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The DMA Way

Texas Legislative Update | June 12, 2019

by DMA Staff | Jun 11, 2019

Sales Tax | Alcoholic Beverage Tax | Boat and Boat Motor Sales/Use Tax
Cigarette Tax and Other Tobacco Products Tax | Franchise Tax | General Tax
Hotel Occupancy Tax | Miscellaneous Tax | Mixed Beverage Tax | Motor Fuel Tax
Motor Vehicle Sales/Use Tax | Oil Field Clean Up Fees | Severance Tax
Texas Emissions Reduction Plan (TERP) | Unclaimed Property

PROPERTY TAX
School Finance | General Provisions | State Tax Administration
Appraisal Districts and Local Administration | Exemptions
Exemptions - Residence Homesteads | Appraisal, Methodology, and Notices
Appraisal Roll Certification | Assessment and Tax Rate
Abatement|Protest - Appraisal Review Board | Appeal - Binding Arbitration
Appeal - Judicial Review | Collections and Delinquency | Tax Sales and Redemption
Miscellaneous

*UPDATED JUNE 17, 2019*

DMA - DuCharme, McMillen & Associates, Inc. provides this Texas Legislative Update relating to the 86th Texas Legislature Regular Session.

The 86th Texas Legislature Regular Session ended May 27, 2019, with the passage of HB 1 (Zerwas, John), the budget bill, which appropriates $250.7 billion in all funds for the 2020-2021 biennium; HB 3 (Huberty, Dan), the school finance reform bill; and SB 2 (Bettencourt, Paul), the property tax reform bill. HB 3 does the following:

  • provides $5.1 billion in tax relief (average of $0.08 rate reduction in 2019-20; $0.13 in 2020-21);
  • provides $6.5 billion in additional funding to public education and school employee compensation;
  • reduces recapture based on formula changes by $3.6 billion (47%) for the biennium];
  • increases state share of public education funding to 45% (from 38%)
    [Source: Texas Taxpayers and Research Association]

SB 2 makes various changes to the tax administrative system that the Legislature believes would create more transparencies and fairness, including additional opportunities for voter-participation in the tax rate adoption process, but nothing in SB 2 actually provides tax relief. For our readers’ convenience, we have divided our summary of SB 2 by subject matter.

Governor Greg Abbott has until June 16, 2019, to sign or veto the bills, or allow them to become law without his signature. The content and status of any specific bill is available on Texas Legislature Online at  https://capitol.texas.gov/.

ENROLLED TAX BILLS

SALES TAX

Aircraft for Agricultural Use
SB 1214 (Schwertner, Charles) amends Tax Code §151.328, which exempts an aircraft used for a purpose described as an agricultural use in Subsections (a)(5)(A)-(F) (i.e., predator control; wildlife or livestock capture, surveys, or census counts; animal or plant health inspection services; or crop dusting, pollination, or seeding). However, current law restricts travel to less than 30 miles each way to a location to perform a service to preserve the exemption. SB 1214 eliminates this mileage limitation so that any travel to a location to perform a service described by Subsections (a)(5)(A)-(F) would not disqualify an aircraft from the exemption. The Act takes effect September 1, 2019.

Amusement Services
HB 1965 (Thompson, Senfronia) amends Tax Code §151.3101 to provide that amusement services provided by a nonprofit corporation or association or by an educational, religious, law enforcement association, or charitable organization continue to qualify as exempt amusement services if the qualifying nonprofit organization enters into a contract with a nonqualifying entity to provide a touring theatrical production when: (1) the contract with the other entity is for a term of at least five years and for at least five presentations each year; and (2) the amusement service is held at a location either owned or leased for a term of at least one year by the qualifying nonprofit organization. The term “theatrical production” means a live staged play, musical play, opera, or ballet. The Act takes effect September 1, 2019.

HB 3386 (Geren, Charlie) amends Tax Code §151.3101, which currently exempts amusement services that are exclusively provided by a nonprofit corporation organized for the purpose of encouraging agriculture by the maintenance of public fairs and exhibitions of livestock, by providing that the exemption’s exclusivity test would be met if an amusement service is provided at a “designated facility” defined by Texas Local Government Code §334.401, which also is a “qualified project” as defined in Tax Code §351.1015(a)(5)(B). The term “designated facility” means a venue project the principal use of which is for rodeos, livestock shows, equestrian events, agricultural expositions, county fairs, or similar events. A “qualified project” is a multipurpose venue that includes a livestock facility and is located adjacent to a recognized cultural district that is: (1) located on land owned by a municipality or by the venue owner; (2) partially financed by private contributions that equal not less than 40% of the project costs; and (3) related to the promotion of tourism and the convention and hotel industry. The Act takes effect October 1, 2019.

Marketplace Providers and Wayfair
HB 1525 (Burrows, Dustin) makes the following changes:

  • amends the definition of retailer in Tax Code §151.008(b) to include a person who is a marketplace provider;
  • adds Tax Code §151.0242 to:
    • provide these definitions:
      • a marketplace provider means a person who owns or operates a marketplace and directly or indirectly processes sales or payments for marketplace sellers;
      • a marketplace means a physical or electronic medium through which persons other than the owner or operator of the medium make sales of taxable items, including a store, Internet website, software application, or catalog; and
      • a marketplace seller means a seller, other than the marketplace provider, who makes a sale of a taxable item through a marketplace;
    • provide that a marketplace provider has the rights and duties of a seller or retailer with respect to sales made through the marketplace;
    • require a marketplace provider to do the following:
      • certify to each marketplace seller that the marketplace provider assumes the rights and duties with respect to sales made by the marketplace seller through the marketplace;
      • collect sales/use tax on sales of taxable items made through the marketplace; and
      • report and remit taxes on all sales made through the marketplace;
    • require a marketplace seller to do the following:
      • exclude sales made through the marketplace from the seller’s reports if the seller accepts in good faith a marketplace provider’s certification;
      • retain all records required by the Texas Tax Code; and
      • furnish to the marketplace provider information that is required to correctly collect and remit sales/use taxes. The information may include a certification that an item being sold is a taxable item, is not a taxable item, or is exempt from taxation;
    • provide that a marketplace provider is not liable for failure to collect and remit the correct amount of taxes if the marketplace provider demonstrates that the failure resulted from good faith reliance on incorrect or insufficient information provided by the marketplace seller. [One exception, if the marketplace provider and the marketplace seller are affiliates or associates, as defined by Texas Business Organizations Code §1.002, both parties are jointly and severally liable for a deficiency resulting from a sale made through the marketplace.] If the marketplace provider is not liable because of good faith reliance on the information furnished by the marketplace seller, the seller is liable for the deficiency resulting from incorrect or insufficient information provided;
  • clarifies that the bill does not change the purchaser’s tax liability under the law;
  • prohibits a court from certifying a class action brought against a marketplace provider concerning these sales tax provisions;
  • allows the Comptroller to promulgate a rule to except certain marketplace providers from some or all of these requirements; and amends Tax Code §321.203 and §323.203 to provide that, for local tax purposes, a sale of a taxable item made by a marketplace seller through a marketplace is consummated at the location in Texas to which the item is shipped or delivered or at which possession is taken by the purchaser.

The Act takes effect October 1, 2019. [Note: This is one of the Comptroller’s legislative proposals.]

HB 2153 (Burrows, Dustin) simplifies the local tax collection for remote sellers that do not have physical presence in Texas but that are engaged in doing business in Texas. The bill adds Tax Code §151.0595 that:

  • defines “remote seller” as a seller whose only activities in Texas are described by Tax Code §151.107(a)(4) or (5), which consist of the following activities:
    • A person who engages in regular or systematic solicitation of sales of taxable items in Texas by the distribution of catalogs, periodicals, advertising flyers, or other advertising, by means of print, radio, or television media, or by mail, telegraphy, telephone, computer database, cable, optic, microwave, or other communication system for the purpose of effecting sales of taxable items;
    • A person who solicits orders for taxable items by mail or through other media and under federal law is subject to or permitted to be made subject to the jurisdiction of this state for purposes of collecting the sales/use taxes;
  • requires a remote seller to collect and remit one or more local use taxes in connection with a sale of a taxable item into Texas by using either:
    • the combined tax rate of all applicable local uses taxes (current law); or
    • the single local use tax published in the Texas Register, subject to affirmative election, which
      • requires a remote seller that wants to use the single local use tax rate to notify the Comptroller of the election before using the rate; and
      • requires a remote seller that makes the election to use the rate for all sales of taxable items made by the remote seller unless the seller revokes the election by notifying the Comptroller;
  • requires the Comptroller to determine the single local use tax rate effective in a calendar year by computing the estimated average rate of local sales and use taxes imposed in Texas during the preceding state fiscal year by:
    • dividing the total amount of net local sales/use taxes remitted to the Comptroller during the state fiscal year by the total amount of net state sales/use taxes remitted to the Comptroller during that fiscal year; and
    • multiplying the amount by the state sales tax rate provided by Tax Code §151.051 and rounding the amount to the nearest .0025;
  • requires the Comptroller to apportion and distribute revenue from local use taxes as provided by Government Code §403.107;
  • allows a purchaser to apply annually for a refund for any amount by which the amount of use tax computed using the single local use tax rate and paid by the purchaser exceeds the amount the purchaser would have paid if that tax had been computed using the combined rate provided by law;
  • holds harmless a purchaser who buys a taxable item for storage, use or consumption from a remote seller that elects to collect use tax at the single local tax rate; and repeals Tax Code §151.059 and 151.107(c) that are no longer relevant as a result of the passage of HB 2153.

The Act takes effect October 1, 2019. The Act does not require a remote seller to collect local use taxes on sales of taxable items made before October 1, 2019. The Act provides that the single local use tax rate in effect for the period beginning October 1, 2019, and ending December 31, 2019, is 1.75%. [Note: This is one of the Comptroller’s legislative proposals.]

Master Recording
HB 3086 (Cole, Sheryl) amends Tax Code §151.3185, which currently exempts: (1) tangible personal property that will become an ingredient or component part of a motion picture, video or audio recording, a copy of which is sold or offered for ultimate sale, licensed, distributed, broadcast, or otherwise exhibited; (2) tangible personal property that is necessary or essential to and used or consumed in or during the production of such a recording; and (3) the sale of such a recording by the producer of the recording, by:

  • requiring that the recording be a master recording to qualify and requiring the exhibition be for consideration;
  • clarifying that the recording that is currently exempt from tax when sold by the producer means a “master recording”; and defining the term “master recording” to mean the principal media on which images, sound, or a combination of images and sound are first fixed and from which copies are commercially made available for sale, license, distribution, broadcast, or exhibition for consideration.

The Act takes effect May 31, 2019. However, the bill provides that the changes are “clarifications of existing law”. [Note: This bill is one of the Comptroller's legislative proposals. The Comptroller’s office adopted Rule 3.350 in 2017, and HB 3086 codifies it.]

