Texas Property Tax Appraisal Review Board Manual 2004

Conducting Hearings
The ARB conducts two types of hearings—challenges by taxing units and protests by taxpayers. The two have guidelines and requirements in common.

A quorum—that is, a simple majority of review board members—must be present to conduct business. ARBs with more than three members may conduct hearings on taxpayer protests in panels of not fewer than three members. However, the entire ARB must decide the final determination of a protest.

If the entire ARB rejects a panel’s decision, a second panel may rehear the protest. The second panel must be composed of ARB members who did not hear the first protest. If three new members are not available, the full ARB determines the protest.

The Tax Code requires the chief appraiser or an appointed staff member to attend all ARB hearings to represent the appraisal district.

Board meetings and hearings are open to the public. Although it does not have the power to hold a closed hearing on a protest or challenge, the ARB should not allow anyone to disrupt the proceedings.

ARB ex parte contacts and affidavit

An ARB member must be very careful to maintain a truly unbiased approach to each property under protest. An ARB member may not communicate with another person about any matters related to a property under protest, including evidence, argument, facts and the case’s merits. A member may not communicate about the property under protest, unless the property is discussed in another protest or used before the board as a comparison or sample property in another protest or proceeding. Comptroller rules permit an ARB member to discuss a property under protest when the law specifically allows the member to discuss the property. For example, an ARB member may hear a request for a subpoena related to the property under protest.

Tax Code Section 41.66(f) addresses this as “ex parte,” which is Latin for "on the part of one side only." ARB members should not talk or write to the chief appraiser, appraisal district staff, another ARB member or property owner about the facts and evidence of a protest before the protest hearing. At the start of each protest hearing, an ARB member must sign an affidavit that the member has not communicated about the protest without all parties being present.

The affidavit form adopted by the Comptroller’s office (Appendix X) states that the member has not communicated about the property under protest in the ways discussed above. If the member has communicated in violation of the law, the member cannot sign the form and must be recused—or removed—from the hearing. The removed member may not hear, discuss or vote on the protest. The Comptroller’s office suggests that a removed member leave the hearing room, so the property owner will have no reason to believe that the recused member heard the protest or influenced the outcome.

The law requires that the appraisal district’s board of directors adopt a policy for temporarily replacing an ARB member who must be removed from a protest hearing. The policy may take many forms as discussed on page 2.

Effective September 1, 2003, Tax Code Section 6.411 provides a penalty for an ARB member, chief appraiser or appraisal district employee who violates Tax Code Section 41.66(f) and is punishable as a Class C misdemeanor. Even if an ARB member doesn’t sign the affidavit, if he or she has communicated outside the hearing with another ARB member, chief appraiser or appraisal district staff, the ARB member could be guilty of a Class C misdemeanor.

This penalty, however, doesn’t apply if an ARB member talks to a property owner outside of a hearing. The ARB member, however, cannot sign the sworn affidavit and cannot participate in that property owner’s hearing. The penalty also does not apply to discussions with the ARB’s attorney and other communications with the chief appraiser. Other communications would include meeting arrangements, training and general information that does not apply to a specific protested property or protesting property owner.

Appearance at the protest hearing

Most property owners will present their protest. Some property owners, however, may appoint an attorney, lessee or agent to present the protest and perform other required actions. The owner must use the Comptroller’s Forms 50-162-1 or 50-241-1 (see Appendix C) to make this appointment. The second form—50-241-1—is for designating an agent for a single-family residence in which the property owner resides. The owner must sign the form, but it doesn’t have to be notarized. Neither the ARB nor the appraisal district may require the owner to designate the agent in any other way.

Agent appointments aren’t binding until the form is filed with the appraisal district. However, Comptroller rules recognize that values are changed on the basis of information from persons other than the owner or owner’s agent. The owner can’t be injured by favorable changes in value made on the representations of one other than the designated agent. But, the ARB should require the form before taking any action that increases the property owner’s tax liability on the basis of information from one claiming to be the owner’s agent. The ARB also should study the form to determine whether the agent is authorized to receive all ARB communications. Attorneys, most mortgage lenders and corporate employees authorized by the corporation to represent it are not required to file agent designation forms.

The ARB must accept and consider a motion or protest filed by an owner’s agent if the agent’s authorization form is filed at or before the hearing begins on the motion or protest.

