiplying the sales price of the item by the unit property tax
7-16 factor. On or before the 10th day of each month the owner shall,
7-17 together with the statement filed by the owner as provided by this
7-18 section, deposit with the collector an amount equal to the total of
7-19 unit property tax assigned to all items of heavy equipment sold
7-20 from the dealer's heavy equipment inventory in the preceding month
7-21 to which a unit property tax was assigned. The money shall be
7-22 deposited by the collector to the credit of the owner's escrow
7-23 account for prepayment of property taxes as provided by this
7-24 section. An escrow account required by this section is used to pay
7-25 property taxes levied against the dealer's heavy equipment
7-26 inventory, and the owner shall fund the escrow account as provided
7-27 by this subsection.
8-1 (c) The collector shall maintain the escrow account for each
8-2 owner in the county depository. The collector is not required to
8-3 maintain a separate account in the depository for each escrow
8-4 account created as provided by this section, but shall maintain
8-5 separate records for each owner. The collector shall retain any
8-6 interest generated by the escrow account to defray the cost of
8-7 administration of the prepayment procedure established by this
8-8 section. Interest generated by an escrow account created as
8-9 provided by this section is the sole property of the collector and
8-10 that interest may not be used by an entity other than the
8-11 collector. Interest generated by an escrow account may not be used
8-12 to reduce or otherwise affect the annual appropriation to the
8-13 collector that would otherwise be made.
8-14 (d) The owner may not withdraw funds in an escrow account
8-15 created under this section.
8-16 (e) The comptroller by rule shall adopt a dealer's heavy
8-17 equipment inventory tax statement form. A dealer shall complete
8-18 the form with respect to each item of heavy equipment sold. A
8-19 dealer may use no other form for that purpose. The statement may
8-20 include the information the comptroller considers appropriate, but
8-21 shall include at least the following:
8-22 (1) a description of the item of heavy equipment sold,
8-23 including any unique identification or serial number affixed to the
8-24 item by the manufacturer;
8-25 (2) the sales price of the item of heavy equipment;
8-26 (3) the unit property tax of the item of heavy
8-27 equipment, if any; and
9-1 (4) the reason no unit property tax is assigned if no
9-2 unit property tax is assigned.
9-3 (f) On or before the 10th day of each month, a dealer shall
9-4 file with the collector the statement covering the sale of each
9-5 item of heavy equipment sold by the dealer in the preceding month.
9-6 A dealer shall file a copy of the statement with the chief
9-7 appraiser and retain documentation relating to the disposition of
9-8 each item of heavy equipment sold. A chief appraiser or collector
9-9 may examine documents held by a dealer as provided by this
9-10 subsection in the same manner, and subject to the same conditions,
9-11 as provided by Section 23.1241(g).
9-12 (g) Except as provided by this subsection, Subsection (f)
9-13 applies to any dealer, regardless of whether a dealer owes heavy
9-14 equipment inventory tax for the current year. A dealer who owes no
9-15 heavy equipment inventory tax for the current year because the
9-16 dealer was not in business on January 1:
9-17 (1) shall file the statement required by this section
9-18 showing the information required by this section for each month
9-19 that the dealer is in business; and
9-20 (2) may not assign a unit property tax to an item of
9-21 heavy equipment sold by the dealer or remit money with the
9-22 statement except in compliance with the terms of a contract as
9-23 provided by Subsection (k).
9-24 (h) A taxing unit shall, on its tax bill prepared for the
9-25 owner of a dealer's heavy equipment inventory, separately itemize
9-26 the taxes levied against the dealer's heavy equipment inventory.
9-27 When the tax bill is prepared for a dealer's heavy equipment
10-1 inventory, the assessor for the taxing unit, or an entity, if any,
10-2 other than the collector, that collects taxes on behalf of the
10-3 taxing unit, shall provide the collector a true and correct copy of
10-4 the tax bill sent to the owner, including taxes levied against the
10-5 dealer's heavy equipment inventory. The collector shall apply the
10-6 money in the owner's escrow account to the taxes imposed and
10-7 deliver a tax receipt to the owner. The collector shall apply the
10-8 amount to each appropriate taxing unit in proportion to the amount
10-9 of taxes levied, and the assessor of each taxing unit shall apply
10-10 the funds received from the collector to the taxes owed by the
10-11 owner.
