By: Creighton S.B. No. 1760

(In the Senate - Filed March 13, 2015; March 24, 2015, read first time and referred to Committee on Intergovernmental Relations; April 28, 2015, reported adversely, with favorable Committee Substitute by the following vote: Yeas 4, Nays 1; April 28, 2015, sent to printer.) Click here to see the committee vote

COMMITTEE SUBSTITUTE FOR S.B. No. 1760 By: Bettencourt

A BILL TO BE ENTITLED

AN ACT

relating to the transparent and equitable application of ad valorem taxation procedures.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Sections 1.111(f) and (j), Tax Code, are amended to read as follows:

(f) A property owner in writing filed with the appraisal district may direct the appraisal district, appraisal review board, and each taxing unit participating in the appraisal district to deliver all notices, tax bills, refunds, orders, and other communications relating to one or more specified items of the owner's property to a specified person instead of to the property owner. The instrument must clearly identify the person by name and give the person's address to which all notices, tax bills, refunds, orders, and other communications are to be delivered. The property owner may but is not required to designate the person's agent for other tax matters designated under Subsection (a) as the person to receive all notices, tax bills, refunds, orders, and other communications. The designation of an agent for other tax matters under Subsection (a) may also provide that the agent is the person to whom notices, tax bills, refunds, orders, and other communications are to be delivered under this subsection.

(j) An individual exempt from registration as a property tax consultant under Section 1152.002, Occupations Code, who is not supervised, directed, or compensated by a person required to register as a property tax consultant under that chapter and who files a protest with the appraisal review board on behalf of the property owner is entitled to receive all notices from the appraisal district and appraisal review board regarding the property subject to the protest until the authority is revoked by the property owner as provided by this section. An individual to which this subsection applies who is not designated by the property owner to receive notices, tax bills, refunds, orders, and other communications as provided by Subsection (f) or Section 1.11 shall file a statement with the protest that includes:

(1) the individual's name and address;

(2) a statement that the individual is acting on behalf of the property owner; and

(3) a statement of the basis for the individual's exemption from registration under Section 1152.002, Occupations Code.

SECTION 2. Chapter 1, Tax Code, is amended by adding Section 1.14 to read as follows:

Sec. 1.14. INTEREST RATE. Except as otherwise provided by this title, for purposes of a provision of this title providing for the accrual of interest, interest accrues at an annual rate equal to the sum of two percent and the most recent prime rate quoted and published by the Federal Reserve Board as of the first day of the month in which the interest is first calculated.

SECTION 3. Chapter 5, Tax Code, is amended by adding Section 5.091 to read as follows:

Sec. 5.091. STATEWIDE LIST OF TAX RATES. (a) Each year the comptroller shall prepare a list that includes the total tax rate imposed by each taxing unit in this state, other than a school district, if the tax rate is reported to the comptroller, for the year preceding the year in which the list is prepared. The comptroller shall list the tax rates in descending order.

(b) Not later than December 31 of each year, the comptroller shall publish on the comptroller's Internet website the list required by Subsection (a).

SECTION 4. Section 11.135(c), Tax Code, is amended to read as follows:

(c) If an owner receives an exemption for property under Section 11.13 under the circumstances described by Subsection (a) and sells the property before the owner completes construction of a replacement qualified residential structure on the property, an additional tax is imposed on the property equal to the difference between the taxes imposed on the property for each of the years in which the owner received the exemption and the tax that would have been imposed had the owner not received the exemption in each of those years, plus interest at the rate provided by Section 1.14 [an annual rate of seven percent] calculated from the dates on which the differences would have become due.

SECTION 5. Section 11.181(e), Tax Code, is amended to read as follows:

(e) If the organization that owns improved or unimproved real property that has been exempted under Subsection (a) sells the property to a person other than an individual or family satisfying the organization's low-income or other eligibility requirements, a penalty is imposed on the property equal to the amount of the taxes that would have been imposed on the property in each tax year that the property was exempted from taxation under Subsection (a), plus interest at the rate provided by Section 1.14 [an annual rate of 12 percent] calculated from the dates on which the taxes would have become due.

SECTION 6. Section 11.185(e), Tax Code, is amended to read as follows:

(e) If the organization that owns improved or unimproved real property that has been exempted under Subsection (a) sells the property to a person other than a person described by Section 2306.786(b)(1), Government Code, a penalty is imposed on the property equal to the amount of the taxes that would have been imposed on the property in each tax year that the property was exempted from taxation under Subsection (a), plus interest at the rate provided by Section 1.14 of this code [an annual rate of 12 percent] computed from the dates on which the taxes would have become due.

