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A BILL TO BE ENTITLED
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AN ACT
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relating to the ad valorem tax appraisal of oil or gas interests. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 23.175(a), Tax Code, is amended to read |
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as follows: |
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(a) If a real property interest in oil or gas in place is |
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appraised by a method that takes into account the future income from |
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the sale of oil or gas to be produced from the interest, the method |
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must use the average price of the oil or gas from the interest for |
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the preceding calendar year multiplied by a market condition factor |
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as the price at which the oil or gas produced from the interest is |
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projected to be sold in the current year of the appraisal. The |
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average price for the preceding calendar year is calculated by |
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dividing the sum of the monthly average prices for which oil and gas |
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from the interest was selling during [on] each month [day] of the |
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preceding calendar year[, excluding February 29,] by 12 [365]. If |
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there was no production of oil or gas from the interest [on any day] |
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during any month of the preceding calendar year, the average price |
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for which similar oil and gas from comparable interests was selling |
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during that month [on that day] is to be used. The comptroller |
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shall calculate the market condition factor by dividing the |
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comptroller's current calendar year statewide average price for oil |
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or gas, as applicable, forecasted for revenue estimating purposes |
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by the preceding calendar year actual statewide average price for |
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oil or gas, as applicable. For purposes of calculating the market |
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condition factor, "price" means the market value of oil or gas as |
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determined under Subchapter C, Chapter 201, or Section 202.053, as |
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applicable. The comptroller shall calculate the preceding calendar |
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year actual statewide average prices for oil and gas and the market |
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condition factors for oil and gas and publish that information to be |
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used for ad valorem tax appraisal purposes concurrently with the |
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current calendar year statewide average prices for oil and gas |
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forecasted for revenue estimating purposes. The price for the |
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interest used in the second or a subsequent calendar year of the |
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appraisal shall reflect the same percentage rate increase or |
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decrease in the price for oil or gas, as applicable, as projected |
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for that calendar year by the comptroller for revenue estimating |
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purposes. [If market conditions warrant, the average price from the
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preceding year may be increased or decreased in the second and/or
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succeeding years of an appraisal that takes into account the future
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income from the sale of oil or gas to be produced from the interest.
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If the average price from the preceding year is increased in the
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second or any succeeding year of an appraisal that takes into
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account the future income from the sale of oil or gas from the
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interest, the annual percentage rate of increase may be no greater
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than the annual percentage rate increase projected for that year by
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the comptroller for revenue estimating purposes; however, in no
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event may the price used in the second or any succeeding year of an
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appraisal exceed 150 percent of the price used in the current year
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of the appraisal. The price used in the current year may be
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decreased by any amount in the second and succeeding year of an
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appraisal.] |
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SECTION 2. This Act applies only to the appraisal of |
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property for ad valorem tax purposes for a tax year beginning on or |
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after the effective date of this Act. |
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SECTION 3. This Act takes effect January 1, 2008. |