10-12 (i) If the amount in the escrow account is not sufficient to
10-13 pay the taxes in full, the collector shall apply the money to the
10-14 taxes and deliver to the owner a tax receipt for the partial
10-15 payment and a tax bill for the amount of the deficiency together
10-16 with a statement that the owner must remit to the collector the
10-17 balance of the total tax due.
10-18 (j) The collector shall remit to each appropriate taxing
10-19 unit the total amount collected by the collector in deficiency
10-20 payments. The assessor of each taxing unit shall apply those funds
10-21 to the taxes owed by the owner. Taxes that are due but not
10-22 received by the collector on or before January 31 are delinquent.
10-23 Not later than February 15, the collector shall distribute to each
10-24 appropriate taxing unit in the manner provided by this section all
10-25 funds collected under authority of this section and held in escrow
10-26 by the collector under this section. This section does not impose
10-27 a duty on a collector to collect delinquent taxes that the
11-1 collector is not otherwise obligated by law or contract to collect.
11-2 (k) A person who acquires the business or assets of an owner
11-3 may, by contract, agree to pay the current year heavy equipment
11-4 inventory taxes owed by the owner. The owner who owes the current
11-5 year tax and the person who acquires the business or assets of the
11-6 owner shall jointly notify the chief appraiser and the collector of
11-7 the terms of the agreement and of the fact that the other person
11-8 has agreed to pay the current year heavy equipment inventory taxes
11-9 owed by the dealer. The chief appraiser and the collector shall
11-10 adjust their records accordingly. Notwithstanding Section 23.1241,
11-11 a person who agrees to pay current year heavy equipment inventory
11-12 taxes as provided by this subsection is not required to file a
11-13 declaration until the year following the acquisition. This
11-14 subsection does not relieve the selling owner of the tax liability.
11-15 (l) A dealer who fails to file a statement as required by
11-16 this section commits an offense. An offense under this subsection
11-17 is a misdemeanor punishable by a fine not to exceed $100. Each day
11-18 that a dealer fails to comply with this subsection is a separate
11-19 violation.
11-20 (m) In addition to other penalties provided by law, a dealer
11-21 who fails to file a statement as required by this section shall
11-22 forfeit a penalty. A tax lien attaches to the owner's business
11-23 personal property to secure payment of the penalty. The
11-24 appropriate district attorney, criminal district attorney, or
11-25 county attorney shall collect the penalty established by this
11-26 section in the name of the chief appraiser or collector. Venue of
11-27 an action brought under this subsection is in the county in which
12-1 the violation occurred or in the county in which the owner
12-2 maintains the owner's principal place of business or residence. A
12-3 penalty forfeited under this subsection is $500 for each month or
12-4 part of a month in which a statement is not filed after it is due.
12-5 (n) An owner who fails to remit unit property taxes due as
12-6 required by this section shall pay a penalty of five percent of the
12-7 amount due. If the amount is not paid within 10 days after the due
12-8 date, the owner shall pay an additional penalty of five percent of
12-9 the amount due. Notwithstanding this section, unit property taxes
12-10 paid on or before January 31 of the year following the date on
12-11 which they are due are not delinquent. The collector, the
12-12 collector's designated agent, or the county or district attorney
12-13 shall enforce this subsection. A penalty under this subsection is
12-14 in addition to any other penalty provided by law if the owner's
12-15 taxes are delinquent.
12-16 (o) A fine collected under this section shall be deposited
12-17 in the county depository to the credit of the general fund. A
12-18 penalty collected under this section is the sole property of the
12-19 collector, may be used by no entity other than the collector, and
12-20 may not be used to reduce or otherwise affect the annual
12-21 appropriation to the collector that would otherwise be made.
12-22 (p) Section 23.123 applies to a declaration or statement
12-23 filed under this section in the same manner in which that section
12-24 applies to a statement or declaration filed as required by Section
12-25 23.121 or 23.122.
12-26 SECTION 3. This Act takes effect January 1, 1998, and
12-27 applies only to a tax year that begins on or after that date.
13-1 SECTION 4. The importance of this legislation and the
13-2 crowded condition of the calendars in both houses create an
13-3 emergency and an imperative public necessity that the
13-4 constitutional rule requiring bills to be read on three several
13-5 days in each house be suspended, and this rule is hereby suspended.