April 12, 2023
Written by: Eleanor Kim, DMA Tax Counsel
DuCharme, McMillen & Associates, Inc. (DMA) provides this information relating to the 88th Texas Legislature Regular Session.
Property tax continues to be a major focus for the Texas Legislature, with movement on 25 property tax bills since our March 24 Texas Legislative Session Update. However, the relief bills we discussed in that update are still pending.
The House relief bill (HB 2 by Morgan Meyer) and the accompanying constitutional amendment (HJR 1) are set to be heard by the House on April 13, 2023. The Senate relief bills (SB 3 and SB 5) have been referred to the House Ways & Means Committee, but they will not be heard until the two houses resolve their differing approaches.
We will continue to monitor and report on these bills as they progress.
BILLS
Following are tax-related bills that have moved since our previous update.
Jump to bills by tax type:
SALES/USE TAX
HB 300 (Howard, Donna) would: (1) amend Tax Code §151.313 to add children’s diapers, baby wipes, and baby bottles to the list of items eligible for the healthcare exemptions; (2) add Tax Code §151.3132 to exempt the sale of feminine hygiene products; (3) add Tax Code §151.3133 to exempt the sale of maternity clothing, and (4) add Tax Code §151.3134 to the exempt sale of a breast milk pumping products. The House passed the bill on March 20, 2023, and the Senate has referred the engrossed bill to the Senate Finance Committee.
HB 1158 (Darby, Drew), as substituted, would amend Tax Code §151.334 to allow carbon capture facilities to claim an exemption on components of tangible personal property that are purchased and installed to capture carbon dioxide from the atmosphere or an anthropogenic emission source, or transport or inject carbon dioxide from the atmosphere or from an anthropogenic emission source. The bill also updates the definition of “advanced energy project” in Health & Safety Code §382.003(1-a), which would reinstate the eligibility of the exemption for certain coal-fueled electric generating facilities. The House Energy Resources voted out the committee substitute on April 4, 2023.
HB 3374 (Button, Angie Chen) would add Government Code §2303.499 to waive the requirement that employees of a qualified business of an enterprise project must perform at least 50% of the person’s service at the qualified business site during the “COVID relief period,” which means the period from March 1, 2020, through December 31, 2021. The House International Relations/Economic Development Committee voted out a committee substitute on April 11, 2023.
SB 65 (Zaffirini, Judith) would amend Tax Code §151.0038 to exclude from taxable information services the furnishing of an academic transcript. The Senate passed the bill on March 28, 2023, and the House has referred the engrossed bill to the House Ways & Means Committee.
SB 612 (Johnson, Nathan) would amend Tax Code §327.007 to allow cities that have the municipal street sales tax for maintenance and repair to reauthorize the tax for either 8 or 10 years instead of 4 years if the majority of the voters in each of the last two consecutive elections approved its adoption or reauthorization. The Senate Local Committee voted out the bill on March 28, 2023.
FRANCHISE TAX
SB 1243 (Huffman, Joan) would add Tax Code §171.10132 to allow a taxable entity to exclude from total revenue qualifying broadband grant proceeds for broadband deployment in Texas, to deduct the proceeds as cost of goods sold (COGS) if they are expenses that may be included in the COGS deduction, and to deduct the proceeds as compensation if they are expenses that may be included in the compensation deduction. The changes would apply retroactively to reports due on or after January 1, 2023. The Senate Finance Committee voted out the bill on March 29, 2023.
GENERAL
(Applies to all taxes)
HB 2691 (Button, Angie Chen), as substituted, would amend Government Code §403.055 to authorize the Comptroller to release any held payments of a debtor that is in excess of the amount of outstanding debt that another state agency has reported to the Comptroller and would require the reporting state agency to notify a debtor that the debts are being reported to the Comptroller and that payments from the state will be held due to the debt owed. The House Ways & Means Committee voted out the committed substitute on March 27, 2023.
HJR 132 (Hefner, Cole) proposes a constitutional amendment that would prohibit the legislature from imposing a tax based on the wealth or net worth of an individual or family, including a tax based on the difference between the assets and liabilities of an individual or family. Upon passage, this resolution is contingent on the voters’ approval of the constitutional amendment. The House Ways & Means Committee voted out the resolution on March 27, 2023.
SB 506 (Perry, Charles), as substituted, would require each state agency to submit a report on December 1 of each even-numbered year that contains certain information applicable to the state agency’s administration of state taxes and fees. Among others, the report would require a description of all audits performed by the agency, a description of the results of each audit, including emerging issues and errors, a list of each fee the agency is first required to administer as a result of legislation; and the list of each rule relating to a tax or fee adopted or amended by the agency as a result of legislation, a court determination or a policy. The Senate Finance Committee voted out the committee substitute on April 3, 2023.
