2015 Attorney General Opinions and Court Decisions
Listed below are 2015 opinions and decisions concerning various property tax issues. The list does not include all opinions and decisions concerning property tax. The summaries are provided by the Comptroller's office as a public service intended solely as an informational resource. The summaries are not intended as substitutes for or interpretations of the opinions and decisions summarized and should not be relied upon as such. Additionally, the information provided neither constitutes nor serves as a substitute for legal advice. Questions regarding the meaning or interpretation of any information included or referenced herein should, as appropriate or necessary, be directed to an attorney or other appropriate counsel.
Attorney General Opinions
Re: Whether an independent school district may use the certified estimate of property tax values to adopt a tax rate after adopting its budget (RQ-1211-GA)
Summary: The Attorney General set forth the following conclusion in its summary:
Subsections 44.004(j) of the Education Code and 26.05(g) of the Tax Code do not authorize an independent school district to use the certified estimate of property tax values to adopt a tax rate after adopting its budget.
Courts of Appeals Decisions
On the appraisal district’s motion for rehearing, the First Court in Houston reconsidered the two issues the tax payer had raised in this ad valorem property tax case:
- whether “a newly enacted Tax Code provision [section 42.21(h)] permits Town & County [the property owner] to amend the pleadings appealing an appraisal determination to correct a misidentification of the property owner” and alternatively,
- whether the naming error in this case should be considered misnomer instead of misidentification.”
In answering “yes” to the tax payer’s first issue, the court wrote:
Based on the text of section 42.21(h), other relevant Tax Code amendments, and the implications of the various asserted interpretations when reading these provisions as a whole, we conclude that 42.21(h) is not limited to cases of misnomer and can be relied on by property owners in cases of misidentification.
In summarizing its position, the court wrote:
Thus, we conclude that the newly enacted subsection 42.21(h) grants a trial court subject matter jurisdiction over a suit appealing a Board decision as long as the suit meets the property identification and filing requirements contained in section 42.21(h), even if the petition misidentifies the property owner and must be corrected through amendment.
In so doing, the appellate court denied the appraisal district’s motion for rehearing, withdrew its July 1, 2014 opinion in the case, and issued a new opinion and accompanying judgment in their stead. The First Court again reversed the trial court’s granting of the appraisal district’s plea to the jurisdiction and remanded the case for further proceedings between Town & Country and the appraisal district.
On a motion for rehearing, the Court’s disposition and reasoning in this case remained the same as before: the taxpayer’s natural gas was subject to ad valorem tax because it “presented no compelling legal argument that the gas was immune from local taxation”. In so doing, the First Court of Appeals in Houston withdrew its previous October 2, 2014, opinion in the case, vacated its prior judgment, and issued a new, although nearly identical, opinion and judgment in their stead.
The Court’s summary of its conclusion in the new opinion is identical to its earlier opinion:
Although the parties have vigorously disputed whether the natural gas being stored at the Bammel reservoir [in Texas] was in interstate commerce for the purpose of evaluating the validity of an ad valorem tax imposed upon it, it is not necessary for us to resolve that dispute, or the related evidentiary issue concerning the admissibility of ETC Marketing’s expert report, in order to resolve this appeal. Even assuming that the gas is in interstate commerce, it was nevertheless appropriate for an ad valorem tax to be imposed when the owner stored the gas in Texas for the business purpose of selling the gas at a higher price at a later time of the owner’s choosing.
The Court analyzed again the property owner’s argument “to evade the application of ad valorem taxation” under “the dormant Commerce Clause, as measured by the four prongs of the Complete Auto [Transit, Inc. v. Brady, 430 U.S. 274, 97 S. Ct. 1076 (1977)] test.” As before, the Court wrote:
The burden is on the taxpayer to prove that a tax is invalid under the Dormant Commerce Clause, but to do so the taxpayer need only prove that the tax fails one prong of the Complete Auto test. Under the Complete Auto standard, a state tax on interstate commerce ordinarily “will not survive Commerce Clause scrutiny if the taxpayer demonstrates that the tax (1) applies to an activity lacking a substantial nexus to the taxing State; (2) is not fairly apportioned [internally and externally consistent]; (3) discriminates against interstate commerce; or (4) is not fairly related to the services provided by the State.”
The Court concluded, for a second time, that the taxpayer failed to prove that the ad valorem tax imposed on its natural gas in Texas ran afoul of any of the four prongs of the Complete Auto test.
The Texarkana Court of Appeals held that when the property owner failed “to file allocation information at the time of rendition” of its aircraft to the appraisal district, it “forfeited the right to interstate allocation.” In so doing, the appellate court reversed both the trial court’s allocation of $144,262.30 as the taxable value of the $1.1 million aircraft as well as the award of attorney’s fees to the property owner.
The Tyler Court of Appeals wrote that the “issues presented on appeal” in this ad valorem tax case, involving natural gas compressor packages and coolers used to facilitate the production and processing of natural gas, concern the following:
- the constitutionality of tax code Section 23.1241 [Dealer’s Heavy Equipment Inventory; Value] and Section 23.1242 [Payment of Taxes by Heavy Equipment Dealers];
- the taxable situs of the compressor and cooler equipment; and
- “whether the equipment at issue meets the statutory definition required to make Sections 23.1241 and 23.1242 applicable”.
In finding that the property owner “provided no evidence explaining how its equipment functions,” the Court concluded that “Valerus did not meet its burden to prove as a matter of law that its equipment meets Section 23.1241(a)(6)’s definition of heavy equipment.” As a result, the constitutionality of Sections 23.1241 and 23.1242 was not reached by the Court.
With respect to situs for the compressor packages and coolers, the Court held that Chapter 21 of the tax code, titled “Taxable Situs,” particularly Section 21.02(a)(1), controls the determination of situs for this equipment. In so doing, the Court concluded that “because all of the equipment at issue was in Gregg County on January 1, 2012, and has been in Gregg County for more than a temporary period, the evidence shows, as a matter of law, that the 2012 taxable situs for the equipment at issue is Gregg County.” The Court rejected Valerus’s argument that tax code Section 23.1241, together with Comptroller Form 50-265 [Dealer’s Heavy Equipment Inventory Declaration form], indicate that situs is in Harris County, the property owner’s principal place of business.