By: Duncan, Zaffirini, Fraser S.B. No. 174
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the exemption from ad valorem taxation of tangible
1-3 personal property held at certain locations only temporarily for
1-4 assembling, manufacturing, processing, or other commercial
1-5 purposes.
1-6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-7 SECTION 1. Subchapter B, Chapter 11, Tax Code, is amended by
1-8 adding Section 11.252 to read as follows:
1-9 Sec. 11.252. TANGIBLE PERSONAL PROPERTY IN TRANSIT. (a) In
1-10 this section, "goods-in-transit" means tangible personal property
1-11 that meets the requirements of Section 1-n, Article VIII, Texas
1-12 Constitution.
1-13 (b) A person is entitled to an exemption from taxation of
1-14 the appraised value of that portion of the person's property that
1-15 consists of goods-in-transit.
1-16 (c) The exemption provided by Subsection (b) is subtracted
1-17 from the market value of the property determined under Section
1-18 23.01 or 23.12, as applicable, to determine the taxable value of
1-19 the property.
1-20 (d) Except as provided by Subsections (f) and (g), the chief
1-21 appraiser shall determine the appraised value of goods-in-transit
1-22 under this subsection. The chief appraiser shall determine the
1-23 percentage of the market value of inventory or other property owned
1-24 by the property owner in the preceding calendar year that was
1-25 contributed by goods-in-transit. For the first year to which the
2-1 exemption applies to a taxing unit, the chief appraiser shall
2-2 determine that percentage as if the exemption applied to the
2-3 preceding year. The chief appraiser shall apply that percentage to
2-4 the market value of the property owner's inventory or other
2-5 property for the current year to determine the appraised value of
2-6 goods-in-transit for the current year.
2-7 (e) In determining the market value of goods-in-transit that
2-8 in the preceding year were assembled, manufactured, repaired,
2-9 maintained, processed, or fabricated in this state or used by the
2-10 person who acquired or imported the property in the repair or
2-11 maintenance of aircraft operated by a certificated air carrier, the
2-12 chief appraiser shall exclude the cost of equipment, machinery, or
2-13 materials that entered into and became component parts of the
2-14 goods-in-transit but were not themselves goods-in-transit or that
2-15 were not transported to another location in this state or out of
2-16 this state before the expiration of 270 days after the date they
2-17 were brought into this state by the property owner or acquired by
2-18 the property owner in this state. For component parts held in
2-19 bulk, the chief appraiser may use the average length of time a
2-20 component part was held by the owner of the component parts during
2-21 the preceding year at a location in this state that was not owned
2-22 or under the control of the owner of the component parts in
2-23 determining whether the component parts were transported to another
2-24 location in this state or out of this state before the expiration
2-25 of 270 days.
2-26 (f) If the property owner was not engaged in transporting
3-1 goods-in-transit to other locations in this state or out of this
3-2 state for the entire preceding year, the chief appraiser shall
3-3 calculate the percentage of the market value described in
3-4 Subsection (d) for the portion of the year in which the property
3-5 owner was engaged in transporting goods-in-transit to another
3-6 location in this state or out of this state.
3-7 (g) If the property owner or the chief appraiser
3-8 demonstrates that the method provided by Subsection (d)
3-9 significantly understates or overstates the market value of the
3-10 property qualified for an exemption under Subsection (b) in the
3-11 current year, the chief appraiser shall determine the market value
3-12 of the goods-in-transit to be exempt by determining, according to
3-13 the property owner's records and any other available information,
3-14 the market value of those goods-in-transit owned by the property
3-15 owner on January 1 of the current year, excluding the cost of
3-16 equipment, machinery, or materials that entered into and became
3-17 component parts of the goods-in-transit but were not themselves
3-18 goods-in-transit or that were not transported to another location
3-19 in this state or out of this state before the expiration of 270
3-20 days after the date they were brought into this state by the
3-21 property owner or acquired by the property owner in this state.