SB 952 (Perry, Chares), as substituted, would: (1) amend Tax Code §111.0041(c) and §112.052(d) to require taxpayers to produce “sufficient” records and supporting documentation (rather than “contemporaneous” records and supporting documentation; (2) amend Tax Code §111.0081 to provide that the 10% additional penalty imposed when an audit assessment is not timely paid is abated if a taxpayer timely files a lawsuit after redetermination (Subchapter e), but the penalty would be due if the taxpayer fails to pay the audit liability within 20 days of a court’s judgment; (3) add Tax Code §111.0091 to allow a taxpayer that has performed a managed audit under Tax Code §151.0231 or §201.3021 to bypass the redetermination hearing process and to file a lawsuit in district court to appeal the managed audit results. The notice of intent to bypass the redetermination process must be filed on or before the 60th day within the managed audit results but a taxpayer is required to hold a conference with the Comptroller before the filing of a lawsuit; (4) repeal Tax Code §111.105(e) that allows the Comptroller to issue a 180-day demand notice for supporting documentation of a refund claim. The Senate Finance Committee voted out the committee substitute on April 3, 2023.
HOTEL OCCUPANCY TAX
SB 1420 (Birdwell, Brian) would: (1) amend Tax Code §351.009 and §352.009 to change the due date that a municipality or a county must file a report pertaining to its city hotel occupancy tax with the Comptroller from February 20 of each year to March 1 of each year; (2) add the requirement that the municipality must include in the report the total revenue amount of city hotel occupancy tax that has been collected and unspent that is in the municipality’s budget for the fiscal year in which the report is due; (3) authorize a municipality or a county to use a portion of its hotel occupancy tax to recoup cost in reporting; (4) amend Tax Code §351.101 to prohibit the use of city hotel occupancy tax to acquire a site for, construct, improve, enlarge, equip, repair, staff, operate or maintain any part of a building or facility for a visitor information center unless the building or facility is exclusively used to distribute or disseminate tourism-related information to tourists; (5) amend the definition of “tourist” provided by Tax Code §351.001 to an individual who travels at least 50 miles to either attend a meeting or event at a hotel or spend the night at a hotel; (6) add Tax Code §351.162 to require the Comptroller to recapture an amount of tax based on tax collection data between the hotel’s 10 year-year anniversary and 20 year-anniversary of being designated a qualified hotel under certain circumstances; and (7) add Tax Code §351.163 to require the Comptroller to prepare a report on the status of each qualified project by December 1 of each even-number year. The Senate Natural Resources/Economic Development Committee voted out the committee to substitute the bill on March 29, 2023.
SB 1057 (Whitmire, John) amends Tax Code §351.1015 relating to the authority of certain municipalities and local government corporations to use certain tax revenue for certain qualified projects and project-associated infrastructure. The Senate Natural Resources/ Economic Development Committee voted out a committee substitute on April 5, 2023.
MOTOR FUEL TAX
HB 2763 (Guillen, Ryan) would amend Tax Code §162.104(a) and Tax Code §162.204, effective January 1, 2026, to exempt from tax gasoline and diesel fuel sold to a rural transit authority (created under Chapter 458, Transportation Code) that uses the fuel exclusively for public transportation. The bill would amend provisions to allow the rural transit authority to claim a refund of tax paid or claim a credit of tax paid on gasoline and diesel fuel used in an exempt manner. The House Ways & Means Committee voted out the bill on March 27, 2023.
HB 3651 (Bailes, Ernest) would amend Chapter 162, Tax Code, as follows: (1) define “container” to mean any receptables used to store motor fuel; (2) define “delivery” to mean any transfer of motor fuel: (a) into a fuel supply tank, cargo tank, or container; or (b) to a location or into a receptable, as specified by this chapter in connection with the term; (3) amend the definition of “motor fuel” to provide that fuel used for “a motor vehicle licensed for use on a public highway”; (4) amend the definition of “motor fuel transporter” to exclude a person who is licensed under Chapter 162 as a supplier, permissive supplier or distributor and who lawfully acquires motor fuel and retains ownership of the fuel while the fuel is being transported; (5) amend the definition of “transport vehicle” to provide that it includes a motor vehicle or a motor vehicle/trailer combination that carry moto fuel over a public highway; (6) amend Tax Code §162.101 and Tax Code §162.201 to clarify that tax shall be added to the selling price of gasoline or diesel fuel so that the tax is “paid by each person receiving” the fuel until it is paid by the person ultimately using or consuming it; and (7) amend Tax Code §162.103(a)(4) and Tax Code §162.203(a) to clarify that a backup tax is imposed on gasoline or diesel fuel on which tax has not been paid “in an original or subsequent sale” and adds subsection (5) that the backup tax is imposed on a person who acquires gasoline or diesel fuel by any unlawful means, including purchase through unauthorized use of a credit card, debit card, or other money, regardless of whether tax was previously paid on the fuel or was added to the selling price of the fuel. The House Ways & Means Committee voted out the bill on April 4, 2023.
