SRC-MLC, LBB S.B. 175 78(R) BILL ANALYSIS
Senate Research Center S.B. 175
78R1731 SMH-FBy: Barrientos
Finance
2/10/2003
As Filed
DIGEST AND PURPOSE
Currently, Texas, along with thirteen other states, requires businesses to
render personal property, such as equipment, equipment inventories,
fixtures, furniture, and machinery. However, unlike those other thirteen
states, Texas does not impose a statutory penalty for businesses that fail
to render personal property. Because Texas does not provide a rendition
disincentive, a large number of Texas businesses fail to render their
personal property, which costs the state up to $900 million in unclaimed
tax revenue. As proposed, S.B. 175 would promote compliance with the
rendition of personal property by Texas businesses by establishing a
penalty for the failure to render such personal property. S.B. 175
provides that businesses that fail to report their personal property by
the rendition deadline must pay an additional five percent in taxes; and
provides that, for businesses that fail to report their personal property
within 30 days of the date a rendition is due, the penalty increases to 10
percent. S.B. 175 also authorizes investigations and audits of rendition
statements and property reports.
RULEMAKING AUTHORITY
Rulemaking authority is expressly granted to the Comptroller of Public
Accounts of the State of Texas in SECTION 5 (Section 23.0115, Tax Code) of
this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Chapter 22B, Tax Code, by adding Section 22.231, as
follows:
Sec. 22.231. REQUIREMENT TO DELIVER RENDITION STATEMENT OR PROPERTY
REPORT; INJUNCTION. (a) Provides that delivery of a rendition statement
or property report to a chief appraiser is mandatory when required under
this chapter.
(b) Authorizes the chief appraiser to bring suit for an injunction to
require delivery of a rendition statement or property report by a person
who fails to deliver in a timely manner the statement or report.
SECTION 2. Amends Section 22.24, Tax Code, by amending Subsections (c)
with the addition of Subsections (c-1) and (c-2) and amending Subsection
(d), as follows:
(c-1) Requires the owner of tangible personal property used for the
production of income to describe the property and to state certain
information in a rendition or report form.
(c-2) Authorizes a rendition or report form to require the inclusion of
other information by the property owner if the Comptroller of Public
Accounts of the State of Texas (comptroller) deems it necessary for the
proper administration of taxation of property subject to this chapter.
(d) Provides that a rendition or report form for property other than
tangible personal property used for the production of income shall permit
but may not require a property owner to state an opinion about the
property's market value. Makes nonsubstantive changes.
SECTION 3. Amends Chapter 22B, Tax Code, by adding Sections 22.28 and
22.29, as follows:
Sec. 22.28. PENALTY FOR FAILURE TO DELIVER RENDITION STATEMENT OR
PROPERTY REPORT. (a) Provides that a penalty is imposed by each taxing
unit that imposes such taxes on certain property belonging a person who,
in accordance with Section 22.01 (Rendition Generally), 22.04 (Report by
Bailee, Lessee, or Other Possessor), or 22.05 (Rendition by Railroad), is
required to deliver in a timely manner a rendition statement or property
report to the chief appraiser and who fails to do so.
(b) Sets forth a method for calculating the penalty.
(c) Provides that, notwithstanding Subsection (b), if the computed
penalty is less than $1, the amount of the penalty is $1.
(d) Provides circumstances under which the penalty provided by this
section is not imposed.
(e) Requires the chief appraiser to follow certain procedures if a person
fails to deliver in a timely manner a rendition statement or property
report as required by Section 22.01, 22.04, or 22.05.
(f) Requires the assessor for each taxing unit imposing taxes on the
property to adhere to certain guidelines relating to the amount, delivery,
and collection of the penalty.
(g) Provides that a penalty imposed under Subsection (a) that becomes
delinquent will accrue penalties and interest in the same manner as a
delinquent tax.
(h) Provides that the imposition of a penalty under Subsection (a) and
any penalty or interest accruing on the penalty, are the personal
obligation of the property owner and constitute a lien on the property.
Sec. 22.29. INVESTIGATIONS AND AUDITS. (a) Authorizes the chief
appraiser, or a person authorized by the chief appraiser, to perform
certain functions to verify the accuracy of a rendition statement or
property report and to require the property owner or certain
representatives of the property owner to produce the books, records, and
papers used in preparation of the rendition statement or property report.
(b) Requires, if the chief appraiser determines as the result of an
investigation under this section that the chief appraiser's reliance on a
rendition statement or property report resulted in the omission or
undervaluation of taxable property in the current tax year or in any one
of the five preceding years, the chief appraiser to add the omitted
property or the portion of the appraised value of undervalued property
erroneously omitted for each tax year to the appraisal roll as provided by
Section 25.21 (Omitted Property) for other property that escapes taxation.
(c) Prohibits the chief appraiser from conducting an investigation of a
property owner under this section more than once every three years, unless
the chief appraiser takes action under Subsection (b) as a result of an
investigation of a property owner, the chief appraiser may conduct an
investigation of the property owner in the following year.
(d) Provides that the same degree of confidentiality will be maintained
for copies of books, records, or papers made or retained by the chief
appraiser or the chief appraiser's agent or representative in the course
of an investigation under Section 22.27 (Confidential Information) as for
that of a rendition statement or property report.
(e) Prohibits the chief appraiser from employing a person on a
contingency fee basis to conduct an audit under this section.
SECTION 4. Amends the heading to Section 23.011, Tax Code, to read as
follows:
Sec. 23.011. COST METHOD OF APPRAISAL: REAL PROPERTY
SECTION 5. Amends Chapter 23A, Tax Code, as follows:
Sec. 23.0115. COST METHOD OF APPRAISAL: TANGIBLE PERSONAL PROPERTY. (a)
Requires the chief appraiser to use the methods and procedures specified
by the appraisal manuals developed under Subsection (b) to determine the
depreciated value of tangible personal property if the chief appraiser
uses the cost method of appraisal to determine the value of the property
used for the production of income on the basis of information provided in
a rendition statement or property report.
(b) Requires the comptroller by rule to develop and distribute to each
appraisal office appraisal manuals that prescribe depreciation schedules
for common types of tangible personal property, specify methods of
applying the schedules to appraise property, and prescribe the method a
chief appraiser shall use to calculate depreciation for property not
covered by a depreciation schedule prescribed by the comptroller.
SECTION 6. Amends Section 41.43, Tax Code, by amending Subsection (a) and
adding Subsection (d), as follows:
(a) Makes conforming and nonsubstantive changes.
(d) Provides that, if a property owner fails to deliver a rendition
statement or property report before the date of a hearing as required by
Chapter 22
(Renditions and Other Reports) for property that is the subject of a
protest authorized by Section 41.41 (a) (1) or (2), the property owner has
the burden of establishing the value of the property by presenting a
preponderance of evidence at the hearing; and provides that the protest
shall be determined in favor of the appraisal district if the property
owner fails to establish such a preponderance of evidence.
SECTION 7. Amends Section 42.29, Tax Code, by adding Subsection (c) to
prohibit a property owner, notwithstanding Subsection (a), from being
awarded attorney's fees for failing to deliver in a timely manner a
rendition statement or property report required by Chapter 22 (Renditions
and Other Reports) for property that is the subject of the appeal.
SECTION 8. (a) Effective date: January 1, 2004.
Makes application of this Act prospective.
(b) Provides that Section 22.29, Tax Code, authorizes the addition, to an
appraisal roll, of either omitted property or the portion of the appraised
value of undervalued property that was erroneously omitted, only for a tax
year beginning on or after the effective date of this Act.