S.B. No. 340 AN ACT

relating to the rendition and appraisal of property for ad valorem tax purposes and to the use of electronic means for certain interactions between property owners and appraisal districts, taxing units, or other tax officials; providing civil penalties.

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

SECTION 1. Section 1.085, Tax Code, is amended by amending Subsection (b) and adding Subsections (e), (f), and (g) to read as follows:

(b) An agreement between a chief appraiser and a property owner must:

(1) be in writing;
(2) be signed by the chief appraiser and the property owner; and
(3) specify:

(A) the medium of communication;
(B) the type of communication covered;
(C) the means for protecting the security of a communication;
(D) the means for confirming delivery of a communication; and
(E) the electronic mail address of the property owner or person designated to represent the property owner under Section 1.111, as applicable.

(e) The comptroller by rule:

(1) shall prescribe acceptable media, formats, content, and methods for the electronic transmission of notices required by Section 25.19; and
(2) may prescribe acceptable media, formats, content, and methods for the electronic transmission of other notices, renditions, and applications.

(f) In an agreement entered into under this section, a chief appraiser may select the medium, format, content, and method to be used by the appraisal district from among those prescribed by the comptroller under Subsection (e).

(g) Notwithstanding Subsection (a), if a property owner whose property is included in 25 or more accounts in the appraisal records of the appraisal district requests the chief appraiser to enter into an agreement for the delivery of the notice required by Section 25.19 in an electronic format, the chief appraiser must enter into an agreement under this section for that purpose and shall deliver the notice in accordance with an electronic medium, format, content, and method prescribed by the comptroller under Subsection (e).

SECTION 2. Section 1.09, Tax Code, is amended to read as follows:

Sec. 1.09. AVAILABILITY OF FORMS. When a property owner is required by this title to use a form, the office or agency with which the form is filed shall make printed and electronic versions of the forms readily and timely available and shall furnish a property owner a form without charge.

SECTION 3. Section 22.01, Tax Code, is amended by amending Subsection (a) and adding Subsections (f) through (j) to read as follows:

(a) Except as provided by Chapter 24, a person shall render for taxation all tangible personal property used for the production of income that the person owns or that the person manages and controls as a fiduciary on January 1. A rendition statement shall contain:

(1) the name and address of the property owner;
(2) a description of the property by type or category;
(3) if the property is inventory, a description of each type of inventory and a general estimate of the quantity of each type of inventory;
(4) the physical location or taxable situs of the property; and
(5) the property owner's good faith estimate of the market value of the property or, at the option of the property owner, the historical cost when new and the year of acquisition of the property.

(f) Notwithstanding Subsections (a) and (b), a rendition statement of a person who owns tangible personal property used for the production of income located in the appraisal district that, in the owner's opinion, has an aggregate value of less than $20,000 is required to contain only:

(1) the name and address of the property owner;
(2) a general description of the property by type or category; and
(3) the physical location or taxable situs of the property.

(g) A person's good faith estimate of the market value of the property under Subsection (a)(5) is solely for the purpose of compliance with the requirement to render tangible personal property and is inadmissible in any subsequent protest, hearing, appeal, suit, or other proceeding under this title involving the property, except for:

(1) a proceeding to determine whether the person complied with this section;
(2) a proceeding under Section 22.29(b); or
(3) a protest under Section 41.41.

(h) If the property that is the subject of the rendition is regulated by the Public Utility Commission of Texas, the Railroad Commission of Texas, the federal Surface Transportation Board, or the Federal Energy Regulatory Commission, the owner of the property is considered to have complied with the requirements of this section if the owner provides to the chief appraiser, on written request of the chief appraiser, a copy of the annual regulatory report covering the property and sufficient information to enable the chief appraiser to allocate the value of the property among the appropriate taxing units for which the appraisal district appraises property.

(i) Subsection (a) does not apply to a property owner whose property is subject to appraisal by a third party retained by the appraisal district if the property owner provides information substantially equivalent to that required by Subsection (a) regarding the property directly to the third party appraiser.

