SRC-JLB H.B. 2255 78(R)   BILL ANALYSIS


Senate Research Center   H.B. 2255
78R8395 KCR-FBy: Flores (Shapleigh)
Intergovernmental Relations
5/21/2003
Engrossed

           
This analysis utilizes the House Committee Report, which is the most
recent version available to the Senate Research Center, and is not
formatted to the style of the Senate Research Center.  There were no
amendments to H.B. 2255 on the House floor. 

BACKGROUND AND PURPOSE 

Under current Texas law, rollback taxes on property previously granted an
agricultural use exemption due on February 1st as provided by law for ad
valorem taxes.  After this date the taxes become delinquent and receive
penalty charges and incur interest.  Due to this specified deadline there
is a brief window of opportunity for owners not willing to pay the
rollback taxes to sell their property and bestow upon an unsuspecting
buyer not only the rollback taxes but also the likelihood of those taxes
becoming delinquent.  The buyer usually finds out about the rollback taxes
only after they become delinquent and are notified by way of a delinquent
notice or when they apply for a mortgage or sell the property and a tax
certificate and title policy is required.      

Likewise, because the taxing entity cannot demand payment of the rollback
taxes until February 1st, when they become delinquent, under current law a
roll back tax may remain unpaid for over 12 months without incurring
penalty and interest.  Because the roll back bill is not delinquent, this
limits the ability of the taxing unit to recover deferred taxes on
property previously granted an agricultural use exemption.      

H.B. 2255 deletes the February 1st deadline and instead, imposes a
deadline that requires the property owner to pay the rollback taxes on the
first day of the next month giving them a period of at least 21 days after
the mailing of the bill.   

By altering this deadline three results will occur:  The consumer of
subdivision lots will not be forced to pay rollback taxes on a subdivision
that has been sold prior to the date that the developer has to pay
rollback taxes;  the consumer would be able to purchase title insurance
and assure themselves of clear titles on purchases of lots where the land
was previously under agricultural use and is subject to rollback taxes;
and the taxing entities collecting rollback taxes would be able to recover
taxes owed to them much faster.   

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency, or
institution. 

ANALYSIS

SECTION 1.  Amends Section 23.46 (c), Tax Code, to delete a provision of
the Tax Code making February 1st the deadline for payment on rollback
taxes and replaces it with a deadline that expires on the first day of the
next month that will provide the tax recipient with 21 days after the date
the bill was mailed to pay the tax.   

SECTION 2.  Amends Section 23.55 (e), Tax Code, to delete a provision of
the Tax Code making February 1st the deadline for payment on rollback tax
and replaces it with a deadline that expires on the first day of the month
that will provide the tax recipient 21 days after the date the bill was
mailed to pay the tax. 

 SECTION 3.  Effective date:  January 1, 2004.  Provides this section only
applies to additional taxes imposed under Section 23.46 or 23.55, Tax
Code, issued or renewed on or after January 1, 2004.   

EFFECTIVE DATE

January 1, 2004.