HBA-NMO H.B. 405 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 405 By: Palmer Ways & Means 3/17/99 Introduced BACKGROUND AND PURPOSE Current law requires a religious organization to pay tax on vacant land, whether it derives a profit from the land or not. If the religious organization derives no profit from the land, this type of taxation may place financial strain on the organization. H.B. 405 entitles a religious organization to an exemption from taxation of one or more parcels of vacant land, not to exceed 40 aggregate acres, that does not produce revenue for the organization or another person. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Subchapter B, Chapter 11, Tax Code, by adding Section 11.205, as follows: Sec. 11.205. VACANT LAND OWNED BY RELIGIOUS ORGANIZATION. (a) Provides that "religious organization" has the meaning assigned by Section 11.20(c), Tax Code, which qualifies a religious organization as one that is organized and operated primarily for the purpose of engaging in religious worship or promoting the spiritual development or wellbeing of individuals; does not accrue distributable profits or realize private gain; uses its assets in performing religious functions; and directs upon dissolution that its assets be transferred to this state, the United States, or a charitable, educational, or religious organization. (b) Entitles a religious organization (organization) to an exemption from taxation of one or more parcels, not to exceed 40 aggregate acres, of vacant land that is owned by the organization and does not produce revenue for the organization or another person. (c) Requires the chief appraiser, for the purposes of Subsection (f), to determine the market value of the land and to record it in the appraisal records. (d) Requires the organization to notify the appraisal office in writing before May 1 after the organization's entitlement to exemption ends. Imposes a penalty on the land equal to 10 percent of the taxes that would have been imposed on the land in each year it is erroneously exempted, if the organization fails to notify the appraisal office. (e) Requires the chief appraiser to make an entry in the appraisal records for the land on which the penalty is imposed, indicating liability for the penalty, and to deliver a written notice of imposition of the penalty to the organization. Requires the notice to include an explanation of the procedures for protesting the imposition of the penalty. Requires the assessor for each taxing unit to add the amount of the penalty to the unit's tax bill for taxes on the land. Requires the penalty to be collected at the same time and in the same manner as the taxes on the land. Provides that the amount of the penalty constitutes a lien on the land and accrues penalty and interest in the same manner as a delinquent tax. (f) Imposes an additional tax for each of the preceding five years for which the land received an exemption, if the organization sells the land or uses it to produce revenue. Provides that the additional tax is an amount equal to the tax that would have been imposed had the land been taxed on the basis of market value in each of those years, plus interest at an annual rate of seven percent calculated from the dates the taxes would have become due. (g) Provides that a tax lien attaches to the land on the date the organization sells the land or first produces revenue to secure payment of the additional tax and interest imposed and any penalties incurred. Provides that the lien exists in favor of all taxing units for which the additional tax is imposed. (h) Provides that the additional tax imposed by Subsection (f) does not apply to the year for which the tax has already been imposed. (i) Provides that the additional tax, if only part of a parcel that has received an exemption is sold by the organization or begins to produce revenue, applies only to that part of the parcel and is an amount equal to the taxes had that part been taxed on the basis of market value. (j) Provides that the chief appraiser make the determination that land has been sold by the organization or has begun to produce revenue. Requires the chief appraiser to deliver a notice of the determination to the owner of the land as soon as possible and to include in the notice the owner's right to protest the determination. Requires the assessor of each taxing unit, if the owner does not file a timely protest or the protest is denied, to prepare and deliver a bill for the additional taxes plus interest as soon as practicable. Provides that the taxes and interest are due and become delinquent and incur penalties and interest as provided by law for ad valorem taxes imposed by the taxing unit if not paid before the next February 1 that is at least 20 days after the date the bill is delivered to the owner of the land. (k) Provides that the sanctions provided by Subsection (f) do not apply if the land is sold for right of way, condemned, or transferred to this state or a political subdivision of this state to be used for a public purpose. SECTION 2. Amends Section 11.43(c), Tax Code, to add the exemption provided by Section 11.205, Tax Code, to a list of exemptions that once allowed, need not be claimed in subsequent years. SECTION 3. Effective date: January 1, 2000, if the related constitutional amendment is approved by the voters. Otherwise, this Act has no effect. SECTION 4. Emergency clause.