Off-Highway Vehicles
HB 1543 (Springer, Drew) makes the following changes:

  • adds Tax Code §151.481 to require manufacturers of off-highway vehicles that are required to hold a manufacturer’s license under Chapter 2301, Occupation Code, to file a report with the Comptroller by March 1st of each year that lists each warranty issued by the manufacturer for a new off-highway vehicle that was, during the preceding calendar year, sold to a Texas resident by a retailer located outside of Texas, and
    • sets the first report due date as March 1, 2020;
    • requires the Comptroller to prescribe the report form, which shall contain, at a minimum, for each warranty: the vehicle identification number of the vehicle; the make, model and model year of the vehicle; and the name and address of the purchaser of the vehicle. As soon as practical, the Comptroller is to use the information to investigate and collect any unpaid use taxes on the purchases of off-highway vehicles;
    • authorizes the Comptroller to impose a penalty under Tax Code §151.703(d) for failure to file a report;
    • requires a manufacturer to pay the state a civil penalty of not less than $25 or more than $2,000 for each day a violation continues if the manufacturer violates these requirements;
    • permits the Comptroller to notify the Department of Motor Vehicles of a manufacturer’s failure to file a report, and the Department of Motor Vehicles may take administrative action against the manufacturer for the failure under Chapter 2301, Occupations Code;
    • authorizes the Comptroller to audit, inspect, or otherwise verify a manufacturer’s compliance with these requirements and to bring a cause of action in a court of law to enforce these provisions and to recover court costs and reasonable attorney’s fee if the Comptroller prevails; and
  • adds Transportation Code §501.0301 to provide that a county  assessor-collector may not issue a title receipt and the Department of Motor Vehicles may not issue a certificate of title for an all-terrain vehicle or recreational off-highway vehicle purchased from an out-of-state retailer for a model that is not more than one year old (based on the manufacturer's designated model year) when the application is presented unless the applicant certifies that the applicant has paid use tax to the Comptroller; and
    • provides that the change applies to an application for title filed on or after March 1, 2020; and requires the Comptroller to form a working group with the Texas Assessor-Collectors Association of Texas to develop forms.

The Act takes effect September 1, 2019.

Reporting of Alcoholic Beverages
HB 4542 (Guillen, Ryan) makes the following changes:

  • amends Tax Code §151.461 to add brewpubs to the list of persons involved in the manufacture and distribution of alcoholic beverages that are required to file a monthly report of sales to the Comptroller under Tax Code §151.462. The reporting requirement applies only to a brewpub that engages in activities authorized by Alcoholic Beverage Code §74.08, which authorizes the holder of a brewpub license who holds a wine and beer retailer’s permit and whose sale of beer, ale, or malt liquor consists only of beer, ale, or malt liquor manufactured on the brewpub’s premises to sell to retailers; and amends Tax Code §111.006(h) to add another requirement to the Comptroller’s current authority to disclose information to a person regarding net sales by quantity, brand, and size that is submitted in a report required under Tax Code §151.462. Currently, Tax Code §111.006(h) allows the Comptroller to disclose information if the requestor holds a permit or license under Chapter 19, 20, 21, 37, 64, 65, or 66, Alcoholic Beverage Code, and if the request relates only to information regarding the sale of a product distributed by the requestor. The bill requires the Comptroller to determine whether the information reported is sufficiently detailed to protect the confidentiality of sales information relating to products not distributed by the requestor.

The Act takes effect September 1, 2019.

Resale
SB 1525 (Watson, Kirk) makes the following changes relating to resale:

  • changes an exemption provided by Tax Code §151.335 for amusement services and personal services provided through coin-operated machines that are operated by the consumer to a tax exclusion by:
    • amending the definition of taxable amusement services in Tax Code §151.0028 to exclude services provided through coin-operated machines that are operated by the consumer;
    • amending the definition of taxable personal services in Tax Code §151.0045 to exclude services provided through coin-operated machines that are operated by the consumer; and
    • repealing Tax Code §151.335;
      [Note: These changes solidify the Comptroller’s efforts to overturn the court case of Combs v. Roark Amusement Vending Inc. (2013). As a result of these changes, plush toy machines may not be purchased tax free for resale because the machines are used to provide nontaxable services.]
  • amends Tax Code §151.006(a)(1) to clarify the definition of “sale for resale” requiring a taxable item be acquired for the purpose of reselling it as a taxable item and removes alternative language that a taxable item may be acquired for reselling it “with” a taxable item [Note: The change returns the provision to the language it contained before 2011.];
  • amends Tax Code §151.006(a)(5) to expand the definition of “sale for resale” to include sales of tangible personal property or a taxable service to a purchaser who acquires the property or service to transfer it as an integral part of a contract or subcontract for the sale, other than rentals or leases, of tangible personal property with a government entity exempt under Tax Code §151.309 or an organization exempt under Tax Code §151.310 only if the purchaser allocates and bills to the contract the cost of the property or service as a direct or indirect cost and transfers title to the property to the exempt entity or organization under the contract and any applicable acquisition regulations [Note: The change codifies the court cases of Day & Zimmerman v. Calvert (1975) and Strayhorn v. Raytheon (2003).];
  • amends Tax Code §151.006(c) to provide that the definition of “sale for resale” does not include a sale of a taxable item that is purchased for use by a service provider who performs nontaxable services, but it retains the exception when the nontaxable service provider has a contract with certain enumerated federal agencies;
  • amends Tax Code §151.006 to add subsection (e) to specify that a “sale for resale” does not include the sale of tangible personal property that will be used, consumed, or expended in, or incorporated into, an oil or gas well by a purchaser who acquires the property to perform an oil well service taxable under Chapter 191, Tax Code; and
  • amends Tax Code §151.338 to narrow the current exemption for services to repair, remodel, maintain or restore tangible personal property if the repair, remodeling, maintenance or restoration is required by statute, ordinance, order, rule or regulation of any commission, agency, court, or political, governmental, or quasi-governmental entity in order to protect the environment or to conserve energy by exempting only separately stated charges for such labor. The bill also specifies that:
    • the exemption does not apply to charges for materials furnished by the service provider to the customer of the services; and
    • the exemption does not apply to lump-sum charges for repair, remodeling, maintenance or restoration even if the qualifying purpose is satisfied.

Exception: 65% of a lump-sum charge for labor and materials to repair, remodel, maintain, or restore tangible personal property is exempted from sales tax if the labor and materials are purchased for a health care facility as defined by Section 108.002, Health and Safety Code, or for an oncology center.

The Act takes effect June 10, 2019. However, the bill provides that the changes are “clarifications of existing law”.  [Note: This bill is one of the Comptroller's legislative proposals.]

Retailers’ Payment of Tax in Lieu of Collection
HB 2358 (Guillen, Ryan) makes the following changes:

  • amends Tax Code §151.704, which currently prohibits by making it a criminal offense for a retailer to directly or indirectly advertise, hold out or state that it would assume or absorb sales tax or would not add tax to the sale price, by adding an exception:
    • permitting a retailer to directly or indirectly advertise, hold out, or state to a customer or the public that the retailer will pay the tax if the retailer: (1) advertises, holds out, or states that the retailer is paying the tax for the customer; (2) does not represent that the sale is exempt or excluded from taxation; and (3) includes the separately stated tax amount on the receipt or other documents given to the customer with a statement that the tax will be paid by the retailer. The bill would hold such retailers liable for tax, penalty and interest; and
  • amends Tax Code §111.016 to:
    • provide that a retailer who advertises, holds out, or states that the retailer will pay the sales tax as provided by Tax Code §151.704(b) and makes a sale of a taxable item: (1) is presumed to have received or collected the amount of the taxes on the taxable transaction; (2) is required to hold the amount in trust for the benefit of the state; and (3) is liable to the state for the amount of tax plus any accrued penalties and interest on the amount; and
    • extend the personal liability imposed on an individual who controls or supervises the collection of tax or accounting for and paying over of the tax and who fails to pay or cause to be paid the tax or money as a responsible party to the new provision.

The Act takes effect October 1, 2019.

Sale by Non-Profit Organization
HB 2684 (Metcalf, Will) adds Tax Code §151.3102 to exempt taxable items sold by a nonprofit organization that is exempt from federal income tax under IRC §501(c)(3) at a county fair if the purchaser is a person attending or participating in the fair. The Act takes effect on September 1, 2019.

Local Sales/Use Tax
HB 279 (Craddick, Tom) amends Chapter 1061, Special District Local Laws Code, to authorize the Midland County Hospital District to impose a sales and use tax in increments of 0.125% up to a maximum rate of 2%. The Act takes effect June 10,2019.

SB 1319 (Birdwell, Brian) adds provisions to Chapters 334 and 504, Local Government Code, to authorize municipalities and counties that meet certain conditions to convert all or a portion of a sales/use tax adopted under Chapter 334, Local Government Code, for sports and community venues to a sales/use tax imposed under Chapter 504, Local Government Code, for Type A and Type B economic development corporations, if the conversion is approved by the voters. The Governor vetoed this bill.
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ALCOHOLIC BEVERAGE TAX

HB 3754 (Burrows, Dustin) amends Alcoholic Beverage Code §11.38 and §61.36 to authorize a city, town, or county to:

  • suspend a permittee who sells an alcoholic beverage without paying a local permit or license fee;
  • enter into a contract with a private attorney or a public or private vendor for the collection of an unpaid permit fee that is more than 60 days past due. The private attorney or public or private vendor collecting the past due fee may assess a collection charge to a permit holder for late payment or nonpayment; and enter into an interlocal agreement with another entity authorized to levy a fee for the collection of an unpaid permit fee that is more than 60 days past due.

The Act takes effect September 1, 2019. The changes in law apply only to fees originally levied on or after September 1, 2019.

SB 928 (Hancock, Kelly) amends Chapters 12 and 62 of the Alcoholic Beverage Code to:

  • allow holders of a brewer's permit to import ale and malt liquor and to allow holders of a manufacturer's license to import ale, malt liquor and beer for manufacturing purposes;
  • provide that state tax on the imported ale, malt liquor, and beer does not accrue until the beer, ale or malt liquor has been used for manufacturing purposes and the resultant product has been placed in containers for sale; and
  • include ale and malt liquor among the beverages a manufacturer’s license holder may import into Texas in barrels or other containers and remove the prohibition against shipping beer into Texas in tank cars.