3-22 (h) The chief appraiser by written notice delivered to a
3-23 property owner who claims an exemption under this section may
3-24 require the property owner to provide copies of property records to
3-25 determine the amount and value of goods-in-transit and whether the
3-26 location in this state where the goods-in-transit were detained for
4-1 assembling, storing, manufacturing, processing, or fabricating
4-2 purposes was not owned or under the control of the owner of the
4-3 goods-in-transit. If the property owner fails to deliver the
4-4 information requested in the notice before the 31st day after the
4-5 date the notice is delivered to the property owner, the property
4-6 owner forfeits the right to claim or receive the exemption for that
4-7 year.
4-8 (i) For the purposes of Section 1-n, Article VIII, Texas
4-9 Constitution, "petroleum products" means liquid and gaseous
4-10 materials that are the immediate derivatives of the refining of oil
4-11 or natural gas.
4-12 (j) Property that meets the requirements of Section 1-n(a),
4-13 Article VIII, Texas Constitution, constitutes goods-in-transit
4-14 regardless of whether the person who owns the property on January 1
4-15 is the person who transports it to another location in this state
4-16 or out of this state.
4-17 (k) The governing body of a taxing unit, in the manner
4-18 required for official action by the governing body, may provide for
4-19 the taxation of tangible personal property exempt under Subsection
4-20 (b) and not exempt under other law. Before acting to tax the
4-21 exempt property, the governing body of the taxing unit must conduct
4-22 a public hearing as required by Section 1-n(d), Article VIII, Texas
4-23 Constitution. If the governing body of a taxing unit provides for
4-24 the taxation of the personal property as provided by this
4-25 subsection, the exemption prescribed by Subsection (b) does not
4-26 apply to that unit.
5-1 (l) This section expires August 31, 2003.
5-2 SECTION 2. Subsection (a), Section 11.437, Tax Code, is
5-3 amended to read as follows:
5-4 (a) A person who operates a warehouse used primarily for the
5-5 storage of cotton for transportation to another location in this
5-6 state or outside of this state may apply for an exemption under
5-7 Section 11.251 or 11.252 for cotton stored in the warehouse on
5-8 behalf of all the owners of the cotton. An exemption granted under
5-9 this section applies to all cotton stored in the warehouse that is
5-10 eligible to be exempt under Section 11.251 or 11.252. Cotton that
5-11 is stored in a warehouse covered by an exemption granted under this
5-12 section and that is transported to another location in this state
5-13 or outside of this state is presumed to have been transported to
5-14 another location in this state or outside of this state within the
5-15 time permitted by Section 1-j or 1-n, Article VIII, [Section 1-j,
5-16 of the] Texas Constitution, for cotton to qualify for an exemption
5-17 under that section.
5-18 SECTION 3. Subsection (e), Section 22.01, Tax Code, is
5-19 amended to read as follows:
5-20 (e) Notwithstanding Subsections (a) and (b), a person is not
5-21 required to render for taxation cotton that:
5-22 (1) the person manages and controls as a fiduciary;
5-23 (2) is stored in a warehouse for which an exemption
5-24 for cotton has been granted under Section 11.437 [11.436]; and
5-25 (3) the person intends to transport to another
5-26 location in this state or outside of this [the] state within the
6-1 time permitted by Section 1-j or 1-n, Article VIII, [Section 1-j,
6-2 of the] Texas Constitution, for cotton to qualify for an exemption
6-3 under that section.
6-4 SECTION 4. This Act takes effect January 1, 2002, and
6-5 applies only to taxes imposed for a tax year beginning on or after
6-6 that date, but only if the constitutional amendment proposed by the
6-7 77th Legislature, Regular Session, 2001, to authorize the
6-8 legislature to exempt from ad valorem taxation tangible personal
6-9 property held at certain locations only temporarily for assembling,
6-10 manufacturing, processing, or other commercial purposes, takes
6-11 effect. If that amendment is not approved by the voters, this Act
6-12 has no effect.
