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  86R489 CJC-F
 
  By: Hughes S.B. No. 411
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the appraisal for ad valorem tax purposes of tangible
  personal property held for sale at retail.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Sections 23.12(a) and (f), Tax Code, are amended
  to read as follows:
         (a)  Except as provided by Sections 23.121, [23.1241,]
  23.124, 23.1241, 23.1244, and 23.127, the market value of an
  inventory is the price for which it would sell as a unit to a
  purchaser who would continue the business. An inventory shall
  include residential real property which has never been occupied as
  a residence and is held for sale in the ordinary course of a trade or
  business, provided that the residential real property remains
  unoccupied, is not leased or rented, and produces no income.
         (f)  The owner of an inventory other than a dealer's motor
  vehicle inventory as that term is defined by Section 23.121, [a
  dealer's heavy equipment inventory as that term is defined by
  Section 23.1241, or] a dealer's vessel and outboard motor inventory
  as that term is defined by Section 23.124, a dealer's heavy
  equipment inventory as that term is defined by Section 23.1241, a
  retail inventory as that term is defined by Section 23.1244, or a
  retail manufactured housing inventory as that term is defined by
  Section 23.127 may elect to have the inventory appraised at its
  market value as of September 1 of the year preceding the tax year to
  which the appraisal applies by filing an application with the chief
  appraiser requesting that the inventory be appraised as of
  September 1. The application must clearly describe the inventory
  to which it applies and be signed by the owner of the inventory. The
  application applies to the appraisal of the inventory in each tax
  year that begins after the next August 1 following the date the
  application is filed with the chief appraiser unless the owner of
  the inventory by written notice filed with the chief appraiser
  revokes the application or the ownership of the inventory changes.
  A notice revoking the application is effective for each tax year
  that begins after the next September following the date the notice
  of revocation is filed with the chief appraiser.
         SECTION 2.  Subchapter B, Chapter 23, Tax Code, is amended by
  adding Section 23.1244 to read as follows:
         Sec. 23.1244.  RETAILER'S RETAIL INVENTORY; VALUE. (a) In
  this section:
               (1)  "Chief appraiser" means the chief appraiser for
  the appraisal district in which a retailer's retail inventory is
  located.
               (2)  "Declaration" means a retailer's retail inventory
  declaration form adopted by the comptroller under this section.
               (3)  "Retailer" means a person who is engaged in the
  business in this state of selling retail inventory. For purposes of
  this section, the term does not include a bank, savings bank,
  savings and loan association, credit union, or other finance
  company. In addition, for purposes of taxation of a person's retail
  inventory in a tax year, the term does not include a person who
  renders the person's retail inventory in that tax year by filing a
  rendition statement or property report under Chapter 22.
               (4)  "Retail inventory" means all tangible personal
  property that a retailer holds for sale in this state during a
  12-month period and for which the retailer is not otherwise
  entitled to an exemption from taxation. For purposes of this
  section, the term does not include:
                     (A)  real property; or
                     (B)  inventory that qualifies for appraisal under
  Section 23.121, 23.124, 23.1241, or 23.127.
               (5)  "Sales price" means the total amount of money paid
  or to be paid to a retailer for the purchase of an item of retail
  inventory.
               (6)  "Total annual sales" means the total of the sales
  price from every sale from a retailer's retail inventory for a
  12-month period.
         (b)  For the purpose of the computation of property tax,  the
  market value of a retailer's retail inventory on January 1 is the
  total annual sales, less sales at wholesale and sales to retailers,
  for the 12-month period corresponding to the preceding tax year,
  divided by 12.