What if an agent appointed by a property owner has not registered with the Texas Department of Licensing and Regulation (TDLR)? Chapter 1152, Occupations Code, is the registration act for property tax consultants or agents. The law requires a person who provides property tax consulting services for compensation to be registered with the state and become certified. If a consultant or agent who is not registered as required by law appears before the ARB, the ARB should not act to cut off the property owner’s right to a hearing on his or her protest. Based on the advice of the ARB’s attorney, the ARB should decide how best to report noncompliance with the registration act. For more information about the licensing act, call TDLR at (512) 463-6599 or 1-800-803-9202. TDLR’s address is P.O. Box 12157, Austin, TX 78711 and fax number is (512) 475-2871.

A property owner need not appear at the hearing if the evidence is presented by affidavit. A property owner must file a notarized affidavit before the ARB hears the protest. In addition, the chief appraiser has a right to study and copy the affidavit. The property owner may use the Comptroller-prescribed affidavit, Form 50-283, in Appendix AA, available to owners without charge from the appraisal district. The owner, however, is not required to use this form. The owner may submit a notarized letter that includes (1) the owner's name; (2) a property description; and (3) the owner's statement specifying the appraisal district or ARB determination for which the owner seeks relief.

The property owner also may obtain Form 50-283 from the Comptroller’s office by sending an e-mail to ptd.cpa@cpa.texas.state.us, by calling 1-800-252-9121 or by visiting the Comptroller’s Web site at www.window.state.tx.us/taxinfo/taxforms/02-forms.html#ARB.

The Texas Supreme Court has held that a property owner must appear, either in person, by an attorney or agent or by an affidavit, before the owner may appeal the ARB’s decision to district court. An ARB should consult with its attorney to determine what to do if the property owner did not appear or to include in its written orders a space indicating if the owner appeared at the protest. In a related case, a Texas court of appeals held that the owner must be present but need not present evidence at the hearing. This court said that the owner may appeal to district court after the ARB issues its order. Again, the ARB should consult its attorney for legal advice.

The notice of protest hearing (see Appendix D) informs an owner that failure to appear may bar a court appeal. On the advice of its attorney, an ARB may also add an indication on its Order Determining Protest (see Appendix I) that the owner did not appear.

As a matter of procedure, the ARB chair calls the cases in the order scheduled and makes certain each party takes an oath promising the accuracy of the party’s testimony. See the sample oath on this page. People may either swear or affirm. If a property owner refuses to take an oath, the ARB should note the refusal in its hearing records. The ARB may take the refusal into account as it weighs the evidence. Appraisal district staff must take an oath. After consulting with its attorney, the ARB should adopt a policy about the requirement for sworn testimony.

Hearing procedures

The ARB is not a court, and most property owners do not bring attorneys to ARB hearings. For this reason, the law requires that ARB hearings be as informal as possible. The ARB should make every effort to help the property owner present evidence.

The same general rule applies when the owner exercises the legal right to examine and cross-examine witnesses. The law provides that the property owner have an opportunity to rebut the appraisal district’s evidence.

The ARB may prohibit witnesses other than the appraisal district’s representative and the property owner from hearing one another’s testimony. This practice is referred to as placing the witnesses “under the Rule.”

The ARB should follow its written hearing procedures. Property owners received these procedures before their hearing, and they expect that the hearing will progress based on what those procedures state.

Evidence

After swearing in all witnesses, the ARB is ready to hear evidence about the protest or challenge. A property owner or taxing unit may present any evidence relevant to the issue being protested.

Tax Code Section 41.45(h) states that either before or after the hearing begins, the protesting party and the chief appraiser must provide each other with copies of any written materials that will be submitted to the ARB as evidence during the hearing.

As the ARB listens to the evidence, members should keep in mind the evidence presented by both sides, the standard for judging the evidence and the weight to give to different evidence.

The law prohibits the ARB from considering any evidence supplied by the appraisal district unless the evidence is presented at the protest hearing. Neither the appraisal district nor the property owner may give an ARB member information about the property except during the protest hearing. An ARB member who violates this rule and cannot sign the required affidavit must be removed from the hearing.

The ARB may not consider any evidence presented by the chief appraiser that was not made available to the property owner at least 14 days before the hearing. Section 41.67(d) states that information requested under Section 41.461 by the property owner that was not available at least 14 days before the hearing may not be used.

