By: Armbrister S.B. No. 759
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the appraisal and ad valorem taxation of heavy
1-2 equipment; providing penalties.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subsections (a) and (f), Section 23.12, Tax Code,
1-5 are amended to read as follows:
1-6 (a) Except as provided by Sections 23.121, 23.1241, [23.12A]
1-7 and 23.12D [of this code], the market value of an inventory is the
1-8 price for which it would sell as a unit to a purchaser who would
1-9 continue the business. An inventory shall include residential real
1-10 property which has never been occupied as a residence and is held
1-11 for sale in the ordinary course of a trade or business, provided
1-12 that the residential real property remains unoccupied, is not
1-13 leased or rented, and produces no income.
1-14 (f) The owner of an inventory other than a dealer's motor
1-15 vehicle inventory as that term is defined by [in] Section 23.121, a
1-16 dealer's heavy equipment inventory as that term is defined by
1-17 Section 23.1241, [of this code] or a dealer's vessel and outboard
1-18 motor inventory as that term is defined by [in] Section 23.12D [of
1-19 this code] may elect to have the inventory appraised at its market
1-20 value as of September 1 of the year preceding the tax year to which
1-21 the appraisal applies by filing an application with the chief
1-22 appraiser requesting that the inventory be appraised as of
1-23 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.
3-1 (5) "Fleet transaction" means the sale of five or more
3-2 items of heavy equipment from a dealer's heavy equipment inventory
3-3 to the same person in one calendar year.
3-4 (6) "Heavy equipment" means self-propelled,
3-5 self-powered, or pull-type equipment, including farm equipment or a
3-6 diesel engine, that weighs at least 3,000 pounds and is intended to
3-7 be used for agricultural, construction, industrial, maritime,
3-8 mining, or forestry uses. The term does not include a motor
3-9 vehicle that is required by:
3-10 (A) Chapter 501, Transportation Code, to be
3-11 titled; or
3-12 (B) Chapter 502, Transportation Code, to be
3-13 registered.
3-14 (7) "Sales price" means the total amount of money paid
3-15 or to be paid to a dealer for the purchase of an item of heavy
3-16 equipment.
3-17 (8) "Subsequent sale" means a dealer-financed sale of
3-18 an item of heavy equipment that, at the time of the sale, has been
3-19 the subject of a dealer-financed sale from the same dealer's heavy
3-20 equipment inventory in the same calendar year.
3-21 (9) "Total annual sales" means the total of the sales
3-22 price for each sale from a dealer's heavy equipment inventory in a
3-23 12-month period.
3-24 (b) For the purpose of the computation of property tax, the
3-25 market value of a dealer's heavy equipment inventory on January 1
4-1 is the total annual sales, less sales to dealers, fleet
4-2 transactions, and subsequent sales, for the 12-month period
4-3 corresponding to the preceding tax year, divided by 12.
4-4 (c) For the purpose of the computation of property tax on
4-5 the market value of the dealer's heavy equipment inventory of an
4-6 owner who was not a dealer on January 1 of the preceding tax year,
4-7 the chief appraiser shall estimate the market value of the dealer's
4-8 heavy equipment inventory. In making the estimate required by this
4-9 subsection, the chief appraiser shall extrapolate using sales data,
4-10 if any, generated by sales from the dealer's heavy equipment
4-11 inventory in the preceding tax year.
4-12 (d) Except for dealer's heavy equipment inventory, personal
4-13 property held by a dealer is appraised as provided by the other
4-14 sections of this code. In the case of a dealer whose sales from
4-15 the dealer's heavy equipment inventory are made predominately to
4-16 other dealers, the chief appraiser shall appraise the dealer's
4-17 heavy equipment inventory as provided by Section 23.12.
4-18 (e) A dealer is presumed to be an owner of a dealer's heavy
4-19 equipment inventory on January 1 if, in the 12-month period ending
4-20 on December 31 of the preceding year, the dealer sold an item of
4-21 heavy equipment to a person other than a dealer. The presumption
4-22 is not rebutted by the fact that a dealer has no item of heavy
4-23 equipment physically on hand for sale from the dealer's heavy
4-24 equipment inventory on January 1.