MOTOR VEHICLE REGISTRATION FEE
HB 78 (Ortega, Lina) would amend Transportation Code §502.4021 to allow certain counties to impose an additional vehicle registration fee in an amount up to $10 if the voters of the county approve the fee imposition. The bill applies only to a county that borders Mexico and contains a municipality that unilaterally created a regional mobile authority. The House Transportation Committee voted out the bill on March 29, 2023.
PROPERTY TAX
HB 159 (Landgraf, Brooks), as substituted, would amend Tax Code §26.04 to provide that a taxing unit that is required to post-tax rate information on the taxing unit’s Internet website is required to publish a summary of that information and the uniform resource locator (URL) address of the location where the information is posted in a newspaper of general circulation in each county in which the taxing unit is located. The requirement would not apply to a taxing unit located wholly or partly in a county with a population of one million or more; or where no part of the taxing unit is located in a county in which a newspaper of general circulation is published. The House Ways & Means Committee voted out the committee substitute on April 4, 2023.
HB 456 (Craddick, Tom) would amend Tax Code §11.18(a) to add royalty interest to the list of assets owned by a charitable organization that are exempt from property tax. The term “royalty interest” means an interest in mineral rights in a producing leasehold in the state but does not include the interest of the person having the management and operation of a well. The House Ways & Means Committee voted out the bill on March 16, 2023, and the House passed the bill on April 5, 2023. The Senate has received the engrossed bill.
HB 623 (Harris, Cody), as substituted, would amend Tax Code §11.162 to provide that the owner of tangible personal property consisting of animal feed that is exempt from sales/use tax under Tax Code §151.316(a)(3) or (4) is entitled to an exemption from property tax if the animal feed is held by the owner for sale at retail. The exemption is contingent on the passage of a constitutional amendment (HJR 47) and on the voters’ approval of the constitutional amendment. The House Ways & Means Committee voted out the committee substitute and HJR 47 on April 4, 2023.
HB 796 (Button, Angie Chen), as substituted, would add Tax Code §41.13 to require each appraisal district to create and maintain a publicly available and searchable Internet database that contains certain information regarding protest hearings conducted by the appraisal district’s appraisal review board. The House Ways & Means Committee voted out the committee substitute on March 20, 2023, and House passed the bill with a floor amendment on April 5, 2023. The floor amendment provides that beginning on January 1, 2025, the database must include information for protests relating to the most recent tax year and each tax year thereafter until the database includes protest information for the most recent five years and that beginning January 1, 2030, the database is to provide protest information for the previous five tax years. The Senate has received the engrossed bill.
HB 1228 (Metcalf, Will) would amend Tax Code §25.195 to require a chief appraiser, at the request of a property owner, to provide without a fee, electronically or by mail, a copy of the records, supporting data, schedules, and other material and information the owner or the owner’s agent is entitled to under existing law. The bill would require a private appraisal firm to provide electronically or by mail all information pertaining to the property that the firm considered in appraising the property, including information showing each method of appraisal used to determine the value of the property and all calculations, personal notes, correspondence, and working papers used in appraising the property with respect to property appraised by the firm under contract with the district. The House Ways & Means Committee voted out the bill on March 20, 2023, and the House passed the bill on April 6, 2023.
HB 2121 (Paul, Dennis) would amend Tax Code §22.24(e) to add that a rendition or report can be filed on behalf of a property owner who is rendering tangible personal property used for the production of income that has an estimated market value of not more than $500,000 without requiring a sworn statement. The House Ways & Means Committee voted out the bill on April 4, 2023.