6-13 COMMITTEE AMENDMENT NO. 1
6-14 Amend Senate Bill 174 by inserting the following section and
6-15 renumbering accordingly:
6-16 SECTION 4. Section 403.302(d), (Subchapter M, Government
6-17 Code, is amended as follows:
6-18 (d) For the purposes of this section, "taxable value" means
6-19 the market value of all taxable property less:
6-20 (1) the total dollar amount of any residence homestead
6-21 exemptions lawfully granted under Section 11.13(b) or (c), Tax
6-22 Code, in the year that is the subject of the study for each school
6-23 district;
6-24 (2) one-half of the total dollar amount of any
6-25 residence homestead exemptions granted under Section 11.13(n), Tax
6-26 Code, in the year that is the subject of the study for each school
7-1 district;
7-2 (3) the total dollar amount of any exemptions granted
7-3 before May 31, 1993, within a reinvestment zone under agreements
7-4 authorized by Chapter 312, Tax Code;
7-5 (4) subject to Subsection (e), the total dollar amount
7-6 of any captured appraised value of property that:
7-7 (A) is within a reinvestment zone created on or
7-8 before May 31, 1999, or is proposed to be included within the
7-9 boundaries of a reinvestment zone as the boundaries of the zone and
7-10 the proposed portion of tax increment paid into the tax increment
7-11 fund by a school district are described in a written notification
7-12 provided by the municipality or the board of directors of the zone
7-13 to the governing bodies of the other taxing units in the manner
7-14 provided by Section 311.003(e), Tax Code, before May 31, 1999, and
7-15 within the boundaries of the zone as those boundaries existed on
7-16 September 1, 1999, including subsequent improvements to the
7-17 property regardless of when made;
7-18 (B) generates taxes paid into a tax increment
7-19 fund created under Chapter 311, Tax Code, under a reinvestment zone
7-20 financing plan approved under Section 311.011(d), Tax Code, on or
7-21 before September 1, 1999; and
7-22 (C) is eligible for tax increment financing
7-23 under Chapter 311, Tax Code;
7-24 (5) the total dollar amount of any exemptions granted
7-25 under Section 11.251 or Section 11.252, Tax Code;
7-26 (6) the difference between the comptroller's estimate
8-1 of the market value and the productivity value of land that
8-2 qualifies for appraisal on the basis of its productive capacity,
8-3 except that the productivity value estimated by the comptroller may
8-4 not exceed the fair market value of the land;
8-5 (7) the portion of the appraised value of residence
8-6 homesteads of the elderly on which school district taxes are not
8-7 imposed in the year that is the subject of the study, calculated as
8-8 if the residence homesteads were appraised at the full value
8-9 required by law;
8-10 (8) a portion of the market value of property not
8-11 otherwise fully taxable by the district at market value because of
8-12 action required by statute or the constitution of this state that,
8-13 if the tax rate adopted by the district is applied to it, produces
8-14 an amount equal to the difference between the tax that the district
8-15 would have imposed on the property if the property were fully
8-16 taxable at market value and the tax that the district is actually
8-17 authorized to impose on the property, if this subsection does not
8-18 otherwise require that portion to be deducted;
8-19 (9) the market value of all tangible personal
8-20 property, other than manufactured homes, owned by a family or
8-21 individual and not held or used for the production of income;
8-22 (10) the appraised value of property the collection of
8-23 delinquent taxes on which is deferred under Section 33.06, Tax
8-24 Code;
8-25 (11) the portion of the appraised value of property
8-26 the collection of delinquent taxes on which is deferred under
9-1 Section 33.065, Tax Code; and
9-2 (12) the amount by which the market value of a
9-3 residence homestead to which Section 23.23, Tax Code, applies
9-4 exceeds the appraised value of that property as calculated under
9-5 that section.
9-6 Hartnett