The protesting party does not have 14 days to study the records made available by the appraisal district. But, if the owner could not gain access to all or part of the appraisal district’s evidence 14 days before the hearing, the ARB must exclude the unavailable evidence. For example, the owner appears at the appraisal district two days before the hearing to inspect the evidence, and it is made available. The evidence is admissible at the regularly scheduled protest hearing, even though the owner may not have had time to study the records. On the other hand, the owner appears 14 days before the hearing to inspect the evidence and some of it is not made available. The appraisal district can’t use that evidence not available at the hearing. The property owner may waive the right to see the evidence during the 14 days before the hearing. The ARB may postpone the hearing.

For property appraised by private appraisal firms, under contract with appraisal districts, Tax Code Section 25.195 allows property owners and their agents to inspect and copy appraisal firm information used or considered in the owner's appraisal at the appraisal firms’ offices. The appraisal firm must make the information available for inspection and copying not later than the 15th day after delivery of a written request to inspect the information. The information request does not include information made confidential under Tax Code Section 22.27. If denied the information, the owner or agent may take the denial to the ARB for the ARB to conduct a special hearing. Failure by the appraisal firm to provide the requested information may result in an ARB decision not to approve the appraisal records relating to the property until the requested information is made available.

Presentation of evidence. Normally, the property owner presents evidence first. After the chief appraiser presents the district’s position, the property owner presents rebuttal evidence. The ARB must allow cross-examination of witnesses. Values from prior years or the decisions of previous review boards do not bind the current ARB — each year stands alone.

The appraisal district usually offers testimony and evidence including:

property’s legal description and location;

type of property and its use;

property’s appraised value and the way it was appraised;

description of any improvements to the land and their age, condition and appraised value;

how the improvements were appraised;

total value for each type of property considered;

any information on sales of comparable properties in the neighborhood or elsewhere in the area;

reasons for denying exemption or special appraisal; and

reasons for the decision by the chief appraiser concerning other matters under protest or challenge.

Relevant evidence. Evidence is simply information that helps the ARB to decide what the facts are. Evidence may include data, schedules, formulas and other information. The ARB should consider only relevant evidence. Relevant evidence is information that has particular meaning in the hearing in which it is introduced. If information introduced in an ARB hearing does not meet the definition of evidence, or if it’s irrelevant, the ARB should disregard it.

For example, a homeowner may introduce information such as recent sales of similar properties to demonstrate too high of a home value. This is relevant evidence. A complaint that taxes are too high because a certain taxing unit’s governing body spends money carelessly is irrelevant, and the ARB should disregard it. The ARB should also disregard any comments about who will pay the taxes after the case is settled.

Burden of proof. In a protest on appraised value, the law states that the appraisal district has the burden of establishing the property’s value by a preponderance of the evidence presented at the hearing. If the appraisal district fails to meet the burden of proof, the ARB must determine the protest in the property owner’s favor.

In a protest of unequal appraisal, the ARB must determine a protest in favor of the protesting party unless the appraisal district establishes:

the property’s appraisal ratio is equal to or less than the median level of appraisal of a reasonable and representative sample of other properties in the appraisal district;

the property’s appraisal ratio is equal to or less than the median level of appraisal of a sample of properties, consisting of a reasonable number of other properties similarly situated to or of the same general kind or character; or

the property’s appraised value is equal to or less than the median appraised value of a reasonable number of comparable properties appropriately adjusted.

This provision deals with a property owner who is claiming, “my value’s right but everyone around me is lower.” While a vast majority of protests to the ARB are about over-appraisal, the ARB has a duty to decide disputes about unequal values. See the section Types of Protests and Challenges for more about appraisals and unequal appraisals.

Rendered information. Effective in 2004, the ARB may deal with evidence and issues for rendered property, such as business personal property. The Tax Code Chapter 22 now includes mandatory rendition requirements. A rendition identifies, describes and gives the location of taxable property on January 1. Property owners must render annually to appraisal districts all tangible personal property used for the production of income in Texas. At their option, owners may render other types of property.

Rendition statements filed by property owners include owner’s name and address; general property description by type or category; if inventory, description and general estimate of quantity; and property’s physical location or taxable situs; and owner’s good faith estimate of the property’s market value or, at the owner’s option, historical cost when new and year of property’s acquisition. However, for property with an aggregate value of less than $20,000, the owner must render only owner’s name and address, general property description by type or category and property’s physical location or taxable situs. Rendition forms may not require—but may permit—a property owner to furnish other information not specifically required to be reported. For example, a property owner who is not required to give an estimate of value may, at the owner’s option, provide that opinion.