The Act takes effect September 1, 2019.
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BOATS AND BOAT MOTOR SALES/USE TAX

HB 4032 (Guillen, Ryan) makes the following changes to Chapter 160, Tax Code:

  • amends the definition of “boat” in Tax Code §160.001(2) to mean a vessel not more than 115 feet in length (currently not more than 65 feet in length), measured from the tip of the bow in a straight line to the stern;
    • [Note: Vessels from 66 feet to 115 feet in length that are currently subject to sales/use tax at a rate of up to 8.25% under Chapter 151, Tax Code, will be subject to boat and boat motor sales/use tax at the rate of 6.25%.]
  • adds Tax Code §160.0246 to exempt the sale of a boat or boat motor that:
    • is sold in Texas for use in another state or nation if it is removed from Texas within 10 days of the purchase;
    • is sold in Texas for use in another state or nation if, within 10 days of the purchase, the boat or boat motor is docked at or placed in a boat repair or modification facility registered with the Comptroller, is only used to test the repairs or modification, and is removed from Texas within 20 days after the completion of the repair or modifications;
    • is sold in Texas for use in another state or nation if it displays a permit described by Tax Code §160.0247 at all times after the boat or boat motor is purchased until the boat or motor is removed from Texas and is removed from Texas within 90 days of the purchase;
    • is used in Texas or brought into Texas for use if the boat or motor:
      • has a current certificate or number issued under any federal law or a federally approved numbering system of another state;
      • displays a permit described by Tax Code §160.0247 at all times while the boat or motor is located in Texas; and
      • is removed from Texas within 90 days after the date the boat or motor is brought into Texas;
  • adds Tax Code §160.0247 to authorize the Comptroller or its agent to issue a temporary use permit to the owner of a taxable boat or motor that qualifies for an exemption under Tax Code §160.0246. The fee is $150 and is valid for 90 days with no renewal. The owner of a taxable boat may obtain two temporary permits in a calendar year but the second permit may be issued only after the first permit has been expired for at least 30 days;
  • adds Tax Code §160.026 to provide that, notwithstanding any other law, the tax imposed under Tax Code §160.021 on the sale of a taxable boat or motor may not exceed $18,750; and
  • amends Tax Code §160.041 to change the due date for tax imposed by Tax Code §160.021, 160.022 and 160.023 from the 20th working day to the 45th working day after the taxable boat or motor is delivered to the purchaser or brought into Texas.

The Act takes effect September 1, 2019.
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CIGARETTE TAX AND OTHER TOBACCO PRODUCTS TAX

HB 4614 (Guillen, Ryan) and HB 3475 (Guillen, Ryan) make the following changes to Chapter 154 (Cigarette Tax) and Chapter 155 (Cigars and Other Tobacco Products Tax), Tax Code:

  • modifies the first sale tax imposition from first sale in intrastate commerce to first intrastate or interstate sale by:
    • including in the definition of first sale the sale of cigarettes or tobacco products by a distributor in or outside Texas to a distributor, wholesaler or retailer in Texas;
    • including in the definition of first sale the sale of cigarettes or tobacco products by a manufacturer in Texas who transfers cigarettes/tobacco products in Texas; and
    • defining "engaged in business " to mean a person, either directly or through a representative, that sells cigarettes/tobacco products in Texas, uses a warehouse or another location to store cigarettes/tobacco products, or otherwise conducts a physical presence cigarette/tobacco products related business in Texas;
  • clarifies the tax liability by:
    • adding that a permitted distributor who makes a first sale to a permitted distributor is liable for the tax; and
    • specifying that the ultimate consumer or user bears the impact of cigarette tax and tobacco products tax. If another person pays the tax, the amount should be added to the price charged to the ultimate consumer;
  • adds or changes provisions for manufacturers by:
    • defining a manufacturer to mean a person who manufactures, fabricates, or assembles cigarettes/tobacco products or causes or arranges for the manufacture, fabrication, or assembly of cigarettes, for sale or distribution;
    • excluding from first sale the sale of cigarettes/tobacco products by an out-of-state manufacturer to a Texas distributor or the transfer of cigarettes/tobacco products from an out-of-state manufacturer to a Texas bonded agent;
    • narrowing the definition of bonded agent to mean a third-party agent of a manufacturer outside Texas who delivers to distributors under orders from the manufacturer;
    • requiring a manufacturer that sells to a permit holder to file a return for cigarette tax before the 25th day of each month as opposed to at the end of each month;
    • providing that raw tobacco sold to a permitted manufacturer in Texas for use in manufacturing is not taxable; and
    • providing that a vehicle of a manufacturer's representative is not a residence or public storage facility, which excepts it from the prohibition that cigarettes cannot be stored at a residence of public storage facility;
  • adds provisions requiring export warehouses to hold permits, retain records, and sell untaxed cigarettes and tobacco products only to persons authorized to buy or consume such products outside the United States; and
  • regulates sales by
    • requiring sales and distribution to be between permit holders, except for retail sales to customers;
    • redefining place of business to include a vending machine from which cigarettes/tobacco products are sold;
    • requiring a person who sells cigarettes by providing a roll-your-own machine available for use by the consumer to obtain a permit; and
    • making various enforcement changes.

Both Acts take effect September 1, 2019.
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FRANCHISE TAX

HB 1607 (Goldman, Craig) amends Tax Code §171.101 to allow a taxable entity to deduct “aerospace costs” from total revenue to compute taxable margin. The deduction for aerospace costs will be phased in beginning with reports originally due on or after January 1, 2020, at 20% with the percentage increasing by 20% each year until reports originally due on or after January 1, 2024, on which 100% of aerospace costs may be deducted. The term “aerospace costs” means any costs not already subtracted as compensation or costs of goods sold that are properly allocated and incurred under the Federal Acquisition Regulation (48 C.F.R. Chapter 1) and subject to the requirements of 48 C.F.R. Chapter 2 or Chapter 18 for contracts, or subcontracts supporting those contracts, for the sale of goods or services to the federal government by a taxable entity in the aerospace industry that is engaged in activities described by North American Industry Classification System (NAICS) Code 334511, 3364, 3399, 5413, 5415, 5416, or 5419. The Act takes effect January 1, 2020.

SB 1824 (Perry, Charles) amends Tax Code §171.1011 to allow a taxable entity that is a performing rights society that licenses the public performance of nondramatic musical works on behalf of a copyright owner to exclude from total revenue payments made to the public performance rights holder and copyright owner for whom the taxable entity licenses the public performance. The Act takes effect June 4, 2019.
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GENERAL

HB 4542 (Guillen, Ryan) adds Tax Code §111.0023 to define “individual” to mean a natural person. The term does not include a partnership, limited liability partnership, corporation, banking corporation, savings and loan association, limited liability company, business trust, professional association, business association, joint venture, joint stock company, holding company, or other legal entity. The Act takes effect September 1, 2019.

HJR 38 (Leach, Jeff) proposes a constitutional amendment that would repeal the Bullock Amendment (Article 8, §24) of the Texas Constitution that requires the approval of a personal income tax on individuals in a state-wide referendum and would replace it with a constitutional provision that prohibits state taxation of the net income of individuals, including an individual's share of partnership or unincorporated association income. The resolution amends Article 8, Section 1(c) of the Texas Constitution to make clear that the state may tax income of corporations. The resolution was enrolled on May 21, 2019, and the proposed constitutional amendment will be submitted to the voters at an election to be held on November 5, 2019.
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HOTEL OCCUPANCY TAX

HB 1633 (Kuempel, John) amends Tax Code §352.002 to allow the commissioners court of a county with a population of not more than 50,000 and in which an annual peanut festival is held to impose a county hotel occupancy tax. [Note: This bill applies to Wilson County.] The tax rate may not exceed 7%, but if the hotel is located in either a city that imposes city hotel occupancy tax under Chapter 351 or the extraterritorial jurisdiction of a city that imposes hotel occupancy tax under Tax Code §351.0025, then the tax rate may not exceed 2% of the price paid for a hotel room. The Act takes effect June 2, 2019.

HB 1634 (Kuempel, John) amends Tax Code §352.002 to allow the commissioners court of a county with a population of 110,000 or more through which the Guadalupe River flows to impose a county hotel occupancy tax. [Note: This bill applies to Guadalupe County.] The tax rate may not exceed 7%, but if the hotel is located in either a city that imposes city hotel occupancy tax under Chapter 351 or the extraterritorial jurisdiction of a city that imposes hotel occupancy tax under Tax Code §351.0025, then the tax rate may not exceed 2% of the price paid for a hotel room. The Act takes effect June 14, 2019.

HB 2272 (Guillen, Ryan) amends Tax Code §352.003(b), which currently limits a county that does not have a city within it to a tax rate of 4%, by creating an exception for a county that borders three counties, each of which borders Mexico. The Act takes effect on June 10, 2019.

SB 1319 (Birdwell, Brian) requires a county that imposes hotel occupancy tax to report to the Comptroller by February 20 of each year the following: (1) the hotel occupancy tax rate imposed under Chapter 352, Tax Code; (2) the tax rate, if applicable, of sales/use tax for a sport and community venue imposed under Chapter 334, Local Government Code; and (3) the amount of revenue collected during the county's preceding fiscal year from taxes imposed under Chapter 352, Tax Code, and Chapter 334, Local Government Code, if any. The Governor vetoed this bill.
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MISCELLANEOUS GROSS RECEIPTS TAX

HB 2263 (Paddie, Chris) amends Tax Code §182.022 to provide that tax may not be imposed on the gross receipts from the sale of electricity to a public school district customer. The change to Tax Code §182.022(d) takes effect January 1, 2024. The bill provides that the Public Utility Commission or a retail electric provider shall provide as soon as practical after January 1, 2024, for the adjustment of the electric utility’s billing of a public school district customer to reflect any decrease in the utility tax liability to this state if the decrease is attributable to the exemption.
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MIXED BEVERAGE GROSS RECEIPTS TAX/SALES TAX

HB 3006 (Burrows, Dustin) adds Tax Code §183.0421 to provide that a permittee is required to file a mixed beverage sales tax return no later than the 20th day of each month and provides that if tax is due for a business day that falls in two different months, then the tax should be allocated to the month in which the business day begins. The bill amends Tax Code §183.043 to provide that if a conflict arises between a provision of Subchapter B-1, Chapter 183, Tax Code (Mixed Beverages legislative proposals.]
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MOTOR FUEL TAX

HB 791 (Huberty, Dan) amends Tax Code §162.001 to define “volunteer fire department” to mean a fire department operated by its members, including a part-paid fire department composed of at least 50% volunteer firefighters, that is operated on a not-for-profit basis, including a department that is exempt from federal income tax under 26 IRC §501(a) of 1986, by being listed as an exempt organization in 26 IRC §501(c)(3) or (4). [Note: Motor fuel sold to a volunteer fire department for the department’s exclusive use is exempt from tax, but the definition would allow clearer delineation as to who may qualify for the exemption.] The Act takes effect May 24, 2019.

HB 3954 (Burrows, Dustin) makes changes to Chapter 162, Tax Code, as follows:

  • amends Tax Code §162.001 to:
    • modify the definition of “bulk transfer” to clarify that the term includes a marine vessel and a motor fuel storage facility;
    • add a definition of “marine vessel” to include a marine barge;
    • add a definition of “motor fuel storage facility" to mean a storage facility supplied by pipeline or marine vessel that does not have a rack for removal of motor fuel by truck, railcar, or any other means of conveyance that is outside the bulk transfer/terminal system; and
    • add to the definition of “supplier” to include a person who owns motor fuel in a marine vessel in Texas. It requires marine vessels that transfer motor fuel from one location to another within the bulk transfer/terminal system be owned by a licensed supplier or permissive suppler;
  • amends Tax Code §§162.101(e-1) and 162.201(e-1) to provide that tax is imposed on gasoline or diesel that would otherwise be exempt as exported fuel if the gasoline or diesel is sold into a truck or railcar in Texas to a person who does not hold a license;
  • adds Tax Code §§162.101 (e-3) and 162.201(e-3) to provide that tax is imposed on gasoline or diesel that would otherwise be exempt as exported fuel if the gasoline or diesel is sold into a marine vessel in Texas to a person does not hold a license; and
  • provides that shipping documents showing delivery to a foreign destination are evidence that gasoline or diesel was actually exported to a foreign country and that tax is not due on the export.