(j) Subsection (a) does not apply to property that is exempt from taxation.

SECTION 4. Section 22.02, Tax Code, is amended to read as follows:

Sec. 22.02. RENDITION OF PROPERTY LOSING EXEMPTION DURING TAX YEAR OR FOR WHICH EXEMPTION APPLICATION IS DENIED.

(a) If an exemption applicable to a property on January 1 terminates during the tax year, the person who owns or acquires the property on the date applicability of the exemption terminates shall render the property for taxation within 30 days after the date of termination.

(b) If the chief appraiser denies an application for an exemption for property described by Section 22.01
(a), the person who owns the property on the date the application is denied shall render the property for taxation in the manner provided by Section 22.01 within 30 days after the date of denial.

SECTION 5. Section 22.07, Tax Code, is amended by adding Subsections (c) through (f) to read as follows:

(c) The chief appraiser may request, either in writing or by electronic means, that the property owner provide a statement containing supporting information indicating how the value rendered under Section 22.01(a)(5) was determined. The statement must:

(1) summarize information sufficient to identify the property, including: (A) the physical and economic characteristics relevant to the opinion of value, if appropriate; and (B) the source of the information used;
(2) state the effective date of the opinion of value; and
(3) explain the basis of the value rendered. If the property owner is a business with 50 employees or less, the property owner may base the estimate of value on the depreciation schedules used for federal income tax purposes.

(d) The property owner shall deliver the statement to the chief appraiser, either in writing or by electronic means, not later than the 21st day after the date the chief appraiser's request is received. The owner's statement is solely for informational purposes and is not admissible in evidence in any subsequent protest, suit, appeal, or other proceeding under this title involving the property other than:

(1) a proceeding to determine whether the property owner has complied with this section;
(2) a proceeding under Section 22.29(b); or
(3) a protest under Section 41.41.

(e) A statement provided under this section is confidential information and may not be disclosed, except as provided by Section 22.27.
(f) Failure to comply with this section in a timely manner is considered to be a failure to timely render under Section 22.01 and penalties as described in Section 22.28 shall be applied by the chief appraiser.

SECTION 6. Section 22.23, Tax Code, is amended by amending Subsection (b) and adding Subsection (c) to read as follows:

(b) On written request by the property owner, the chief appraiser shall extend a deadline for filing a rendition statement or property report to May 15. The chief appraiser may further extend the deadline an additional 15 days upon good cause shown in writing by the property owner.
(c) If before December 1, 2003, a person files a rendition statement for the 2003 tax year that provides the information required by Section 22.01 as that section exists on January 1, 2004, and, as a result of that information, the chief appraiser discovers that some or all of that person's tangible personal property used for the production of income was omitted from the appraisal roll in one of the two preceding years, the chief appraiser may not add the value of the omitted property to the 2001 or 2002 appraisal roll. This subsection expires January 1, 2005.

SECTION 7. Subsections (b), (c), and (d), Section 22.24, Tax Code, are amended to read as follows:

(b) A person filing a rendition or report shall include all information required by Section 22.01.
(c) The comptroller may prescribe or approve different forms for different kinds of property but shall ensure that each form requires a property owner to furnish the information necessary to identify the property and to determine its ownership, taxability, and situs. A form may not require but may permit a property owner to furnish information not specifically required by this chapter to be reported. In addition, a form prescribed or approved under this subsection must contain the following statement in bold type: "If you make a false statement on this form, you could be found guilty of a Class A misdemeanor or a state jail felony under Section 37.10, Penal Code."
(d) Except as required by Section 22.01(a), a rendition or report form shall permit but not require a property owner to state the owner's good faith estimate of the market value of the property.