The ARB may hear and consider evidence presented from an owner’s rendition. The ARB may consider an owner’s value estimate on the rendition form at the protest hearing, but such information is inadmissible in court or for a Section 25.25 hearing (explained under late hearings).

Evidence presented to the ARB may include the chief appraiser’s request for a statement from the owner of property valued at $20,000 or more to explain how the owner arrived at the “good faith estimate” of market value for the subject property. The statement must summarize the information to:

sufficiently identify the property, including physical and economic characteristics and source of information;

specify the effective date of the value estimate; and

explain the basis of the rendered value. If the business owner has 50 employees or less, the owner may base the estimate on depreciation schedules used for income tax purposes.

The property owner or owner’s agent must deliver the statement in writing or electronically within 21 days of the chief appraiser’s request. The statement is inadmissible in an administrative or judicial proceeding, except to determine compliance with Chapter 22, any effort at tax evasion or the owner’s protest before an ARB. The statement is confidential, and the chief appraiser may only disclose it as provided in Section 22.27. Section 22.27 lists seven reasons that the chief appraiser may disclose the information, including during a judicial or administrative proceeding to which the property owner or the person who filed the statement or report is a party. Such an administrative proceeding would be an ARB hearing.

The ARB may hear issues about failure to file a rendition or to file it timely. The statutory deadline to file a rendition is April 15. A property owner may file a written request on or before April 15 to request an extension of that due date. The chief appraiser extends that owner’s deadline to May 15. The chief appraiser also may extend the May 15 deadline another 15 days if the property owner shows in writing good cause for the additional days.

If an owner fails to deliver a required rendition or requested information prior to an ARB hearing, the owner has the burden of proving the property’s value to the ARB rather than the appraisal district. If the property owner fails to provide sufficient evidence that convinces the ARB of the property’s value, the ARB must determine the protest in favor of the appraisal district.

When a “third party”—generally an appraisal firm under contract with an appraisal district—appraises the property and the property owner provides substantially equivalent information to this third party, then the owner does not have to file the rendition with the appraisal district. An owner of property regulated by the Public Utility Commission, Texas Railroad Commission, Surface Transportation Board or Federal Energy Regulatory Commission complies with rendition requirements by submitting a copy of the property’s annual regulatory report and sufficient allocation information. The chief appraiser must make a written request first for that report and information.

Property owners do not have to render exempt property, such as a church’s personal property or implements of husbandry used for farm, ranch and timber production. If the chief appraiser denies an exemption application, however, the owner must render the property within 30 days of the exemption denial.

A property owner may protest to the ARB the failure or refusal of the chief appraiser to waive any penalty dealing with a rendition. The owner first must send the chief appraiser a written request to waive any penalty and provide any appropriate supporting documentation within 30 days of being notified of the penalty. The chief appraiser must then determine whether or not to waive the penalty, considering the property owner’s compliance history; type, nature and taxability of the property involved; type of business involved; completeness of records; owner’s reliance on appraisal district advice; changes in district policies affecting renditions; and any other relevant factor. The chief appraiser may waive the penalty if the appraiser determines that the property owner exercised reasonable diligence to comply or has substantially complied with rendition requirements. If the chief appraiser refuses to waive the penalty, then the owner may protest that decision to the ARB.

The Tax Code rendition penalties include a penalty of 10 percent of the annual taxes on property rendered late or not rendered, with an additional penalty of 50 percent for fraud or the intent to evade taxation if a court finally determines fraud, tax evasion or altered or destroyed records.

Failure to comply with a chief appraiser’s request for additional information on the “good faith estimate” is the same 10 percent penalty as failure to render timely.

Witnesses

Anyone is competent to appear as a witness and give testimony, except the insane and children. Ideally, the witness should have firsthand knowledge of the facts. The ARB should consider only testimony pertinent to the facts. Expert witnesses are exceptions to this rule.

Expert witnesses. Appraisal often requires a high degree of specialized knowledge and training. Both sides may present the testimony of expert appraisers, both about value and about methods of appraisal. These are matters of opinion based on specialized knowledge rather than firsthand observation of the facts.

The ARB should ask about the experts’ qualifications and experience and be sure it understands the facts on which the experts base their opinions.

Above all, the ARB should ask expert witnesses whether they have any reservations about or qualifications to their opinions. As with any witness, the ARB is free to believe all, some or none of an expert’s testimony.