The Act takes effect September 1, 2019.

SB 2119 (Alvarado, Carol) amends Tax Code §162.009 to transfer liquid weights and measure programs and the fuel quality program from the Texas Department of Agriculture to the Texas Department of Licensing and Regulation and makes conforming changes to Chapter 162, Tax Code. The Act takes effect September 1, 2020.
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MOTOR VEHICLE SALES/USE TAX

HB 2338 (Noble, Candy) amends Tax Code §152.001(12) to modify the definition of a "motor vehicle used for religious purposes" to broaden the current exemption by eliminating two requirements so that any motor vehicle, including a passenger vehicle, may qualify for the exemption if it is used primarily by a church or religious society and not used primarily by a minister for his personal or official duties or needs. The motor vehicle does not have to be purchased or rented by the church or religious society to qualify for the exemption. The Act takes effect September 1, 2019.
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OIL FIELD CLEAN UP FEES

HB 2675 (Geren, Charlie) amends Natural Resource Code §§81.116 and 81.117 to eliminate the current requirements that the Comptroller is to suspend the oil-field cleanup regulatory fee imposed on crude petroleum and gas produced in Texas when the fund accounts exceed $30 million. The Act takes effect September 1, 2019. [Note: The oil-field clean up fee is imposed at five-eighths of one cent per barrel produced in Texas, and the gas fee is imposed at one-fifteenth of one cent per mcf.]
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SEVERANCE TAX

HB 2256 (Sanford, Scott) makes the following changes:

  • adds Tax Code §201.207 to determine overpaid tax amounts by a person who filed a producer's report under Tax Code §201.203 or a first purchaser's report under Tax Code §201.2035 for gas production tax. The bill provides that the person:
    • may compute overpayment of gas production tax by using selected marketing cost sampling for deduction if the Comptroller approves the sampling method;
    • may obtain reimbursement for determined overpaid amounts by taking a credit on one or more reports or by filing a claim for a refund with the Comptroller within the applicable limitations period; and
    • must record the method by which the computation of the overpayment is performed and must make such records available to the Comptroller upon request;
  • adds Tax Code §201.3021 to provide for managed audits of gas production tax under the following terms and circumstances:
    • requires the Comptroller and the taxpayer’s representative to sign a written agreement for a managed audit, which may be limited to one or more factors affecting a taxpayer's liability, including:
      • gross value of gas produced;
      • exempt interest;
      • marketing costs of gas produced;
      • gas used to power operations at a well or lease; or
      • tax reimbursement paid by a purchaser to a producer;
    • grants sole authority to the Comptroller in determining whether a managed audit will be allowed;
    • provides factors that the Comptroller is to consider in making its decision to authorize a managed audit, such as:
      • the taxpayer's history of tax compliance;
      • whether the taxpayer has sufficient time and resources to conduct the audit;
      • the sufficiency and availability of the taxpayer's tax records;
      • the taxpayer's ability to pay any liability arising as a result of the audit; and
      • any other factor the Comptroller determines is relevant;
    • authorizes the Comptroller to examine records and perform reviews that it deems necessary before the audit is finalized to verify the results of the audit;
    • provides that the Comptroller may not assess a penalty and may waive all or part of the interest that would otherwise accrue on any amount identified to be due in a managed audit;
      • Exceptions: The Comptroller may assess penalty and interest if:
        • its audit or review discloses fraud or willful evasion of tax; or
        • tax or an amount represented to be a tax was collected by the taxpayer but was not remitted to the state; and provides that the Comptroller may refund any tax overpayment disclosed by a managed audit unless the amount is tax collected from the customer by the taxpayer and taxpayer has not refunded the collected tax to the customer.

The Act takes effect September 1, 2019.

SB 533 (Birdwell, Brian) amends Tax Code §202.056 to:

  • reinstate the oil production tax exemption for two-year inactive wells by allowing the application for exemption to be filed prospectively (as opposed to during the prior expired periods);

amend the definition of two-year inactive well by excluding a well that is:

  • part of an enhanced oil recovery project as defined by Natural Resources Code §89.002; or
  • drilled but not completed and that does not have a record of hydrocarbon production reported to the Railroad Commission; and
  • reduce the exemption for hydrocarbons produced from a well from 10 years to 5 years.

The Act takes effect September 1, 2019.

SB 925 (Flores, Pete) amends Tax Code §§201.059 and 202.058 (“Credits for Low-Producing Wells”) to provide that, for purposes of qualifying a gas well, the production per well per day is determined by computing the average daily production from the well at the greater of the monthly production from the well reported to the Railroad Commission or the monthly production reported to the Comptroller on the producer's report. The Act takes effect September 1, 2019. [Note: This bill is one of the Comptroller’s legislative proposals.]
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TEXAS EMISSIONS REDUCTION PLAN (TERP)

HB 3745 (Bell, Cecil) amends Tax Code §151.0515 (Sales/Use Tax) and Tax Code §152.0215(c) (Motor Vehicle Sales/Use Tax) to extend the expiration date of the TERP surcharge from August 31, 2019, to the last day of the state fiscal biennium during which the Texas Commission on Environmental Quality publishes in the Texas Register the notice required by Section 382.037, Health and Safety Code. The Act takes effect August 30, 2019.
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UNCLAIMED PROPERTY

HB 3598 (Martinez Fischer, Trey) makes the following changes:

  • amends Property Code §74.103(b) to require records be kept for 10 years from the later of the date on which the property is reportable or the date the report is filed, without regard to whether the property is reported in the aggregate;
  • adds Property Code §74.105 to require an affiliated group to file a combined report;
    • "Affiliated group " means a group of one or more entities in which a controlling interest is owned by a common owner, either corporate or noncorporate, or by one or more of the member entities.
    • If a holder that is required to file a property report is a member of an affiliated group, the holder shall file one report for the affiliated group.
  • adds Property Code §74.106 to provide that a person who is required to file a report must do so each successive year and file a factual certification in any year that it has no property to report;
  • authorizes the Comptroller to advertise or promote the unclaimed property program in any available media;
  • amends Property Code §74.501 to provide that the Comptroller does not have to approve a claim if it is made by:
    • a court-appointed administrator of a reported owner if the administrator was appointed more than four years after the owner’s death; or
    • a corporation that was previously forfeited, dissolved, or terminated, if the Comptroller determines that the revival was for the purpose of making the unclaimed property claim and the person who submitted the claim was not an authorized representative of the corporation at the time of dissolution, forfeiture or termination;
  • amends Property Code §74.702 to allow the Comptroller or the Attorney General or an agent of either to examine any books, records, papers or other information of any person to determine compliance;
  • adds Property Code §74.7021 to provide that the Comptroller or the Attorney General may not examine records, reports, or delivery of property after the seventh anniversary of the date a person filed a property report;
    • Exception: There is no limitation if the person filed a false or fraudulent property report with the intent to avoid delivery of property or failed to file a report, or if a court grants a petition to compel the person to submit for an audit.
    • A person is presumed to have acted with intent to avoid delivery of property if, after correction of a report, the error exceeds at least 25%.
  • amends Property Code §74.704 to authorize the Comptroller to request the Attorney General, State Auditor, banking commissioner, Texas Workforce Commission, or any other state agency or political subdivision to assist in enforcement and to prohibit a fee or charge by a state agency or political subdivision for producing records or documents requested by the Comptroller;
  • adds Property Code §74.711 to authorize the Comptroller to take testimony, administer oaths, and issue subpoenas to compel a person to appear to give testimony or produce documents and to request the Attorney General to enforce the subpoena against a person who fails to comply with the subpoena; and
  • repeals Property Code 74.401(c), which provides that the Comptroller is not required to offer property for sale if the property belongs to a person with an address outside Texas or the Comptroller determines the probable cost of the sale exceeds its value.

The Act takes effect on June 10, 2019. The seven-year limitation period applies only to an examination commenced on or after the effective date of this Act. [Note: This bill is one of the Comptroller’s legislative proposals.]
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PROPERTY TAX

School Finance
HB 3 (Huberty, Dan) is the school finance reform bill and makes the following changes related to property tax:

  • adds Education Code §45.003(b-1) to require the ballot proposition that is submitted to the voters for authorization to issue bonds that are supported by annual ad valorem taxes for school expenditures to include the statement “THIS IS A PROPERTY TAX INCREASE”;
  • amends Education Code §45.003(d) to replace the statewide maintenance & operation (M&O) tax rate cap of $1.17 per hundred with the maximum compressed tax rate plus $0.17, and provides that:
    • the maximum compressed tax rate is the state compression percentage multiplied by $1.00 rather than $1.50; and
    • the state compression percentage is changed from the legislature’s set percentage of 66.7% (established in 2006) to the lower of 93% or percentage set by appropriation for a school year;

      [Note: This affords a 7% rate reduction in the school M&O taxes to be billed this year.]

  • provides additional, annual rate compression for subsequent tax years to the extent that the statewide property values grow faster than 2.5% by setting a statewide compression percentage as the lesser of 93% or a compression percentage set by using the statewide property value growth in excess of 2.5% to compress Tier 1 tax rates. This requires school districts with value growth in excess of the statewide average to use the district’s value growth in excess of 2.5% to compress their Tier 1 tax rate;
  • reduces, but does not eliminate, recapture payments by changing the calculation from one which has historically been based on property value per weighted student, to one based on the extent to which the revenue raised by a school district by its Tier 1 tax rate exceeds its Tier 1 entitlement amount;
  • establishes a fund titled Tax Reduction and Excellence in Education Fund (TREE) which consists of money from sales tax revenue from changes made in response to the Wayfair court decision, available school fund revenue to be used for increased school funding, any severance tax revenue diversion provided by the Constitution to be used for tax compression, and any revenue appropriated to the fund;
  • requires a tax ratification election for rates adopted that exceed $0.93 + prior year enrichment rate + debt rate. In the 2020 tax year, the rollback rate (voter approval rate) is increased by $0.01 but requires a unanimous vote of the school board to access the $0.01 without an election and requires a tax ratification election to be held on a uniform election date; and 
  • requires the Legislative Budget Board to study possible methods of providing property tax relief through M&O rate reduction and to submit a report by September 1, 2020, to the legislature. The study must evaluate:
    • potential sources of revenue that may be used to reduce M&O taxes;
    • methods of limiting increases in M&O tax revenue that adjust for enrollment growth, inflation, and other relevant factors; and
    • for each method of providing property tax relief considered:
      • any difference in anticipated benefits to property taxpayers based on the school district in which the taxpayer resides;
      • the cost to the state; and
      • the anticipated impact on equity in the public school finance system.

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General Provisions
HB 2179 (Wray, John) amends Tax Code §6.41(f) to:

  • change the burden of proof for the removal of a member of an appraisal review board from “clear and convincing evidence” of repeated bias or misconduct to “evidence” of repeated bias or misconduct; and
  • exclude from prohibited ex parte communication any communication between a property tax consultant or a property owner or property owner’s agent and the local administrative judge regarding information relating to grounds for removal of an appraisal review board member. This provision applies only to a county with a population of 120,000 or more.