HB 2249 (Metcalf, Will) would add Tax Code §6.4101 and §6.4102 to provide that an appraisal review board in a specified county is to consist of three members elected by the voters of the county at a general election and would amend Tax Code §6.414 to allow the elected members of the appraisal review board by resolution to identify auxiliary board members who can hear protests before the appraisal review board. The provision applies to counties with a population of 400,000 or more and adjacent to a county with a population of 3.3 million or more and no other counties with a population of more than 300,000. [Note: The description would apply to Montgomery County.] The House Ways & Means Committee voted out the bill on March 27, 2023, and the bill is set on the House Calendar for April 14, 2023.
HB 2354 (Hefner, Cole) would amend Tax Code §23.54 to provide the ownership of agricultural land is not considered to have changed if the ownership is transferred from the former owner to the surviving spouse or a surviving child of the former owner. The House Ways & Means Committee voted out the bill on March 27, 2023, and the bill is set on the House Calendar for April 14, 2023.
HB 2398 (Hefner, Cole) would amend Tax Code §23.541 to require a chief appraiser to accept and approve or deny an application after the deadline for filing if the land had been appraised as open space land in the preceding year, the former owner died during the preceding year, and the application is filed prior to the taxes becoming delinquent by the surviving spouse or a surviving child of the former owner, the executor or administrator of the estate or the trustee of the trust created by the former owner. The bill would exempt such a late application from penalty imposed for a late-filed application. The House Ways & Means Committee voted out the bill on April 4, 2023. [Note: SB 1191 (Zaffirini, Judith) is the same after a committee substitute, and the Senate passed the bill on April 4, 2023. The House has received SB 1191.]
HB 2488 (Geren, Charlie), as substituted, would amend Tax Code §42.23 to put the burden of proof on the appraisal district to establish the appraised value of the property subject to the appeal by clear and convincing evidence. The newly added subsection would apply only to an appeal of an appraisal review board’s order determining protest under a trial de novo or a motion under Tax Code §25.25 involving an increase in the appraised value of a property when the value of the property was lowered in the preceding year as described by Tax Code §23.01(e) or §41.43(a-3). The House Ways & Means Committee voted out the committee substitute on April 4, 2023.
HB 3273 (Thierry, Shawn), as substituted, would amend Tax Code §26.04 to: require beginning January 1, 2024, the chief appraiser of each appraisal district and each taxing unit to post on their respective websites, if they maintain a website, informing each property owner that the estimated amount of taxes imposed on the property can be found in the property tax database; and to require publication of the notice in a county-wide newspaper. The House Ways & Means Committee voted out the committee substitute on April 4, 2023.
HB 3325 (Goodwin, Vikki) would amend Tax Code §25.192 to revise the notice sent by an appraisal district to a residential property owner regarding the owner’s potential eligibility for a residence homestead exemption to include instructions on how the property owner can complete and submit the application online and request an application form from the appraisal district. The House Ways & Means Committee voted out the bill on April 4, 2023.
HB 3640 (Noble, Candy), as substituted, would add Tax Code §11.36 to provide an exemption of value equal to the residence homestead exemption for school districts provided by Tax Code §11.13(b) if the real property that the person owns is the primary residence of an adult who has intellectual or developmental disabilities and who is related to the owner or trustee of the property within the third degree of consanguinity. The exemption is contingent on the passage of a constitutional amendment (HJR 150) and on the voters’ approval of the constitutional amendment. The House Ways & Means Committee voted out the committee substitute and HJR 150 on April 4, 2023.
HB 4101 (Shine, Hugh), as substituted, would amend Tax Code §41A.015 to authorize a property owner who has filed a notice of protest to request for a limited binding arbitration to compel the appraisal review board or the chief appraiser to comply with the model hearing procedures adopted by the appraisal review board. The House Ways & Means Committee voted out the committee substitute on April 4, 2023.
HB 4181 (Munoz, Sergio) would amend Tax Code §11.133 to provide that the surviving spouse of a military service member (rather than a member of the armed services) of the United States killed or fatally injured in the line of duty is entitled to an exemption from taxation of the total appraised value of the surviving spouse’s residence homestead if the surviving spouse has not remarried. The bill is contingent on the passage of a constitutional amendment (HJR 165) and on the voters’ approval of the constitutional amendment. The House Ways & Means Committee voted out the bill and HJR 165 on April 4, 2023.
SB 348 (Springer, Drew) would amend Tax Code §25.027(b), which currently allows posting on the Internet an aerial photograph that depicts five or more separately owned buildings, to allow the posting of: (1) an aerial photograph that depicts more than one separately owned building; (2) a street-level photograph of only the exterior of a building; or (3) a field record or overhead sketch of the property that depicts only the outline of the buildings, the general landscape of the property, and the dimensions of or distances between the buildings and features depicted. The Senate Local Government voted out the bill on March 28, 2023.