SECTION 7. Section 11.201(a), Tax Code, is amended to read as follows:

(a) If land is sold or otherwise transferred to another person in a year in which the land receives an exemption under Section 11.20(a)(6), an additional tax is imposed on the land equal to the tax that would have been imposed on the land had the land been taxed for each of the five years preceding the year in which the sale or transfer occurs in which the land received an exemption under that subsection, plus interest at the rate provided by Section 1.14 [an annual rate of seven percent] calculated from the dates on which the taxes would have become due.

SECTION 8. Section 11.431(b), Tax Code, is amended to read as follows:

(b) If a late application is approved after approval of the appraisal records by the appraisal review board, the chief appraiser shall notify the collector for each unit in which the residence is located. The collector shall deduct from the person's tax bill the amount of tax imposed on the exempted amount if the tax has not been paid. If the tax has been paid, the collector shall refund the amount of tax imposed on the exempted amount. A person is not required to apply for a refund under this subsection to receive the refund.

SECTION 9. Section 23.46(c), Tax Code, is amended to read as follows:

(c) If land that has been designated for agricultural use in any year is sold or diverted to a nonagricultural use, the total amount of additional taxes for the three years preceding the year in which the land is sold or diverted plus interest at the rate provided by Section 1.14 [for delinquent taxes] becomes due. A determination that the land has been diverted to a nonagricultural use is made by the chief appraiser. For purposes of this subsection, the chief appraiser may not consider any period during which land is owned by the state in determining whether the land has been diverted to a nonagricultural use. The chief appraiser shall deliver a notice of the determination to the owner of the land as soon as possible after making the determination and shall include in the notice an explanation of the owner's right to protest the determination. If the owner does not file a timely protest or if the final determination of the protest is that the additional taxes are due, the assessor for each taxing unit shall prepare and deliver a bill for the additional taxes plus interest as soon as practicable after the change of use occurs. If the additional taxes are due because of a sale of the land, the assessor for each taxing unit shall prepare and deliver the bill as soon as practicable after the sale occurs. The taxes and interest are due and become delinquent and incur penalties and interest as provided by law for ad valorem taxes imposed by the taxing unit if not paid before the next February 1 that is at least 20 days after the date the bill is delivered to the owner of the land.

SECTION 10. Section 23.55(a), Tax Code, is amended to read as follows:

(a) If the use of land that has been appraised as provided by this subchapter changes, an additional tax is imposed on the land equal to the difference between the taxes imposed on the land for each of the five years preceding the year in which the change of use occurs that the land was appraised as provided by this subchapter and the tax that would have been imposed had the land been taxed on the basis of market value in each of those years, plus interest at the rate provided by Section 1.14 [an annual rate of seven percent] calculated from the dates on which the differences would have become due. For purposes of this subsection, the chief appraiser may not consider any period during which land is owned by the state in determining whether a change in the use of the land has occurred.

SECTION 11. Section 23.76(a), Tax Code, is amended to read as follows:

(a) If the use of land that has been appraised as provided by this subchapter changes, an additional tax is imposed on the land equal to the difference between the taxes imposed on the land for each of the five years preceding the year in which the change of use occurs that the land was appraised as provided by this subchapter and the tax that would have been imposed had the land been taxed on the basis of market value in each of those years, plus interest at the rate provided by Section 1.14 [an annual rate of seven percent] calculated from the dates on which the differences would have become due.

SECTION 12. Section 23.86(a), Tax Code, is amended to read as follows:

(a) If land that has been appraised under this subchapter is no longer subject to a deed restriction or is diverted to a use other than recreational, park, or scenic uses, an additional tax is imposed on the land equal to the difference between the taxes imposed on the land for each of the five years preceding the year in which the change of use occurs or the deed restriction expires that the land was appraised as provided by this subchapter and the tax that would have been imposed had the land not been restricted to recreational, park, or scenic uses in each of those years, plus interest at the rate provided by Section 1.14 [an annual rate of seven percent] calculated from the dates on which the differences would have become due.

SECTION 13. Section 23.96(a), Tax Code, is amended to read as follows:

(a) If airport property that has been appraised under this subchapter is no longer subject to a deed restriction, an additional tax is imposed on the property equal to the difference between the taxes imposed on the property for each of the five years preceding the year in which the deed restriction expires that the property was appraised as provided by this subchapter and the tax that would have been imposed had the property not been restricted to use as public access airport property in each of those years, plus interest at the rate provided by Section 1.14 [an annual rate of seven percent] calculated from the dates on which the differences would have become due.