4-25 (f) The comptroller by rule shall adopt a dealer's heavy
5-1 equipment inventory declaration form. Except as provided by
5-2 Section 23.1242(k), not later than February 1 of each year, or, in
5-3 the case of a dealer who was not in business on January 1, not
5-4 later than 30 days after commencement of business, each dealer
5-5 shall file a declaration with the chief appraiser and file a copy
5-6 with the collector. The declaration is sufficient to comply with
5-7 this subsection if it sets forth:
5-8 (1) the name and business address of each location at
5-9 which the declarant conducts business;
5-10 (2) a statement that the declarant is the owner of a
5-11 dealer's heavy equipment inventory; and
5-12 (3) the market value of the declarant's heavy
5-13 equipment inventory for the current tax year as computed under
5-14 Subsection (b).
5-15 (g) As provided by this subsection, the chief appraiser may
5-16 examine the books and records of a dealer. A request made under
5-17 this subsection must be made in writing, must be delivered
5-18 personally to the custodian of the records at a location at which
5-19 the dealer conducts business, must provide a period of not less
5-20 than 15 days for the person to respond to the request, and must
5-21 state that the person to whom the request is addressed has the
5-22 right to seek judicial relief from compliance with the request. In
5-23 a request made under this section, the chief appraiser may examine:
5-24 (1) documentation appropriate to allow the chief
5-25 appraiser to ascertain the applicability of this section and
6-1 Section 23.1242 to the person; and
6-2 (2) sales records to substantiate information set
6-3 forth in the declaration filed by the dealer.
6-4 (h) If a dealer fails to file a declaration as required by
6-5 Subsection (f) or if, on the declaration required by Subsection
6-6 (f), a dealer reports the sale of fewer than five items of heavy
6-7 equipment in the preceding year, the chief appraiser shall report
6-8 that fact to the comptroller.
6-9 (i) A dealer who fails to file a declaration as required by
6-10 Subsection (f) commits an offense. An offense under this
6-11 subsection is a misdemeanor punishable by a fine not to exceed
6-12 $500. Each day that a person fails to file the declaration as
6-13 required by Subsection (f) is a separate violation.
6-14 (j) In addition to other penalties provided by law, a dealer
6-15 who fails to file a declaration required by Subsection (f) shall
6-16 forfeit a penalty. A tax lien attaches to the dealer's business
6-17 personal property to secure payment of the penalty. The
6-18 appropriate district attorney, criminal district attorney, or
6-19 county attorney shall collect the penalty established by this
6-20 section in the name of the chief appraiser or collector. Venue of
6-21 an action brought under this subsection is in the county in which
6-22 the violation occurred or in the county in which the owner
6-23 maintains the owner's principal place of business or residence. A
6-24 penalty forfeited under this subsection is $1,000 for each month or
6-25 part of a month in which a declaration is not filed after it is
7-1 due.
7-2 Sec. 23.1242. PREPAYMENT OF TAXES BY HEAVY EQUIPMENT
7-3 DEALERS. (a) In this section:
7-4 (1) "Aggregate tax rate" means the combined tax rates
7-5 of all appropriate taxing units authorized by law to levy property
7-6 taxes against a dealer's heavy equipment inventory.
7-7 (2) "Dealer's heavy equipment inventory,"
7-8 "declaration," "dealer," "sales price," "subsequent sale," and
7-9 "total annual sales" have the meanings assigned those terms by
7-10 Section 23.1241.
7-11 (3) "Statement" means the dealer's heavy equipment
7-12 inventory tax statement filed on a form adopted by the comptroller
7-13 under this section.
7-14 (4) "Unit property tax factor" means a number equal to
7-15 one-twelfth of the preceding year's aggregate ad valorem tax rate
7-16 at the location where a dealer's heavy equipment inventory is
7-17 located on January 1 of the current year.
7-18 (b) Except for an item of heavy equipment sold to a dealer,
7-19 an item of heavy equipment included in a fleet transaction, or an
7-20 item of heavy equipment that is the subject of a subsequent sale,
7-21 an owner or a person who has agreed by contract to pay the owner's
7-22 current year property taxes levied against the owner's heavy
7-23 equipment inventory shall assign a unit property tax to each item
7-24 of heavy equipment sold from a dealer's heavy equipment inventory.