SECTION 8. Subchapter B, Chapter 22, Tax Code, is amended by adding Sections 22.28, 22.29, and 22.30 to read as follows:

Sec. 22.28. PENALTY FOR DELINQUENT REPORT.
(a) Except as otherwise provided by Section 22.30, the chief appraiser shall impose a penalty on a person who fails to timely file a rendition statement or property report required by this chapter in an amount equal to 10 percent of the total amount of taxes imposed on the property for that year by taxing units participating in the appraisal district.
(b) The chief appraiser may retain a portion of a penalty collected under this section, not to exceed 20 percent of the amount of the penalty, to cover the chief appraiser's costs of collecting the penalty. The chief appraiser shall distribute the remainder of the penalty to each taxing unit participating in the appraisal district that imposes taxes on the property in proportion to the taxing unit's share of the total amount of taxes imposed on the property by all taxing units participating in the district.

Sec. 22.29. PENALTY FOR FRAUD OR INTENT TO EVADE TAX.
(a) The chief appraiser shall impose an additional penalty on the person equal to 50 percent of the total amount of taxes imposed on the property for the tax year of the statement or report by the taxing units participating in the appraisal district if it is finally determined by a court that:

(1) the person filed a false statement or report with the intent to commit fraud or to evade the tax; or
(2) the person alters, destroys, or conceals any record, document, or thing, or presents to the chief appraiser any altered or fraudulent record, document, or thing, or otherwise engages in fraudulent conduct, for the purpose of affecting the course or outcome of an inspection, investigation, determination, or other proceeding before the appraisal district.

(b) Enforcement of this section shall be by a proceeding initiated by the district or county attorney of the county in which the appraisal is established, on behalf of the appraisal district. (c) In making a determination of liability under this section, the court shall consider:

(1) the person's compliance history with respect to paying taxes and filing statements or reports;
(2) the type, nature, and taxability of the specific property involved;
(3) the type, nature, size, and sophistication of the person's business or other entity for which property is rendered;
(4) the completeness of the person's records;
(5) the person's reliance on advice provided by the appraisal district that may have contributed to the violation;
(6) any change in appraisal district policy during the current or preceding tax year that may affect how property is rendered; and
(7) any other factor the court considers relevant.

(d) The chief appraiser may retain a portion of a penalty collected under this section, not to exceed 20 percent of the amount of the penalty, to cover the chief appraiser's costs of collecting the penalty. The chief appraiser shall distribute the remainder of the penalty to each taxing unit participating in the appraisal district that imposes taxes on the property in proportion to the taxing unit's share of the total amount of taxes imposed on the property by all taxing units participating in the district.

Sec. 22.30. WAIVER OF PENALTY.
(a) The chief appraiser may waive the penalty imposed by Section 22.28 or 22.29 if the chief appraiser determines that the person exercised reasonable diligence to comply with or has substantially complied with the requirements of this chapter. A written request, accompanied by supporting documentation, stating the grounds on which penalties should be waived must be sent to the chief appraiser not later than the 30th day after the date the person received notification of the imposition of the penalty. The chief appraiser shall make a determination of the penalty waiver request based on the information submitted.
(b) The chief appraiser shall notify the person of the chief appraiser's determination regarding the penalty waiver request after considering:

(1) the person's compliance history with respect to paying taxes and filing statements or reports;
(2) the type, nature, and taxability of the specific property involved;
(3) the type, nature, size, and sophistication of the person's business or other entity for which property is rendered;
(4) the completeness of the person's records;
(5) the person's reliance on advice provided by the appraisal district that may have contributed to the person's failure to comply and the imposition of the penalty;
(6) any change in appraisal district policy during the current or preceding tax year that may affect how property is rendered; and
(7) any other factors that may have caused the person to fail to timely file a statement or report.

(c) A property owner is entitled to protest before the appraisal review board the failure or refusal of a chief appraiser to waive a penalty under Subsection (a).

SECTION 9. Section 23.23, Tax Code, is amended by adding Subsection (f) to read as follows:

(f) Notwithstanding Subsections (a) and (e) and except as provided by Subdivision (2), an improvement to property that would otherwise constitute a new improvement is not treated as a new improvement if the improvement is a replacement structure for a structure that was rendered uninhabitable or unusable by a casualty or by mold or water damage. For purposes of appraising the property in the tax year in which the structure would have constituted a new improvement:

(1) the last year in which the property was appraised for taxation before the casualty or damage occurred is considered to be the last year in which the property was appraised for taxation for purposes of Subsection (a)(2)(A); and
(2) the replacement structure is considered to be a new improvement only to the extent it is a significant improvement over the replaced structure as that structure existed before the casualty or damage occurred.

