SRC-DPW, JXG S.B. 1435 76(R)BILL ANALYSIS


Senate Research CenterS.B. 1435
By: Duncan
Finance
7/6/1999
Enrolled


DIGEST 

Currently, heavy equipment dealers who lease equipment out on a
lease-purchase agreement are taxed under the old January 1 inventory system
and taxed under the new system of heavy equipment property tax appraisal
created by the 75th Legislature (new assessment system) when the sale is
finalized.  Heavy equipment dealers who have fewer sales in the current
year than in the previous year can end up with an escrow account that is
short by a large amount because they are held accountable for the previous
year's appraised value.  Providing for an appraised value based on current
year sales would create a system outside the current calendar.  S.B. 1435
will bring lease agreements into the new assessment system, define market
value, require the chief appraiser to change the appraisal records before
January 20 if the current year's statements show that there are lower sales
in the current year than in the previous year, and require the chief
appraiser to notify collectors and taxing units of accounts in which values
are lowered.   

PURPOSE

As enrolled, S.B. 1435 sets forth guidelines for the appraisal and ad
valorem taxation of heavy equipment. 

RULEMAKING AUTHORITY

This bill does not grant any additional rulemaking authority to a state
officer, institution, or agency. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Subdivisions (2) and (6), Section 23.1241(a), Tax Code,
to define "dealer's heavy equipment" and "heavy equipment."  

SECTION 2. Amends Subdivisions (b) and (f), Section 23.1241, Tax Code, to
provide that the market value of a dealer's heavy equipment inventory on
January 1 is the lesser of the total annual sales, less sales to dealers,
fleet transactions, and subsequent sales, for the 12-month period
corresponding to the preceding tax year or the current tax year, divided by
12, and a sale is considered to occur when ownership of an item of heavy
equipment is transferred from the dealer to the purchaser. Provides that
the declaration is sufficient if it sets forth certain provisions,
including the market value of the declarant's heavy equipment inventory for
the current tax year as computed under Subsection (b)(1)(A). 

SECTION 3. Amends Subsection (h), Section 23.1242, Tax Code, to require a
collector to apply all money in an owner's escrow account to the taxes
imposed and deliver a tax receipt to the owner, immediately on receiving
the notice required by Section 25.25(n). 

SECTION 4. Amends Section 25.25, Tax Code, by adding Subsections (n) and
(o), to require the chief appraiser to change the appraisal roll to correct
the market value of a heavy equipment dealer who has filed heavy equipment
inventory tax statements for the 12-month period corresponding to the
current tax year and whose market value is determined under Section
23.1241(b)(1)(B), before January 20.  Requires the chief appraiser to
notify the collector required to administer the provisions of Section
23.1242 and affected taxing units of the corrected amounts, before January
20. Requires the chief appraiser to submit to the appraisal review board
and to the board of directors of the appraisal district a written report of
each change made under this subsection, before the 10th day  after the end
of each calender quarter. Requires the report to include a description of
each property, and the name of the owner of that property. Requires the
chief appraiser to change the appraisal roll to reflect the corrected
market value, if the chief appraiser has examined the books and records of
a heavy equipment dealer whose appraised value is determined under Section
23.1241(b)(1)(B) and, on conclusion of the examination, has determined that
the dealer's market value should be corrected. 

SECTION 5. Effective date: September 1, 1999. Provides that this Act
applies to the appraisal of heavy equipment for ad valorem tax purposes for
each tax year that begins on or after January 1, 1999. 

SECTION 6. Emergency clause.