SB 361 (Eckhardt, Sarah) would amend Tax Code §6.412 to allow a person employed by a school district as a teacher to serve on the appraisal review board of an appraisal district. The Senate Local Government voted out the bill on March 28, 2023, and the Senate passed the bill on April 4, 2023. The House has received the engrossed bill.
SB 1215 (Paxton, Angela), as substituted, would amend Tax Code §1.071 to require a collector or taxing unit to send a refund to a particular address upon request by the property owner (rather than the property owner’s mailing address) if the request is made on a form prescribed the Comptroller and is submitted before the date the refund is issued. The Senate Local Government Committee voted out the committed substitute on April 4, 2023.
SB 1381 (Eckhardt, Sarah) would amend Tax Code §11.43 relating to the eligibility of the surviving spouse of an elderly person who qualified for a local option exemption by a taxing unit of a portion of the appraised value of the deceased person’s residence homestead to continue to receive an exemption for the same property. The Senate Local Government voted out the committee substitute on March 28, 2023, and the Senate passed the bill on April 4, 2023. The House has received the engrossed bill.
SB 1439 (Springer, Drew) would: (1) amend Tax Code §11.145 to insert the aggregation of tangible personal property held or used for the production of income with the taxable value of less than $2,500 owned by a person and aggregation of such property with other related entities that are members of the same unified business enterprise; (2) define “Related business entity” to mean a business entity that: (A) engages in a common business enterprise with at least one other business entity; and (B) owns tangible personal property that:(i) is held or used for the production of income as part of the common business enterprise; and (ii) is located at the same physical address that tangible personal property owned by at least one other business entity engaged in the common business enterprise is located; (3) define “Unified business enterprise” to mean a common business enterprise composed of more than one related business entity; (4) allow a chief appraiser to investigate whether a business entity is a related entity and authorized to aggregated tangible personal property; and (5) amend Chapter 27, Tax Code, to require the physical address of a property on a rendition statement and require a rendition statement of a related business entity to contain the information for each related business entity that is included in the unified business enterprise. [Note: SB 1439 retains the current exemption threshold of $2,500, but the aggregation provision is similar to what is in SB 5 (Parker, Tan), which increases the threshold to $25,000.] The Senate Local Government Committee voted out the bill on March 28, 2023.
SB 1486 (Bettencourt, Paul) would amend Chapter 31, Tax Code, to authorize a taxpayer option for electronic payment of property tax in all counties. The Senate Local Government Committee voted out the bill on March 28, 2023, and the Senate passed the bill on April 4, 2023. The House has received the engrossed bill.
SB 1487 (Bettencourt, Paul), as substituted, would amend Tax Code §1.085 to make electronic communications available at the election of the property owner, rather than by mutual agreement between the owner and local tax officials as under current law. The word “communication” is defined to include a notice of appraised value, rendition, application form, completed application, report, filing, statement, appraisal review board order, bill, or other item of information required or permitted under the law. The Senate Local Government Committee voted out the committee substitute on April 4, 2023.
SB 1801 (Springer, Drew) would amend Tax Code §11.43 to require an appraisal district to develop a program for the periodic review of each residence homestead exemption granted by the district to confirm the exemption qualification. The program would require the review of each residence homestead exemption at least once every five tax years. The Senate Local Government Committee voted out the bill on March 28, 2023.
SB 2091 (West, Royce) would amend provisions in Chapters 33 and 34, Tax Code, to allow a taxing unit to sell seized or foreclosed property to an abutting property owner without the need for a public sale. The Senate Local Government Committee voted out the bill on March 28, 2023, and the Senate passed the bill on April 4, 2023. The House has received the engrossed bill.
SB 2355 (Bettencourt, Paul) would amend Tax Code §41A.03 to replace the appraisal district with the Comptroller to whom the property owner must submit a request for a binding arbitration to appeal an appraisal review board’s order. The bill would require the Comptroller to receive the request through an online electronic system and would allow a property owner to designate an agent to represent the owner in an arbitration proceeding on a signed form prescribed by the Comptroller. The Senate Local Government Committee voted out the bill on March 28, 2023, the Senate passed the bill on April 4, 2023. The House has received the engrossed bill.
If you have questions about the impact these bills may have on your business, contact our team today to consult with a DMA tax expert.
This website content should be used for general informational purposes only, and not as a substitute for consultation with professional tax, legal, or other competent advisors. Before making any decision or taking any action based on information contained on this website, you should consult with a DMA professional.
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