         (b-1)  Notwithstanding Subsection (b), for the nine-year
  period beginning January 1, 2020, and ending December 31, 2028, the
  market value of a retailer's retail inventory is the greater of:
               (1)  the market value of that retail inventory on
  January 1 of the applicable tax year as determined under Subsection
  (b); or
               (2)  the following percentages of the market value of
  that inventory on January 1 of the applicable tax year as determined
  under Section 23.12:
                     (A)  for the 2020 tax year, 90 percent of the
  market value;
                     (B)  for the 2021 tax year, 80 percent of the
  market value;
                     (C)  for the 2022 tax year, 70 percent of the
  market value;
                     (D)  for the 2023 tax year, 60 percent of the
  market value;
                     (E)  for the 2024 tax year, 50 percent of the
  market value;
                     (F)  for the 2025 tax year, 40 percent of the
  market value;
                     (G)  for the 2026 tax year, 30 percent of the
  market value;
                     (H)  for the 2027 tax year, 20 percent of the
  market value; and
                     (I)  for the 2028 tax year, 10 percent of the
  market value.
         (c)  For the purpose of the computation of property tax on
  the market value of the retail inventory of an owner who was not a
  retailer on January 1 of the preceding tax year, the chief appraiser
  shall estimate the market value of the retailer's retail inventory.
  In making the estimate required by this subsection, the chief
  appraiser shall use sales data, if available, generated by sales
  from the retailer's retail inventory in the preceding tax year.
         (c-1)  Notwithstanding Subsection (c), for the nine-year
  period beginning January 1, 2020, and ending December 31, 2028, the
  chief appraiser shall determine the market value of the retail
  inventory of an owner who was not a retailer on January 1 of the
  preceding tax year in the manner prescribed by Subsection (b-1) and
  shall use the estimated market value determined under Subsection
  (c) as the market value of the retail inventory for purposes of
  Subsection (b-1)(1).
         (c-2)  This subsection and Subsections (b-1) and (c-1)
  expire December 31, 2028.
         (d)  Except for retail inventory, tangible personal property
  held by a retailer is appraised as provided by the other sections of
  this code. In the case of a retailer whose sales from the
  retailer's retail inventory are made predominately to other
  retailers, the chief appraiser shall appraise the retailer's retail
  inventory as provided by Section 23.12.
         (e)  A retailer is presumed to be an owner of retail
  inventory on January 1 if, in the 12-month period ending on December
  31 of the preceding year, the retailer sold an item of retail
  inventory to a person other than a retailer.  The presumption is
  not rebutted by the fact that a retailer has no item of retail
  inventory physically on hand for sale from the retailer's retail
  inventory on January 1.
         (f)  The comptroller by rule shall adopt a retailer's retail
  inventory declaration form. Not later than April 15 of each year,
  or, in the case of a retailer who was not in business on January 1,
  not later than 30 days after commencement of business, each
  retailer shall file a declaration with the chief appraiser for each
  location at which the retailer's retail inventory to be appraised
  as provided by this section is located. The declaration is
  sufficient to comply with this subsection if it sets forth:
               (1)  the name and business address of each location at
  which the retailer's retail inventory to be appraised as provided
  by this section is located;
               (2)  a statement that the retailer is the owner of
  retail inventory; and
               (3)  the market value of the retailer's retail
  inventory for the current tax year as computed under Subsection
  (b).
         (g)  As provided by this subsection, the chief appraiser may
  examine the books and records of a retailer. A request made under
  this subsection must be made in writing, be delivered personally to
  the custodian of the records at a location at which the retailer
  conducts business, provide a period of not less than 15 days for the
  person to respond to the request, and state that the person to whom
  the request is addressed has the right to seek judicial relief from
  compliance with the request. In a request made under this section,
  the chief appraiser may examine:
               (1)  documentation appropriate to allow the chief
  appraiser to ascertain the applicability of this section to the
  person; and
               (2)  sales records to substantiate information set
  forth in the declaration filed by the retailer.
         (h)  A retailer who fails to timely file a declaration under
  Subsection (f) in a tax year waives any right to have the retailer's
  retail inventory appraised as provided by this section in that tax
  year.
         (i)  Section 23.123 applies to a declaration filed under this
  section in the same manner in which that section applies to a
  declaration filed as required by Section 23.121.
         SECTION 3.  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.
         SECTION 4.  This Act takes effect January 1, 2020.