SECTION 14. Sections 23.9807(a) and (b), Tax Code, are amended to read as follows:

(a) If the use of land that has been appraised as provided by this subchapter changes to a use that qualifies the land for appraisal under Subchapter E, an additional tax is imposed on the land equal to the sum of:

(1) the difference between:

(A) the taxes imposed on the land for each of the five years preceding the year in which the change of use occurs that the land was appraised as provided by this subchapter; and

(B) the taxes that would have been imposed had the land been appraised under Subchapter E in each of those years; and

(2) interest at the rate provided by Section 1.14 [an annual rate of seven percent] calculated from the dates on which the differences would have become due.

(b) If the use of land that has been appraised as provided by this subchapter changes to a use that does not qualify the land for appraisal under Subchapter E or under this subchapter, an additional tax is imposed on the land equal to the sum of:

(1) the difference between:

(A) the taxes imposed on the land for each of the five years preceding the year in which the change of use occurs that the land was appraised as provided by this subchapter; and

(B) the taxes that would have been imposed had the land been taxed on the basis of market value in each of those years; and

(2) interest at the rate provided by Section 1.14 [an annual rate of seven percent] calculated from the dates on which the differences would have become due.

SECTION 15. Section 26.06(d), Tax Code, is amended to read as follows:

(d) At the public hearings the governing body shall announce the date, time, and place of the meeting at which it will vote on the proposed tax rate. After each hearing the governing body shall give notice of the meeting at which it will vote on the proposed tax rate and the notice shall be in the same form as prescribed by Subsections (b) and (c), except that it must state the following:

"NOTICE OF TAX REVENUE INCREASE

"The (name of the taxing unit) conducted public hearings on (date of first hearing) and (date of second hearing) on a proposal to increase the total tax revenues of the (name of the taxing unit) from properties on the tax roll in the preceding year by (percentage by which proposed tax rate exceeds lower of rollback tax rate or effective tax rate calculated under this chapter) percent.

"The total tax revenue proposed to be raised last year at last year's tax rate of (insert tax rate for the preceding year) for each $100 of taxable value was (insert total amount of taxes imposed in the preceding year).

"The total tax revenue proposed to be raised this year at the proposed tax rate of (insert proposed tax rate) for each $100 of taxable value, excluding tax revenue to be raised from new property added to the tax roll this year, is (insert amount computed by multiplying proposed tax rate by the difference between current total value and new property value).

"The total tax revenue proposed to be raised this year at the proposed tax rate of (insert proposed tax rate) for each $100 of taxable value, including tax revenue to be raised from new property added to the tax roll this year, is (insert amount computed by multiplying proposed tax rate by current total value).

"The (governing body of the taxing unit) is scheduled to vote on the tax rate that will result in that tax increase at a public meeting to be held on (date of meeting) at (location of meeting, including mailing address) at (time of meeting).

"The (governing body of the taxing unit) proposes to use the increase in total tax revenue for the purpose of (description of purpose of increase)."

SECTION 16. Section 26.09(d), Tax Code, is amended to read as follows:

(d) If a property is subject to taxation for a prior year in which it escaped taxation, the assessor shall calculate the tax for each year separately. In calculating the tax, the assessor shall use the assessment ratio and tax rate in effect in the unit for the year for which back taxes are being imposed. Except as provided by Subsection (d-1), the amount of back taxes due incurs interest calculated at the rate provided by Section 1.14 [33.01(c)] from the date the tax would have become delinquent had the tax been imposed in the proper tax year.

SECTION 17. Section 26.15(f), Tax Code, is amended to read as follows:

(f) If a correction that decreases the tax liability of a property owner is made after the owner has paid the tax, the taxing unit shall refund to the property owner the difference between the tax paid and the tax legally due, except as provided by Section 25.25(n). A property owner is not required to apply for a refund under this subsection to receive the refund.

SECTION 18. Section 26.08(b), Tax Code, is amended to read as follows:

(b) The governing body shall order that the election be held in the school district on a date not less than 30 or more than 90 days after the day on which it adopted the tax rate. Section 41.001, Election Code, does not apply to the election unless a date specified by that section falls within the time permitted by this section. At the election, the ballots shall be prepared to permit voting for or against the proposition: "Approving the ad valorem tax rate of $_____ per $100 valuation in (name of school district) for the current year, a rate that is $_____ higher per $100 valuation than the school district rollback tax rate, for the purpose of (description of purpose of increase)." The ballot proposition must include the adopted tax rate and the difference between that rate and the rollback tax rate in the appropriate places.