The Act applies only to a removal proceeding that begins on or after  and to offenses that occurred on or after June 10, 2019.  

SB 2 (Bettencourt, Paul) changes Chapter 1, Tax Code, as follows:

  • adds Tax Code §1.045 to provide that a reference in law to effective maintenance and operations rate means “no-new-revenue maintenance and operations rate” and that a reference in law to rollback tax rate means “voter-approval tax rate”;
  • amends Tax Code §1.085(a) to allow information that may be requested or inspected by the property owner during a protest hearing to be delivered electronically; and
  • adds Tax Code §1.086 to provide that a property owner may request in writing that the appraisal district send by electronical mail (in lieu of by mail) each required notice related to the property owner’s principal residential property for: (1) a change in value of the property; (2) the eligibility of the property for an exemption; and (3) the grant, denial, cancellation, or other change in the status of an exemption or exemption application applicable to the property.

The Act provides that these provisions take effect January 1, 2020.

SB 1856 (Paxton, Angela) clarifies the person who should receive a refund by:

  • adding Tax Code §1.071 to require a collector or taxing unit to send a refund to the person’s mailing address listed on the appraisal roll but to allow the refund to be mailed to a different address if the property owner makes the request in writing; and
  • amending Tax Code §§11.431, 11.439, 26.112, 26.1125(b), and 26.1127 to require a collector or taxing unit to send a refund to the person who was the property owner on the date the tax was paid.

The Act applies only to a refund made on or after September 1, 2019.

SB 2060 (Menendez, Jose) amends Tax Code §25.19 to require the chief appraiser to include in the notice of appraised value a brief explanation of each tax exemption authorized by law that is available to: (1) a disabled veteran or his/her surviving spouse or child; (2) an individual who is 65 years of age or older or his/her surviving spouse; (3) a disabled individual or his/her surviving spouse; (4) the surviving spouse of a member of the United States armed services who is killed in action; and (5) the surviving spouse of a first responder who is killed or fatally injured in the line of duty. The Act applies only to a notice of appraised value for a tax year beginning on or after January 1, 2020.
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State Tax Administration
HB 3384 (Shine, Hugh) amends Tax Code §5.102 to provide that the Comptroller may conduct a limited- scope review in place of the full review of methodology, appraisal standard, and procedures (MAP) if the appraisal district is in a county that has been declared in whole or in part by the Governor to be a disaster area during the tax year in which the MAP review is required. The bill requires:

  • the chief appraiser of the appraisal district to request a limited-scope review; and
  • a building used by the appraisal district to conduct business is destroyed or is inaccessible or damaged to the extent that it is unusable for at least 30 days;
  • the appraisal district's records are destroyed or are unusable for at least 30 days;
  • the appraisal district's computer system is destroyed or is unusable for at least 30 days; or
  • due to extraordinary circumstances, the appraisal district does not have the resources to undergo a review unless the review is limited in scope.

The Act takes effect June 7, 2019.

SB 2 (Bettencourt, Paul) makes the following changes to Chapter 5, Tax Code, and Chapter 403, Government Code, to take effect January 1, 2020, unless provided otherwise:

  • adds Tax Code §5.01 to create a Property Tax Administration Advisory Board that consists of at least six members appointed by the Comptroller and repeals Government Code §403.302(m-1) and (n) that create the Comptroller’s Property Value Study Advisory Committee;
  • amends Tax Code §5.041 to require that a member of the appraisal review board must have at least eight hours of classroom training and education and must have continuing education of at least four hours of classroom training and education. This provision applies only to an appraisal review board member appointed to serve a term of office that begins on or after January 1, 2020;
  • adds Tax Code §5.043 to require the Comptroller to develop training programs and materials for arbitrators under Chapter 41A as soon as practicable after January 1, 2020;
  • amends Tax Code §5.05 to require an appraisal district to appraise property in accordance with any appraisal manuals required by law to prepared and issued by the Comptroller;
  • amends Tax Code §5.07 to require the Comptroller to prescribe tax rate calculation forms for use by taxing units to submit the no-new-revenue tax rate and the voter-approval tax rate. The Comptroller is to comply with this provision as soon as practicable after January 1, 2020;
  • amends Tax Code §5.09 to include special districts in the Comptroller’s biennial report of total appraised values and taxable values of taxable property;
  • amends Tax Code §5.091 (Statewide List of Tax Rates] by eliminating the current exclusion for school districts and by requiring the Comptroller to prepare a list alphabetically by county and taxing unit and to publish the list by January 1 of the year following the tax year in which the rates are reported. The Comptroller must comply with this provision by January 1, 2022, with regard to tax rate information related to a taxing unit located wholly or partly in a county with a population of 120,000 or more; and by January 1, 2023, with regard to tax rate information related to a taxing unit located wholly in a county with a population of less than 120,000;
  • amends Tax Code §§5.102 and 5.13(d) to provide that the Comptroller’s review of appraisal standards, procedures and methodology used by each appraisal district includes the appraisal district’s compliance with standards, procedures, and methodology prescribed by any appraisal manuals required by law to be prepared and issued by the Comptroller and includes the appraisal district’s compliance in the Comptroller’s performance audit report;
  • adds Tax Code §5.104 to require the Comptroller to prepare a survey form that allows individuals to submit comments and suggestions to the Comptroller regarding an appraisal review board and to require the appraisal districts provide the survey form to property owners or designated agents that appeared before the appraisal review board; and
  • adds Government Code §403.302(k) and (k-1) to require that the Comptroller notify an appraisal district board of directors if a school district’s value is not valid. A public hearing must be held upon receipt of the notice. If the school district values are invalid for three consecutive years, a review of the appraisal district and other remedial measures are required. If the Texas Department of Licensing and Regulation determines that recommendations are not implemented, the board of directors must consider the performance of the chief appraiser. The Act provides that the first tax year that may be considered for the purpose of the applicability of the Comptroller’s determination that a school district’s local value is not valid for three consecutive years is the 2020 tax year.

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Appraisal District and Local Administration
SB 2 (Bettencourt, Paul) makes the following changes to Chapter 6, Tax Code, to take effect January 1, 2020, unless noted otherwise:

  • amends Tax Code §6.035(a-1) to reduce the revolving door period prohibiting a person from serving on an appraisal district board of directors if the person had previously represented property owners for compensation before the appraisal district from five years to three years;
  • adds Tax Code §6.054 to prohibit an appraisal district from employing an individual who is an officer or employee of a taxing unit that participates in the appraisal district;
  • amends Tax Code §6.15 to provide that ex parte communication rules do not apply to a member of the appraisal district’s board of directors transmitting a complaint about the appraisal of a specific property to the chief appraiser if the member makes no comment and the transmission is in writing;
  • adds Tax Code §6.16 to require an appraisal district to maintain a list of individuals who have designated themselves as individuals who will provide free assistance on residence homestead properties but the list should include only: (1) real estate brokers or sales agents licensed under Chapter 1101, Occupations Code; (2) real estate appraisers licensed or certified under Chapter 1103, Occupations Code; or (3) property tax consultants registered under Chapter 1152, Occupations Code;
  • adds Tax Code §6.425 to require an appraisal district in a county with a population of one million or more to create special panels to conduct protest hearings. The provision is effective September 1, 2020, and sets out the following:
    • a special panel is to hear a protest involving property that has an appraised value of $50 million or more and that is included in one of the following classifications: (1) commercial real and personal property; (2) real and personal property of utilities; (3) industrial and manufacturing real and personal property; and (4) multifamily residential real property. However, the chair of the appraisal review board may assign a protest to a special panel even it involves a property that does not fall within the enumerated classification of properties;
    • the minimum eligibility amount for tax year 2020 is $50 million but for each succeeding tax year, the minimum eligibility amount is to be adjusted by the Comptroller for inflation; and 
    • each special panel is to consist of three members appointed by the board’s chair. To be eligible to serve on a special panel, the person must: (1) hold a juris doctor degree; (2) hold a master of business administration degree; (3) be a licensed certified public accountant; (4) be an accredited senior appraiser by the American Society of Appraisers; (5) possess an MAI professional designation from the Appraisal Institute; (6) possess a Certified Assessment Evaluator (CAE) professional designation from the International Association of Assessing Officers; (6) have at least 10 years of experience in property tax appraisal or consulting; or (7) be a licensed real estate broker or sales agent;
  • amends Tax Code §6.41 to require appraisal districts in a county with a population of one million or more to increase the size of the appraisal review board as the board of directors determines to be appropriate to manage the duties of the appraisal review board, including the duties of each special panel. The provision takes effect September 1, 2020, but the change applies only to the appointment of appraisal review board members to terms beginning on or after January 1, 2021;
  • amends Tax Code §6.412 to prohibit an individual from serving on an appraisal review board if the person is related to another member of the appraisal review board within the third degree of consanguinity or within the second degree by affinity and to impose a three-term limit on the members of an appraisal review board. This provision applies to counties with a population of 120,000 or more. This provision does not affect the eligibility of a person serving on an appraisal review board immediately before January 1, 2020;
  • amends Tax Code §6.414(d) to provide that an auxiliary board member may not hear protests before a special panel unless the member is eligible to be appointed to the special panel. This provision is effective September 1, 2020;
  • amends Tax Code §6.42(a) to require the local administrative district judge to select a chairman and a secretary from the appraisal review board members; and 
  • amends Tax Code §6.42(d) to provide that the concurrence of a majority of the members of the appraisal review board or panel present at a meeting is sufficient for a recommendation, determination, decision, or other action. This provision applies only to a recommendation, determination, decision, or other action by an appraisal review board or a panel of such a board on or after January 1, 2020.

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Exemptions
HB 492 (Shine, Hugh) adds Tax Code §11.35 to provide a temporary exemption for qualified property that is at least 15% damaged and that is located in an area declared by the Governor to be a disaster area. The bill sets out definitions, conditions and requirements, but the bill does not become effective unless the voters approve the constitutional amendment authorizing the exemption at the election to be held on November 5, 2019.