7-25 The unit property tax of each item of heavy equipment is determined
8-1 by multiplying the sales price of the item by the unit property tax
8-2 factor. On or before the 10th day of each month the owner shall,
8-3 together with the statement filed by the owner as provided by this
8-4 section, deposit with the collector an amount equal to the total of
8-5 unit property tax assigned to all items of heavy equipment sold
8-6 from the dealer's heavy equipment inventory in the preceding month
8-7 to which a unit property tax was assigned. The money shall be
8-8 deposited by the collector to the credit of the owner's escrow
8-9 account for prepayment of property taxes as provided by this
8-10 section. An escrow account required by this section is used to pay
8-11 property taxes levied against the dealer's heavy equipment
8-12 inventory, and the owner shall fund the escrow account as provided
8-13 by this subsection.
8-14 (c) The collector shall maintain the escrow account for each
8-15 owner in the county depository. The collector is not required to
8-16 maintain a separate account in the depository for each escrow
8-17 account created as provided by this section but shall maintain
8-18 separate records for each owner. The collector shall retain any
8-19 interest generated by the escrow account to defray the cost of
8-20 administration of the prepayment procedure established by this
8-21 section. Interest generated by an escrow account created as
8-22 provided by this section is the sole property of the collector and
8-23 that interest may not be used by an entity other than the
8-24 collector. Interest generated by an escrow account may not be used
8-25 to reduce or otherwise affect the annual appropriation to the
9-1 collector that would otherwise be made.
9-2 (d) The owner may not withdraw funds in an escrow account
9-3 created under this section.
9-4 (e) The comptroller by rule shall adopt a dealer's heavy
9-5 equipment inventory tax statement form. A dealer shall complete
9-6 the form with respect to each item of heavy equipment sold. A
9-7 dealer may use no other form for that purpose. The statement may
9-8 include the information the comptroller considers appropriate but
9-9 shall include at least the following:
9-10 (1) a description of the item of heavy equipment sold,
9-11 including any unique identification or serial number affixed to the
9-12 item by the manufacturer;
9-13 (2) the sales price of the item of heavy equipment;
9-14 (3) the unit property tax of the item of heavy
9-15 equipment, if any; and
9-16 (4) the reason no unit property tax is assigned if no
9-17 unit property tax is assigned.
9-18 (f) On or before the 10th day of each month, a dealer shall
9-19 file with the collector the statement covering the sale of each
9-20 item of heavy equipment sold by the dealer in the preceding month.
9-21 A dealer shall file a copy of the statement with the chief
9-22 appraiser and retain documentation relating to the disposition of
9-23 each item of heavy equipment sold. A chief appraiser or collector
9-24 may examine documents held by a dealer as provided by this
9-25 subsection in the same manner, and subject to the same conditions,
10-1 as provided by Section 23.1241(g).
10-2 (g) Except as provided by this subsection, Subsection (f)
10-3 applies to any dealer, regardless of whether a dealer owes heavy
10-4 equipment inventory tax for the current year. A dealer who owes no
10-5 heavy equipment inventory tax for the current year because the
10-6 dealer was not in business on January 1:
10-7 (1) shall file the statement required by this section
10-8 showing the information required by this section for each month
10-9 that the dealer is in business; and
10-10 (2) may not assign a unit property tax to an item of
10-11 heavy equipment sold by the dealer or remit money with the
10-12 statement except in compliance with the terms of a contract as
10-13 provided by Subsection (k).
10-14 (h) A taxing unit shall, on its tax bill prepared for the
10-15 owner of a dealer's heavy equipment inventory, separately itemize
10-16 the taxes levied against the dealer's heavy equipment inventory.
10-17 When the tax bill is prepared for a dealer's heavy equipment
10-18 inventory, the assessor for the taxing unit, or an entity, if any,
10-19 other than the collector, that collects taxes on behalf of the
10-20 taxing unit, shall provide the collector a true and correct copy of
10-21 the tax bill sent to the owner, including taxes levied against the
10-22 dealer's heavy equipment inventory. The collector shall apply the
10-23 money in the owner's escrow account to the taxes imposed and
10-24 deliver a tax receipt to the owner. The collector shall apply the
10-25 amount to each appropriate taxing unit in proportion to the amount
11-1 of taxes levied, and the assessor of each taxing unit shall apply
11-2 the funds received from the collector to the taxes owed by the
11-3 owner.