SECTION 19. Section 31.12(a), Tax Code, is amended to read as follows:

(a) If a refund of a tax provided by Section 11.431(b), 26.07(g), 26.15(f), 31.11, or 31.111 is paid on or before the 60th day after the date the liability for the refund arises, no interest is due on the amount refunded. If not paid on or before that 60th day, the amount of the tax to be refunded accrues interest at the rate provided by Section 1.14 [a rate of one percent for each month or part of a month that the refund is unpaid], beginning with the date on which the liability for the refund arises.

SECTION 20. Section 33.01(c), Tax Code, is amended to read as follows:

(c) A delinquent tax accrues interest at the rate provided by Section 1.14 [a rate of one percent for each month or portion of a month the tax remains unpaid]. Interest payable under this section is to compensate the taxing unit for revenue lost because of the delinquency. A delinquent tax continues to accrue interest under this subsection as long as the tax remains unpaid, regardless of whether a judgment for the delinquent tax has been rendered.

SECTION 21. Section 33.06(d), Tax Code, is amended to read as follows:

(d) A tax lien remains on the property and interest continues to accrue during the period collection of taxes is deferred or abated under this section. The annual interest rate during the deferral or abatement period is the rate provided by Section 1.14 [eight percent instead of the rate provided by Section 33.01]. Interest and penalties that accrued or that were incurred or imposed under Section 33.01 or 33.07 before the date the individual files the deferral affidavit under Subsection (b) or the date the judgment abating the suit is entered, as applicable, are preserved. A penalty under Section 33.01 is not incurred during a deferral or abatement period. The additional penalty under Section 33.07 may be imposed and collected only if the taxes for which collection is deferred or abated remain delinquent on or after the 181st day after the date the deferral or abatement period expires. A plea of limitation, laches, or want of prosecution does not apply against the taxing unit because of deferral or abatement of collection as provided by this section.

SECTION 22. Section 33.065(g), Tax Code, is amended to read as follows:

(g) A tax lien remains on the property and interest continues to accrue during the period collection of delinquent taxes is deferred or abated under this section. The annual interest rate during the deferral or abatement period is the rate provided by Section 1.14 [eight percent instead of the rate provided by Section 33.01]. Interest and penalties that accrued or that were incurred or imposed under Section 33.01 or 33.07 before the date the individual files the deferral affidavit under Subsection (c) or the date the judgment abating the suit is entered, as applicable, are preserved. A penalty is not incurred on the delinquent taxes for which collection is deferred or abated during a deferral or abatement period. The additional penalty under Section 33.07 may be imposed and collected only if the delinquent taxes for which collection is deferred or abated remain delinquent on or after the 91st day after the date the deferral or abatement period expires. A plea of limitation, laches, or want of prosecution does not apply against the taxing unit because of deferral or abatement of collection as provided by this section.

SECTION 23. Section 42.23, Tax Code, is amended by adding Subsection (i) to read as follows:

(i) When an appraisal district employee testifies as to the value of real property in an appeal under Section 42.25 or 42.26, the court may give preference to an employee who is a person authorized to perform an appraisal of real estate under Section 1103.201, Occupations Code.

SECTION 24. Sections 42.42(c) and (d), Tax Code, are amended to read as follows:

(c) If the final determination of an appeal occurs after the property owner has paid a portion of the tax finally determined to be due as required by Section 42.08, the assessor for each affected taxing unit shall prepare and mail a supplemental tax bill in the form and manner prescribed by Subsection (b). The additional tax is due and becomes delinquent as provided by Subsection (b), but the property owner is liable for [penalties and] interest on the tax included in the supplemental bill calculated at the rate provided by Section 1.14 [as provided by Section 33.01] as if the tax included in the supplemental bill became delinquent on the original delinquency date prescribed by Chapter 31. The property owner and the chief appraiser may agree in writing to waive the interest provided by this subsection on the additional tax due each affected taxing unit for the period between the original delinquency date and the first day of the next month that is at least 21 days after the date the assessor for the taxing unit mails a supplemental tax bill under this subsection.

(d) If the property owner did not pay any portion of the taxes imposed on the property because the court found that payment would constitute an unreasonable restraint on the owner's right of access to the courts as provided by Section 42.08(d), after the final determination of the appeal the assessor for each affected taxing unit shall prepare and mail a supplemental tax bill in the form and manner prescribed by Subsection (b). The additional tax is due and becomes delinquent as provided by Subsection (b), but the property owner is liable for interest on the tax included in the supplemental bill calculated as provided by Section 1.14 [33.01] as if the tax included in the supplemental bill became delinquent on the delinquency date prescribed by Chapter 31.