  • Eligible properties are: (1) tangible personal property that is used for the production of income and is the subject of a rendition statement or property report that demonstrates that the property had taxable situs in the disaster area for the tax year in which the disaster occurred; (2) an improvement to real property; or (3) a manufactured home as that term is defined by Occupations Code §1201.003, that is used as a dwelling, regardless of whether the owner of the manufactured home elects to treat the manufactured home as real property under Occupations Code §1201.2055.
  • An application for exemption must be submitted no later than 105 days after the Governor’s declaration of disaster, but the chief appraiser may extend the deadline for good cause.
  • If the Governor’s declaration of a disaster area occurs on or after the date a taxing unit adopts a tax rate for the tax year in which the declaration is issued, no exemption is allowed unless the governing body of a taxing unit adopts the exemption in the manner provided by law, which includes the specification of the disaster to which the exemption pertains and the adoption of the exemption within 60 days of the Governor’s declaration. An application for exemption after such adoption must be submitted within 45 days, but the chief appraiser may extend the deadline for good cause.
  • A taxing unit that adopts the exemption must notify the chief appraiser of each appraisal district in which the taxing unit participates within seven days of the adoption.
  • The chief appraiser is to assign a damage assessment rating, and the amount of the exemption is determined by multiplying the appraised value by the exemption percentage provided for each rating as follows:
    • Level 1 – damage is 15% to 29%: Exemption percentage is 15%.
    • Level 2 – damage is 30% to 59%: Exemption percentage is 30%.
    • Level 3 – damage is at least 60% but not a total loss: Exemption percentage is 60%.
    • Level 4 – total loss: Exemption percentage is 100%.
  • The chief appraiser approves, modifies or denies an application for the exemption, and the written notice of the approval, modification or denial must be sent within five days of the determination. The notice must include the damage assessment rating assigned by the chief appraiser and a brief explanation of the property owner’s right to protest. The bill:
    • amends Tax Code §41.41 to allow the protest before the appraisal review board  relating to the modification or denial or the determination of the damage assessment rating; and 
    • amends Tax Code §41.44 to require the protest to be filed within 30 days of the written notice.
  • When the exemption is authorized after the beginning of the tax year, the amount of the exemption is prorated by the number of days remaining in the year after the Governor’s declaration.
  • If a person qualifies for the exemption after the amount of tax due is calculated, the amount of tax is reduced. The assessor for each applicable taxing unit is to recalculate the amount of tax due and correct the tax roll. If tax has been paid, a refund will be granted for the amount that exceeds the tax due, but no interest will be paid on the refund. 
  • The exemption expires on January 1 of the first tax year in which the property is reappraised under Tax Code §25.18 (“Periodic Reappraisal”), which requires a plan for periodic reappraisal at least once every three years.
  • The bill repeals Tax Code §23.02 (Reappraisal of Property Damaged in Disaster Area).
  • The bill amends Government Code §403.302(d) to provide that the total dollar amount of any exemptions granted under Tax Code §11.35 is excluded from “taxable value” of the Comptroller’s property value study.

The Act takes effect January 1, 2020, but only if HJR 34 proposed by the 86th Legislature, Regular Session, 2019, authorizing the exemption is approved by the voters at an election to be held November 5, 2019. 

HB 1526 (Bell, Cecil) amends Tax Code §11.161 to exempt a nursery stock weather protection unit as an implement of husbandry. The term “nursery stock weather protection unit” means a plant cover consisting of a series of removable, portable metal hoops, covered by nonreusable plastic sheeting, shade cloth, or other similar removable material, used exclusively for protecting nursery products from weather elements. The Act applies only to a tax year that begins on or after January 1, 2020.

HB 2859 (Capriglione, Giovanni) adds Tax Code §11.141 to exempt from ad valorem tax precious metal that a person owns and that is held in a precious metal depository in Texas, regardless of whether the precious metal is held or used by the person for the production of income. The following definitions are provided: 

  • “Precious metal” means a metal, including gold, silver, platinum, palladium, and rhodium, that: (A) bears a high value-to-weight ratio relative to common industrial metals; and (B) customarily is formed into bullion or specie.
  • "Precious metal depository " means a depository that: (A) is primarily engaged in the business of providing precious metal storage to the general public; and (B) maintains sufficient insurance to cover precious metal deposited in the depository. 

This Act takes effect January 1, 2020, but only if the constitutional amendment proposed by the 86th Legislature, Regular Session, 2019, authorizing the exemption is approved by the voters. HJR 95 (Capriglione, Giovanni) proposes a constitutional amendment to authorize the exemption, and it will be submitted to the voters at an election to be held November 5, 2019.

SB 2 (Bettencourt, Paul) makes changes to Chapter 11, Tax Code, as follows:

  • amends Tax Code §11.24 to provide that once the current exemption for a structure or archeological site is granted, the taxing unit may not repeal or reduce the amount of the exemption unless the property owner consents to the repeal or reduction or the taxing unit provides a written notice of five years to repeal or reduce the exemption. This provision applies only to an exemption that is repealed or reduced on or after January 1, 2020; and 
  • amends Tax Code §11.4391 to change the deadline for an application for freeport exemption from June 15 to the later of June 15 or, if applicable, the 60th day after the date on which the chief appraiser delivers a notice to the property owner under Tax Code §22.22 (“Method for Requiring Rendition or Report”). This provision applies only to a tax year beginning on or after January 1, 2020.

SB 58 (Zaffirini, Judith) amends Tax Code §11.252 to allow the owner of a leased motor vehicle to claim an exemption as a motor vehicle not used in the production of income if the motor vehicle is leased to this state or a political subdivision of this state or if the motor vehicle is leased to an IRC §501(c)(3) organization that uses it exclusively for exempt purposes and that could claim an exemption if it were to own the motor vehicle. The Act takes effect September 1, 2019.
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Exemptions - Residence Homestead
HB 1313 (King, Phil) amends Tax Code §11.26(i) to extend the current school tax limitation for a residence homestead that exists for a surviving spouse of a person who claimed the exemption based on the age of 65 years or older to a surviving spouse of an individual who claimed the exemption based on disability. The Act applies only to a tax year beginning on or after January 1, 2020.

HB 2441 (Wray, John) amends Tax Code §11.13(h) to provide that an eligible disabled person who is 65 or older may not receive both a disabled and an elderly residence homestead exemption from the same taxing unit in the same year but would be permitted to elect one if the taxing unit has adopted both. This Act takes effect January 1, 2020.

SB 443 (Hancock, Kelly) amends Tax Code §11.135 to extend the current exemption for a residence homestead that is rendered uninhabitable or unusable by a casualty or by wind or water damage from two years to five years if the property is located in an area declared to be a disaster area by the governor following a disaster and the residential structure is rendered uninhabitable or unusable as a result of that disaster. The Act takes effect June 4, 2019.

SB 579 (Hughes, Bryan) amends Subchapter D, Chapter 3503, Special District Local Laws Code, to provide a public property exemption for a leasehold or other possessory interest granted to a person by the TexAmericas Center or by a nonprofit corporation holding title for the TexAmericas Center. The Act takes effect January 1, 2020.

SB 1943 (Watson, Kirk) amends Tax Code §11.26 to provide that an heir property owner who qualifies the property as the owner’s residence homestead is considered the sole recipient of any exemption granted to the owner. This Act takes effect September 1, 2019.
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Appraisal, Methodology, and Notices
HB 639 (Springer, Drew) amends Tax Code §23.51(1) to redefine “qualified open-space land” to include land that is used principally as an ecological laboratory by a public or private college or university that must have used it principally in that manner for five of the preceding seven years. The Act takes effect January 1, 2021. However, the change in law made by this Act applies to land beginning with the tax year January 1, 2027. For tax years 2021, 2022, 2023, 2024, 2025, and 2026, the qualification of land for appraisal under Subchapter D, Chapter 23, Tax Code, on the basis of its use as an ecological laboratory is governed by the law as it existed immediately before January 1, 2021.

HB 1313 (King, Phil) amends Tax Code §23.01(e) to change an appraisal district’s burden of proof standard from “substantial” to “clear and convincing” when it wants to increase the appraised value of a property in the following tax year after the appraised value had been lowered as result of a protest or appeal. The Act applies to a tax year beginning on or after January 1, 2020.

HB 1254 (Murphy, Jim) repeals Tax Code §23.42(a-1), which currently provides that “on or after January 1, 2008, an individual is not entitled to have land designated for agricultural use if the land secures a home equity loan described by §50(a)(6), Article XVI, Texas Constitution.” The Act takes effect January 1, 2020. [Note: This bill would repeal a provision that conflicts with a constitutional provision adopted in 2017.]

HB 1409 (Ashby, Trent) makes the following changes:

  • amends Tax Code §23.72 and §23.9802 to provide that in determining whether land is currently and actively devoted principally to the production of timber or forest products or restricted use timber land to the degree of intensity generally accepted in an area, a chief appraiser may not consider a portion of land that is used for the production of timber or forest products, including a road, right-of-away, buffer area, or firebreak or that is used as a right-of-way taken through the power of eminent domain. A portion of land that is used for such activities is considered land that qualifies for the appraisal as timber or forest land if the remainder of the parcel of land meets the eligibility requirements; and 
  • adds Tax Code §23.765 and §23.9808 to provide that the eligibility of land for appraisal as timber land (Subchapter E) or restricted use timber land (Subchapter H) respectively, does not end because a lessee under an oil and gas lease begins conducting oil and gas operations over which the Railroad Commission of Texas has jurisdiction on the land if the portion of the land on which oil and gas operations are not being conducted otherwise continues to qualify for timber appraisal. 

The Act takes effect September 1, 2019. Tax Code §§23.72 and 23.9802 apply only to the appraisal of land for a tax year that begins on or after September 1, 2019. Tax Code §23.765 and 23.9808 do not affect an additional tax imposed as a result of change of use of land appraised before September 1, 2019.

HB 1743 (King, Tracy) amends Tax Code §§23.55(a) and 23.76(a) to reduce the additional tax imposed for changes diverting land from agricultural use and timber land from five years to three years and to lower the annual interest rate imposed on the savings from 7% to 5%. The Act applies only to a change of use of land appraised on or after September 1, 2019.

HB 1815 (Sanford, Scott) amends Tax Code §21.09 to change the deadline to file an interstate allocation application from April 1 to May 1. The Act applies only to the allocation of the value of property for a tax year beginning on or after January 1, 2020.

HB 2159 (Meyer, Morgan) amends Tax Code §25.25, which allows for a motion to be filed for the correction of the appraisal roll for an error that results in an appraised value that exceeds more than one-third the correct appraised value. The bill reduces the threshold for residence homestead by allowing the correction of the appraisal roll if the error results in an appraised value that exceeds more than one-fourth the correct appraised value of the residence homestead. The Act applies to a motion to correct an appraisal roll filed on or after June 14, 2019.

HB 3348 (Guillen, Ryan) adds Tax Code §23.426 to provide that an appraisal of land as agricultural land continues even if there is a temporary cessation of agricultural use because of a temporary quarantine imposed by the Texas Animal Health Commission in its regulation of handling livestock and eradicating ticks or exposure to ticks. The Act takes effect May 21, 2019.

SB 812 (Lucio, Eddie) amends Tax Code §23.23 to modify the definition of “disaster recovery funds” to extend the current limitation on valuation granted to homeowners who repair their homes using funds from designated disaster recovery programs to homeowners who receive benefits from “federal law”. The Act takes effect May 7, 2019, but the change applies to the appraisal of a residence homestead for a tax year that begins on or after January 1, 2019.

SB 2083 (Hinojosa, Chuy) amends Tax Code §26.11, which requires the proration of tax when property is acquired by a federal, state or local government, by including within the numerator of the formula the number of days when possession of the property is actually taken. The Act applies only to a possession and use agreement entered into or an award made under Section 21.021, Property Code, on or after the date the Governor signs the bill or on June 16, 2019, without his signature.  The Act applies only to a possession and use agreement entered into or an award made under Section 21.021, Property Code, on or after June 10, 2019.  