SECTION 10. Section 25.19, Tax Code, is amended by adding Subsection (k) to read as follows:

(k) Notwithstanding any other provision of this section, the chief appraiser may not deliver a written notice concerning property that is required to be rendered or reported under Chapter 22 until after the applicable deadline for filing the rendition statement or property report.

SECTION 11. Section 41.43, Tax Code, is amended by amending Subsection (a) and adding Subsection (d) to read as follows: (a) Except as provided by Subsection (d), in a protest authorized by Section 41.41(a)(1) or (2), the appraisal district has the burden of establishing the value of the property by a preponderance of the evidence presented at the hearing. If the appraisal district fails to meet that standard, the protest shall be determined in favor of the property owner.

(d) If the property owner fails to deliver, before the date of the hearing, a rendition statement or property report required by Chapter 22 or a response to the chief appraiser's request for information under Section 22.07(c), the property owner has the burden of establishing the value of the property by a preponderance of the evidence presented at the hearing. If the property owner fails to meet that standard, the protest shall be determined in favor of the appraisal district.

SECTION 12. (a) Except as provided by Subsections (b) and (c) of this section, this Act takes effect January 1, 2004, and applies only to the rendition of property for ad valorem tax purposes for a tax year that begins on or after that date.

(b) Sections 1.085 and 1.09, Tax Code, as amended by this Act, take effect January 1, 2005.
(c) Subsection (c), Section 22.23, Tax Code, as added by this Act, takes effect September 1, 2003, and applies to the rendition of property for ad valorem tax purposes for the 2003 tax year.
(d) Subsection (f), Section 23.23, Tax Code, as added by this Act, applies to the appraisal of property for a tax year beginning on or after the effective date of this Act regardless of whether the casualty or mold or water damage occurred before, on, or after the effective date of this Act.
(e) Except as provided by Subsection (f) of this section, the changes in law made by this Act to Section 1.085, Tax Code, apply only to an agreement between a chief appraiser and a property owner entered into on or after January 1, 2005. An agreement between a chief appraiser and a property owner entered into before January 1, 2005, is governed by the law in effect on the date the agreement was entered into, and the former law is continued in effect for that purpose.
(f) Notwithstanding Subsection (b) of this section, in the case of an appraisal district established for a county with a population of 500,000 or less, the changes in law made by this Act to Section 1.085, Tax Code, apply only to an agreement between the chief appraiser and a property owner entered into on or after January 1, 2006. An agreement between the chief appraiser of such an appraisal district and a property owner entered into before January 1, 2006, is governed by the law in effect on the date the agreement was entered into, and the former law is continued in effect for that purpose.
(g) Notwithstanding Subsection (b) of this section, an appraisal district established in a county with a population of 500,000 or less or a taxing unit located in a county with a population of 500,000 or less is not required to comply with Section 1.09, Tax Code, as amended by this Act, until January 1, 2006.

______________________________ ______________________________ President of the Senate Speaker of the House

I hereby certify that S.B. No. 340 passed the Senate on April 24, 2003, by the following vote: Yeas 27, Nays 4; May 21, 2003, Senate refused to concur in House amendments and requested appointment of Conference Committee; May 24, 2003, House granted request of the Senate; May 31, 2003, Senate adopted Conference Committee Report by the following vote: Yeas 30, Nays 0.

______________________________ Secretary of the Senate

I hereby certify that S.B. No. 340 passed the House, with amendments, on May 10, 2003, by a non-record vote; May 24, 2003, House granted request of the Senate for appointment of Conference Committee; May 31, 2003, House adopted Conference Committee Report by a non-record vote.

______________________________ Chief Clerk of the House

Approved:

______________________________ Date

______________________________
Governor