SECTION 25. Section 42.43(b), Tax Code, is amended to read as follows:

(b) For a refund made under this section, the taxing unit shall include with the refund interest on the amount refunded [calculated] at the rate provided by Section 1.14 [an annual rate that is equal to the sum of two percent and the most recent prime rate quoted and published by the Federal Reserve Board as of the first day of the month in which the refund is made, but not more than a total of eight percent,] calculated from the delinquency date for the taxes until the date the refund is made.

SECTION 26. Sections 140.010(e) and (f), Local Government Code, are amended to read as follows:

(e) A county or municipality that proposes a property tax rate that exceeds the lower of the effective tax rate or the rollback tax rate shall provide the following notice:

"NOTICE OF (INSERT CURRENT TAX YEAR) TAX YEAR PROPOSED PROPERTY TAX

RATE FOR (INSERT NAME OF COUNTY OR MUNICIPALITY)

"A tax rate of $_____ per $100 valuation has been proposed for adoption by the governing body of (insert name of county or municipality). This rate exceeds the lower of the effective or rollback tax rate, and state law requires that two public hearings be held by the governing body before adopting the proposed tax rate. The governing body of (insert name of county or municipality) proposes to use revenue attributable to the tax rate increase for the purpose of (description of purpose of increase).

PROPOSED TAX RATE $______ per $100

PRECEDING YEAR'S TAX RATE $______ per $100

EFFECTIVE TAX RATE $______ per $100

ROLLBACK TAX RATE $______ per $100 "The effective tax rate is the total tax rate needed to raise the same amount of property tax revenue for (insert name of county or municipality) from the same properties in both the (insert preceding tax year) tax year and the (insert current tax year) tax year. "The rollback tax rate is the highest tax rate that (insert name of county or municipality) may adopt before voters are entitled to petition for an election to limit the rate that may be approved to the rollback rate.

"YOUR TAXES OWED UNDER ANY OF THE ABOVE RATES CAN BE CALCULATED AS

FOLLOWS:

property tax amount = (rate) x (taxable value of your property) /

100

"For assistance or detailed information about tax calculations, please contact:

(insert name of county or municipal tax assessor-collector)

(insert name of county or municipality) tax assessor-collector

(insert address)

(insert telephone number)

(insert e-mail address)

(insert Internet website address, if applicable) "You are urged to attend and express your views at the following public hearings on the proposed tax rate:

First Hearing: (insert date and time) at (insert location of meeting).

Second Hearing: (insert date and time) at (insert location of meeting)."

(f) A county or municipality shall:

(1) provide the notice required by Subsection (d) or (e), as applicable, by the earlier of October [not later than September] 1 or the 30th day after the date the taxing unit's appraisal roll is certified by:

(A) publishing the notice in a newspaper having general circulation in:

(i) the county, in the case of notice published by a county; or

(ii) the county in which the municipality is located or primarily located, in the case of notice published by a municipality; or

(B) mailing the notice to each property owner in:

(i) the county, in the case of notice provided by a county; or

(ii) the municipality, in the case of notice provided by a municipality; and

(2) post the notice on the Internet website of the county or municipality, if applicable, beginning by the earlier of October [not later than September] 1 or the 30th day after the date the taxing unit's appraisal roll is certified and continuing until the county or municipality adopts a tax rate.

SECTION 27. Subchapter H, Chapter 49, Water Code, is amended by adding Section 49.2361 to read as follows:

Sec. 49.2361. ADDITIONAL NOTICE FOR CERTAIN TAX INCREASES. If a district proposes to adopt a combined tax rate that would authorize the qualified voters of the district by petition to require a rollback election to be held in the district, the notice required by Section 49.236 must include a description of the purpose of the proposed tax increase.

SECTION 28. (a) Except as provided by Subsection (b), the changes in law made by this Act apply only to an ad valorem tax year that begins on or after the effective date of this Act.

(b) The change in law made by this Act to a provision of Title 1, Tax Code, that affects the amount or rate of any penalty or interest due applies only to penalties and interest that accrue on or after the effective date of this Act. Penalties and interest that accrued before the effective date of this Act are governed by the law in effect when the penalties and interest accrued, and that law is continued in effect for that purpose.

SECTION 29. Notwithstanding Section 30, Section 23 of this Act takes effect January 1, 2020.

SECTION 30. This Act takes effect January 1, 2016.

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