SB 2 (Bettencourt, Paul) makes the following changes to Chapters 22, 23, and 25, Tax Code, to take effect January 1, 2020, unless noted otherwise:

  • repeals Tax Code §22.23(c), which currently requires business personal property be rendered by April 1 in counties in which Freeport exemptions exist, and the repeal moves the rendition deadline for all owners of business personal property to April 15, except for certain regulated companies that may render on April 30 (see below);
  • amends Tax Code §22.23(d) to provide that the due date of April 30 for a property owner regulated by the Public Utility Commission of Texas, the Railroad Commission of Texas, the Federal Surface Transportation Board, or the Federal Energy Regulatory Commission may be extended to May 15 upon the property owner’s written request and may be extended for an additional 15 days for good cause. This provision applies only to the appraisal of property for a tax year beginning on or after January 1, 2020;
  • amends Tax Code §23.01(h) to provide that appraisal methods and techniques included in the most recent versions of the following are considered generally accepted appraisal methods and techniques for the purposes of property tax: the Appraisal of Real Estate published by the Appraisal Institute; the Dictionary of Real Estate Appraisal published by the Appraisal Institute; the Uniform Standards of Professional Appraisal Practice published by The Appraisal Foundation; and a publication that includes information related to mass appraisal. This provision applies only to the appraisal of property for a tax year beginning on or after January 1, 2020;
  • amends Tax Code §25.19 (Notice of Appraised Value) to:
    • eliminate the current requirement of estimated taxes from the notice if the appraised value is greater than it was in the preceding year, the amount of tax that would be imposed on the property on the basis of the tax rate for the preceding year. The change takes effect January 1, 2021, for counties with populations of 120,000 or more, and for other counties, the change takes effect January 1, 2022; and 
    • require an appraisal district in a county with a population of one million or more to include in the notice a statement that the property owner has the right to have the protest heard by a special panel. This provision takes effect January 1, 2021;
  • adds Tax Code §25.192 to provide that an appraisal district, if its records indicate that the address of the property is the property owner’s residence and the property does not have a residence homestead exemption in the current year, to send a written notice to the property owner that the property could be eligible for the residence homestead exemption. This provision applies only to a notice for a tax year beginning on or after January 1, 2020; and adds Tax Code §25.193 to require the chief appraiser to deliver a clear and understandable written notice to a property owner by the stated deadlines if an exemption or partial exemption that was approved for the preceding year was canceled or reduced for the current year. This provision applies only to a notice for a tax year beginning on or after January 1, 2020.

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Appraisal Role Certification
SB 2 (Bettencourt, Paul) amends Tax Code §26.01 to provide that, if the appraisal review board has not approved the appraisal records for the district by July 20, the chief appraiser must prepare and certify to the assessor for each taxing unit participating in the district an estimate of the taxable value of property in that taxing unit by July 25. The Act provides that this provision takes effect January 1, 2020.

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Assessment and Tax Rate
SB 2 (Bettencourt, Paul) makes the following changes to Chapter 26, Tax Code, to take effect January 1, 2020, unless noted otherwise:

  • adds Tax Code §26.012(8-a) to define “De minimis rate” to mean the tax rate equal to the sum of: (1) the no-new-revenue M&O rate; (2) the rate that when applied to the taxing unit’s current total value will impose taxes equal to $500,000; and (3) a taxing unit’s current debt rate;
  • amends Tax Code §26.012(13) to modify the definition of “Last year’s Levy” to include in the levy the portion of taxable value of property that is the subject of an appeal under Chapter 42 on July 25 that is not in dispute;
  • adds Tax Code §26.012(19) to define "Special taxing unit " to mean a taxing unit, other than a school district, for which the maintenance and operations (M&O) tax rate proposed for the current tax year is 2.5 cents or less per $100 of taxable value; a junior college district; or a hospital district;
  • adds Tax Code §26.013 to define “Unused increment rate” as the difference between the actual tax rates and the voter-approval rates for the three previous years;
  • makes conforming changes to Chapter 26 to replace effective tax rate with “no-new-revenue tax rate” and to replace “rollback tax rate” with “voter-approval tax rate”;
  • amends Tax Code §26.04 and other provisions in Chapter 26 to provide the voter-approval tax rate for special taxing units is 8% over the no-new-revenue M&O rate, plus the current debt rate, and for other taxing units (except school districts) is 3.5% over the no-new-revenue M&O rate, plus the current debt rate and the unused increment rate. HB 3 (Huberty, Dan) addresses school districts’ value growth in excess of 2.5% rate;
  • provides that for taxing units in disaster areas, the voter-approval tax rate is 8% until the earlier of the second year that the value of the taxing unit is restored, or the third year after the disaster occurred;
  • adds Tax Code §26.05(d-2) and amends Tax Code §26.04(e) to require a taxing unit’s chief financial officer or auditor to certify the unit’s sales tax levy used to pay debt service before setting its property tax rate and to require taxing units other than school districts to use, certify and submit the prescribed forms before rate adoption and require certification that the tax rates are correct and posting on the Internet the tax rates and debt information by August 7;
  • adds Tax Code §26.04(e-2) to require the delivery of a notice by mail or email that the estimated amount of tax may be found on the property tax database maintained by the appraisal district (“real time notice”). This provision applies to a tax year beginning with the 2020 tax year for an appraisal district in a county with a population of 200,000 or more, and for others, the provisions applies to a tax year beginning with the 2021 tax year;
  • adds Tax Code §26.0442 and §26.0443 to allow no-new-revenue M&O rates to be adjusted for county indigent defense compensation expenditures and for amounts paid by cities and counties to maintain a county hospital;
  • amends Tax Code §26.05(a) to require rates be adopted before the later of September 30 or the 60th day after the receipt of the certified appraisal roll but no later than the 71st day before the next uniform election date in November of that year if the rate exceeds the voter-approval tax rate;
  • adds Tax Code §26.06(d-1) and (d-2) to provide that hearings on tax rates may not be held until the fifth day after the real-time tax notice is delivered. This provision applies to a tax year beginning with the 2020 tax year for an appraisal district in a county with a population of 200,000 or more, and for others, the provision applies to a tax year beginning with the 2021 tax year;
  • adds Tax Code §26.052(f) to require posting on the taxing unit’s Internet website, in addition to its newspaper notice, of the proposed tax rate;
  • amends Tax Code §26.06(a) to require that the public hearing to adopt a tax rate not be held before the 5th day after the notice is given;
  • adds or amends provisions requiring simplified languages in newspaper notices and Internet postings;
  • amends Tax Code §26.07 to require an election be held in November to approve tax rates (except for school districts and certain exceptions for small cities) if adopted rates exceed the voter-approval rate for the unit, except in the case of a disaster;
  • adds Tax Code §26.17 to require an appraisal district to create and maintain a property tax database that contains information required by law, that is continuously updated as data become available, and that is accessible to the public. This provision applies to a tax year beginning with the 2020 tax year for an appraisal district in a county with a population of 200,000 or more, and for others, the provisions applies to a tax year beginning with the 2021 tax year; and adds Tax Code §26.18 to require a taxing unit to maintain an Internet website and post certain information in a format prescribed by the Comptroller. Among others, information to be posted is: (1) the name of each member of the governing body of the taxing unit; (2) the mailing address, e-mail address, and telephone number of the taxing unit; (3) the taxing unit's budget for the preceding two years; (4) the taxing unit's proposed or adopted budget for the current year; (5) the change in the amount of the taxing unit's budget from the preceding year to the current year, by dollar amount and percentage; and (6) in the case of a taxing unit other than a school district, the amount of property tax revenue budgeted for maintenance and operations for the preceding two years and current year. This provision applies to a tax year beginning with the 2020 tax year for an appraisal district in a county with a population of 200,000 or more, and for others, the provisions applies to a tax year beginning with the 2021 tax year.

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Abatement
HB 3143 (Murphy, Jim) amends Chapter 312, Tax Code (Property Redevelopment and Tax Abatement Act) as follows:

  • amends Tax Code §312.002 to require a municipality or a taxing unit to hold a public hearing before it may adopt, amend, repeal, or reauthorize guidelines and criteria and to post the current version of the guidelines and criteria governing the tax abatement on its Internet website;
  • amends Tax Code §312.005 to require the chief appraiser to deliver the appraised value of the property that was the subject of the abatement agreement to the Comptroller for three years following the expiration of the abatement;
  • amends Tax Code §312.006 to extend the expiration date of the program from September 1, 2019 to September 1, 2029;
  • amends Tax Code §312.207 to require a public notice of a meeting at which the governing body will consider the approval of the tax abatement agreement be posted at least 30 days before the meeting and require the following information to be included in the notice:
    • the name of the property owner and the applicant;
    • the name and location of the reinvestment zone in which the property is located;
    • a general description of the nature of the improvements or repairs included in the agreement; and
    • the estimated cost of the improvements or repairs; and
  • adds Tax Code §312.404 to extend the same requirements to counties.

The Act takes effect September 1, 2019.

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Protest - Appraisal Review Board
HB 1060 (Bell, Cecil) 

  • amends Tax Code §1.085 to provide that a property owner does not have to enter into an agreement to be entitled to electronic delivery of a notice of protest hearing under Tax Code §41.46; and
  • amends Tax Code §41.46 to require an appraisal review board to deliver the hearing notice by certified mail or by electronic mail, if the property owner requests in the notice of protest that the hearing notice be delivered by certified mail or by electronic mail. The ARB may require the property owner to pay the postage cost of certified mail.

The Act takes effect September 1, 2019.

HB 1313 (King, Phil) amends Tax Code §41.41 to provide that an appraisal district or the appraisal review board may not require a property owner to pay a fee in connection with a protest. The Act applies only to a tax year beginning on or after January 1, 2020.

SB 2 (Bettencourt, Paul) amends Chapter 41, Tax Code, as follows:

  • amends Tax Code §41.03(a) to eliminate a taxing unit’s right to challenge before the ARB the level of appraisals of any category of property in the district or in any territory in the district. The Act provides that this provision applies only to a challenge for which a challenge petition is filed on or after January 1, 2020; 
  • amends Tax Code §41.44(d) to require that the protest form provided by the ARB must permit a property owner to request that the protest be heard by a special panel if eligible. The Act provides that this provision takes effect September 1, 2020;
  • makes the following changes relating to a special panel to be effective September 1, 2020, but which apply only to a protest filed on or after January 1, 2021:
    • amends Tax Code §41.45 to specify that the appraisal review board or special panel that heard the protest must make the determination. If the board does not accept the recommendations of the special panel, the board may refer the matter for rehearing by another special panel composed of different members, but if a second special panel cannot hear the rehearing, then the board may determine the protest; and 
    • adds Tax Code §41.66(k-1) to require a protest be assigned to a special panel if the property owner or agent consents and to require protests be randomly assigned to a special panel, but the board may consider the type of property subject to the protest or the ground of the protest for the purpose of using available expertise. Once assigned, the protests may not be reassigned to another panel without the consent of the property owner or the designated agent. If the appraisal review board has cause to reassign a protest to another panel, a property owner or the designated agent may agree to the reassignment of the protest or request postponement. A change of members of a panel because of a conflict of interest, illness, or inability to continue participating in hearings for the remainder of the day does not constitute reassignment of a protest to another panel; 
  • amends several provisions to apply to a protest for which the notice of protest was filed on or after January 1, 2020:
    • amends Tax Code §41.46 to require that the appraisal review board’s notice be issued no later than 15 days before the hearing and that in addition to date, time and place, the notice include a description of the subject matter of the hearing that is sufficient to identify the specific action being protested (e.g., appraised value, denial of property tax exemption, disqualification from special appraisal methods); 
    • amends Tax Code §41.461 to require the chief appraiser to inform the property owner that the owner “is entitled to request” information (e.g. data, schedules, formulas) that the chief appraiser will introduce at the hearing rather than the current provision which says the owner “may inspect and may obtain” and to prohibit the chief appraiser from charging for copies of the information. The bill permits the delivery of the information by mail, in electronic format as provided by an agreement, or by reference to a secure Internet website where the information is identifiable and readily available but only if the notice contains a conspicuous statement that the owner or agent has the right to receive the information by mail or in person; 
    • amends Tax Code §41.47 as follows to provide that the appraisal review board may not determine the appraised value of the property in an amount greater than the appraised value of the property shown in the appraisal records except as agreed to by the parties. The prohibition does not apply if the action being protested is the cancellation, modification, or denial of an exemption or the determination that the property does not qualify for appraisal as provided by Subchapter C, D, E, or H, or Chapter 23; 
    • requires the appraisal review board to issue a written order no later than 30 days after the hearing has concluded, if the appraisal district is located in a county with a population of less than four million. For other appraisal districts, the appraisal review board has 45 days; 
    • authorizes the disposition of a protest by means of an agreed order. The chief appraiser and the property owner may file a joint motion with the appraisal review board notifying the board that the parties have agreed to a disposition of the protest and requesting the board to issue an agreed order. The joint motion must contain the terms of the disposition of the protest. The chairman of the board shall issue the order within five days of the filing of the joint motion, but if the chair is unable to meet the five-day deadline, then the board shall issue the order within 30 days after the filing of the joint motion. The parties may provide in the joint motion that the agreed order is appealable in the same manner as any other order issued by the appraisal review board; [Note: SB 2531 (Creighton, Brandon) has the same provision.]
  • amends Tax Code §41.66 as follows:
    • to allow a designated agent of the property owner to file for a protest hearing, to request postponement of a hearing, and to request consecutive hearings of up to 20 properties of the property owner;
    • to permit the appraisal review board to schedule the hearings on all protests filed by the property owner or agent to be held consecutively. The notice must identify the date and time the first hearing will begin, the ending date, and the list of order. The order may not change without the agreement of the parties, and the appraisal review board may not reschedule a hearing to a date earlier than the seventh day after the date the last hearing was scheduled to end unless agreed to by everyone; and
    • to require priority be given to a protest that involves a property owner who is 65 years of age or older, disabled, a military service person, a military veteran, or a spouse of a military service person or veteran;
  • amends Tax Code §41.67 to provide that information requested before the protest hearing that was not delivered to the protesting party at least 14 days before the scheduled hearing and that may not be used as evidence includes offering such information through argument or testimony. However, the provision does not apply to information offered to rebut evidence or argument presented at the hearing by the protesting party or that party's designated agent; and 
  • amends Tax Code §41.71 to require the appraisal review board to provide hearings on a Saturday or after 5 p.m. on a weekday but to prohibit scheduling the first hearing on a weekday evening to begin after 7 p.m. or a hearing on a protest on a Sunday. This provision applies only to a hearing on a protest under Chapter 41, Tax Code, that is scheduled on or after January 1, 2020.

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Appeal - Binding Arbitration
HB 1802 (Bohac, Dwayne) makes the following changes:

  • amends Tax Code §41A.03(a) to change the deadline to appeal an appraisal review board’s order by filing a request for binding arbitration from 45 days to 60 days. This change applies to an appeal of an ARB order that a property owner receives notice of on or after the effective date of the bill; and 
  • amends Tax Code §41A.05(a) to prohibit the Comptroller from rejecting an application for binding arbitration unless it delivers a written notice of the defect in the application that is the cause of the rejection and allows the cure of the defect within 15 day of the date the Comptroller delivers the notice. The applicant has 15 days to cure the defect, without regard to the deadline for filing the request for binding arbitration under Tax Code §41A.03(a). The change applies only to a request for binding arbitration received by the Comptroller from an appraisal district on or after the effective date of the bill.

The Act takes effect May 17, 2019.

SB 2 (Bettencourt, Paul) makes changes to Chapter 41A, Tax Code, to take effect January 1, 2020, unless otherwise provided:

  • amends Tax Code §41A.03 to provide that a single arbitration deposit covers a property owner’s requests for binding arbitration to appeal appraisal review board orders involving two or more contiguous tracts of land owned by the property owner. [Note: SB 1876 (Fallon, Pat) has the same provisions.] This provision applies only to a request for binding arbitration received by the Comptroller from an appraisal district on or after January 1, 2020;
  • amends Tax Code §41A.06 to provide that an arbitrator must complete the course for training and education of appraisal review board members and a training program on property tax law;
  • amends Tax Code §41A.061 to provide that an arbitrator must continue to maintain training and educational requirements; 
  • amends Tax Code §41A.09(b) to change the maximum arbitrator’s fee by reference to Tax Code §41A.06(b)(4);
  • amends Tax Code §41A.07 to provide that an arbitrator must be a Texas resident and to eliminate the current requirement that the arbitrator must reside in the county in which the property that is the subject of the appeal is located. The property owner may request that, in appointing an initial arbitrator under this section, the Comptroller appoint an arbitrator who resides in the county in which the property is located or an arbitrator who resides outside that county. This provision applies only to a request for binding arbitration received by the Comptroller from an appraisal district on or after January 1, 2020; and
  • amends Tax Code §41A.07 to reduce the number of years that a person must wait for eligibility as an arbitrator after representing property owners for compensation, working for the appraisal district or serving on the appraisal review board from five years to two years. This provision applies only to a request for binding arbitration received by the Comptroller from an appraisal district on or after January 1, 2020.

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Appeal - Judicial Review
HB 380 (Geren, Charlie) makes the following changes:

  • amends Tax Code §42.01 to permit a property owner to appeal an order of an appraisal review board (ARB) that it lacks jurisdiction to determine a protest under Subchapter C, Chapter 41, Tax Code, or a motion to correct an appraisal roll under Tax Code §25.25. If the court determines that the ARB had jurisdiction, it may make a final determination on the merits of the case on any ground of protest authorized by law, regardless of whether the property owner included the ground in the notice of protest; and 
  • adds Tax Code §42.231 to provide that if an appraisal district brings a jurisdictional plea that the property owner has not exhausted administrative remedies, the court is authorized in lieu of dismissing the appeal to remand the matter to the ARB with instruction to allow the property owner to cure the administrative problem. The parties may agree to waive remand and elect to have the court determine the appeal on the merits. If remanded, the remanded matter is considered a timely filed protest, and an ARB hearing is required. After a determination by the ARB upon remand, the property owner may file an appeal. 

The Act applies to an appeal that is filed on or after September 1, 2019.

HB 861 (Anchia, Rafael) amends Tax Code §42.42 (Corrected and Supplemental Tax Bills) to require a tax assessor to provide in the supplemental tax bill that is sent to a property owner after the final determination of appeals that penalty and interest will be due “if the additional tax is not paid by the delinquency date for the additional tax”. The Act applies only to an appeal that is filed on or after September 1, 2019.

HB 994 (Guillen, Ryan) adds Subchapter B-1 to Chapter 42, Tax Code, to provide a pilot program solely in Atascosa County that would allow an appeal of an appraisal review board order to a justice court rather than to a district court. The bill provides that a property owner that is located in a county that has a population of less than 45,500 and that shares a border with a county that has a population of 1.5 million or more and is within 200 miles of an international border, and through which the Atascosa River flows, may appeal to a justice court if the appeal relates to a residence homestead and the appraised value stated in the order being appealed is $500,000 or less. The Act takes effect September 1, 2019. 

SB 2 (Bettencourt, Paul) adds Tax Code §42.081 to provide that a taxing unit that imposes taxes on property that is the subject of an appeal may not file a suit to collect a delinquent tax on the property during the pendency of the appeal unless it is determined by the court that the property owner failed to comply with Section 42.08 (Forfeiture of Remedy for Nonpayment of Taxes). The Act applies only to an appeal that is filed on or after January 1, 2020.
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Collections and Delinquency
HB 1883 (Bonnen, Greg) makes the following changes:

  • amends Tax Code §31.02 to delete the phrase “during a war or national emergency declared” to make all persons who serve in the U.S. armed forces eligible to make payment on delinquent property tax without penalty if the payment is made at certain prescribed times; and
  • adds Tax Code §33.01 to provide that a payment that is deferred under Tax Code §31.02 and that is not paid on or before the deferred prescribed time accrues interest at 6% for each year or portion of a year the tax remains unpaid and incurs no penalty.

This Act applies to penalties and interest on delinquent taxes if the taxes are paid on or after September 1, 2019, regardless of their accruals before that date.

HB 1885 (Bonnen, Greg) amends Tax Code §33.011 to provide that the governing body of a taxing unit may waive penalties and interest on a delinquent tax if the tax bill was delivered to a mortgagee of a property for which the mortgage does not require the owner to fund an escrow account, and the mortgagee failed to mail a copy of the bill, and the taxpayer paid the tax no later than the 21st day after the date the taxpayer knew or should have known of the delinquency. This Act applies only to penalties and interest on taxes that become delinquent on or after January 1, 2020.
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Tax Sales and Redemption
HB 1652 (Huberty, Dan) amends Tax Code §34.05 to allow the sale of property in a public online auction if directed by the commissioners court of the county in accordance with Tax Code §34.01(a-1) and the rules adopted thereunder for public auction using online bidding and sale. The Act takes effect June 14, 2019.

HB 2650 (Goodwin, Vikki) amends Tax Code §34.01 to provide that costs of sale include a licensed auctioneer's commission and fees. The Act applies only to the sale of real property for which notice is given on or after May 29, 2019.

SB 1642 (Miles, Borris) amends Tax Code §34.21 to provide that a real property owner who is entitled to redeem the property may not transfer the owner's right of redemption to another and to provide that any instrument purporting to transfer the owner’s right of redemption is void. The Act takes June 14, 2019.
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Miscellaneous
SB 73 (Nelson, Jane) and SB 489 (Zaffirini, Judith) amend Tax Code §25.025 to expand the definition of a "federal or state judge " whose home address the appraisal districts must keep confidential from the public. Both Acts take effect on September 1, 2019.

SB 662 (Campbell, Donna) and SB 1494 (Paxton, Angela) amend Tax Code §25.025 to preclude appraisal districts from publicly disclosing the home address of a state officer elected statewide or a member of the legislature. SB 1494 also makes confidential the home address of a current and former child or adult protective services caseworker or investigator for the Department of Family and Protective Services. SB 1494 takes effect on June 10, 2019, and SB 662 takes effect June 14, 2019.

HB 2446 (Swanson, Valoree) amends Tax Code §25.025 to preclude appraisal districts from publicly disclosing the home address of a firefighter or volunteer firefighter or emergency medical services personnel as defined by Section 773.003, Health and Safety Code. The Act takes effect on June 14, 2019.
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