11-4 (i) If the amount in the escrow account is not sufficient to
11-5 pay the taxes in full, the collector shall apply the money to the
11-6 taxes and deliver to the owner a tax receipt for the partial
11-7 payment and a tax bill for the amount of the deficiency together
11-8 with a statement that the owner must remit to the collector the
11-9 balance of the total tax due.
11-10 (j) The collector shall remit to each appropriate taxing
11-11 unit the total amount collected by the collector in deficiency
11-12 payments. The assessor of each taxing unit shall apply those funds
11-13 to the taxes owed by the owner. Taxes that are due but not
11-14 received by the collector on or before January 31 are delinquent.
11-15 Not later than February 15, the collector shall distribute to each
11-16 appropriate taxing unit in the manner provided by this section all
11-17 funds collected under authority of this section and held in escrow
11-18 by the collector under this section. This section does not impose
11-19 a duty on a collector to collect delinquent taxes that the
11-20 collector is not otherwise obligated by law or contract to collect.
11-21 (k) A person who acquires the business or assets of an owner
11-22 may, by contract, agree to pay the current year heavy equipment
11-23 inventory taxes owed by the owner. The owner who owes the current
11-24 year tax and the person who acquires the business or assets of the
11-25 owner shall jointly notify the chief appraiser and the collector of
12-1 the terms of the agreement and of the fact that the other person
12-2 has agreed to pay the current year heavy equipment inventory taxes
12-3 owed by the dealer. The chief appraiser and the collector shall
12-4 adjust their records accordingly. Notwithstanding Section 23.1241,
12-5 a person who agrees to pay current year heavy equipment inventory
12-6 taxes as provided by this subsection is not required to file a
12-7 declaration until the year following the acquisition. This
12-8 subsection does not relieve the selling owner of the tax liability.
12-9 (l) A dealer who fails to file a statement as required by
12-10 this section commits an offense. An offense under this subsection
12-11 is a misdemeanor punishable by a fine not to exceed $100. Each day
12-12 that a dealer fails to comply with this subsection is a separate
12-13 violation.
12-14 (m) In addition to other penalties provided by law, a dealer
12-15 who fails to file a statement as required by this section shall
12-16 forfeit a penalty. A tax lien attaches to the owner's business
12-17 personal property to secure payment of the penalty. The
12-18 appropriate district attorney, criminal district attorney, or
12-19 county attorney shall collect the penalty established by this
12-20 section in the name of the chief appraiser or collector. Venue of
12-21 an action brought under this subsection is in the county in which
12-22 the violation occurred or in the county in which the owner
12-23 maintains the owner's principal place of business or residence. A
12-24 penalty forfeited under this subsection is $500 for each month or
12-25 part of a month in which a statement is not filed after it is due.
13-1 (n) An owner who fails to remit unit property taxes due as
13-2 required by this section shall pay a penalty of five percent of the
13-3 amount due. If the amount is not paid within 10 days after the due
13-4 date, the owner shall pay an additional penalty of five percent of
13-5 the amount due. Notwithstanding this section, unit property taxes
13-6 paid on or before January 31 of the year following the date on
13-7 which they are due are not delinquent. The collector, the
13-8 collector's designated agent, or the county or district attorney
13-9 shall enforce this subsection. A penalty under this subsection is
13-10 in addition to any other penalty provided by law if the owner's
13-11 taxes are delinquent.
13-12 (o) A fine collected under this section shall be deposited
13-13 in the county depository to the credit of the general fund. A
13-14 penalty collected under this section is the sole property of the
13-15 collector, may be used by no entity other than the collector, and
13-16 may not be used to reduce or otherwise affect the annual
13-17 appropriation to the collector that would otherwise be made.
13-18 (p) Section 23.123 applies to a declaration or statement
13-19 filed under this section in the same manner in which that section
13-20 applies to a statement or declaration filed as required by Section
13-21 23.121 or 23.122.
13-22 SECTION 3. This Act takes effect January 1, 1998, and
13-23 applies only to a tax year that begins on or after that date.
13-24 SECTION 4. The importance of this legislation and the
13-25 crowded condition of the calendars in both houses create an
14-1 emergency and an imperative public necessity that the
14-2 constitutional rule requiring bills to be read on three several
14-3 days in each house be suspended, and this rule is hereby suspended.