Hearsay. Firsthand observation and expert testimony will have the witness testifying, “I saw it,” “I measured it,” “I did it.” When the witness says, “I heard it from someone else,” the testimony is hearsay. Hearsay is secondhand testimony. Ordinarily, the ARB should not consider hearsay statements as evidence.

For example, in a protest over denial of a residence homestead exemption, the chief appraiser testifies, “The property owner’s neighbor told me the owner does not live in the house.” The statement is hearsay. Ideally, the neighbor should be at the hearing and under oath to substantiate the statement.

However, there may be cases where common sense tells you to rely on hearsay. The ARB should consider hearsay only if it is, in light of the facts, the sort of information that reasonably careful people would rely on when deciding serious matters.

Appraisals by chief appraiser and relatives

The Tax Code places a special restriction on appraisals made by the chief appraiser in a private capacity on behalf of a taxpayer or taxing unit. The ARB may not consider such an appraisal as evidence in a protest or challenge. Similarly, if a relative within the second degree (see Appendix Y) of the chief appraiser makes an appraisal, the ARB may not consider that appraisal as evidence.

Documents

Documents and papers are important items of evidence before the ARB In general, the ARB may consider any documents, provided a witness identifies them under oath or the owner of the original certifies them as copies of the original.

Tax Code Section 41.67(b) provides that a party must submit the original of a document unless the ARB determines that it’s not readily available. If a copy of a document is used, any party has the right to compare the copy with the original.

Documents submitted in evidence become a permanent part of the hearing record.

Official notice

As a general rule, the ARB must make its decision only on the evidence brought by the parties. However, the ARB may also consider certain kinds of basic facts that neither side presents as evidence. This is called “taking official notice” of the fact.

The ARB, like a judge, may take official notice of any fact that is reasonably certain, either because it is (1) generally known in the community or (2) capable of being easily confirmed by sources whose accuracy can’t reasonably be questioned. For example, an ARB may take official notice that a house borders a park that may affect its property value. If it takes official notice of a fact, the ARB must inform both parties and give them an opportunity to argue against this action.

Subpoenas and records

The Tax Code provides that the ARB and the parties involved in a hearing should gather all evidence relevant to the case.

The property owner or a challenging taxing unit has a right to know the basis of the appraisal district’s determinations. Similarly, the appraisal district has the right to know relevant facts in the taxpayer’s possession.

To ensure these rights, the Tax Code gives the ARB the power to:

subpoena witnesses, books, records or other documents. The ARB may do so only after holding a hearing to determine whether good cause for issuing the subpoena exists. A subpoena may only be issued if a property is under protest and may be issued only to a party to the protest. The ARB may not subpoena books, records or documents that belong to persons other than the property owner or the appraisal district involved in the protest;

inspect the records or other materials of the appraisal office that are not made confidential under the Tax Code as stated in Section 41.64; and

request the Comptroller to assist in determining the accuracy of appraisals or to provide other professional assistance. The appraisal district must reimburse the costs of providing assistance if the Comptroller requests reimbursement, as provided in Section 41.65.

To inspect confidential records or other materials that the appraisal office has, the ARB must subpoena the information from the appraisal district. Such records include renditions, income and expense data filed with the appraisal district and sales information granted confidentiality by the appraisal office.

An ARB may not issue a subpoena unless it holds a hearing to determine that good cause exists for issuing the subpoena. The ARB must establish a procedure for a good cause hearing for issuing a subpoena. The procedures must require the ARB to deliver written notice—not later than the 5th day before the date of the hearing—to the party to be subpoenaed. The party has the right to be heard at the hearing. Appendix G is a sample subpoena.

The ARB may consult with its attorney. Under Tax Code Section 6.43, the ARB may employ an attorney paid through the appraisal district budget, or it may use the services of the county attorney.

Postponement of hearings

Three different incidents require the ARB to postpone a protest hearing. First, the ARB must postpone a hearing for 5-15 days if either the property owner or owner’s agent shows good cause or the chief appraiser consents to the owner’s request. The chief appraiser and the property owner may agree to a shorter or longer postponement. No additional notice is required.

Second, the ARB must postpone an ARB hearing if either the property owner or owner’s agent is scheduled for an ARB hearing in another appraisal district on the same date. To qualify for the postponement, the owner or agent must show that the postmark on the other ARB’s hearing notice is earlier than the postmark on the hearing notice delivered by the ARB in which the postponement is requested.

Third, the ARB must postpone a hearing if the chief appraiser does not comply with the requirement to deliver at least 14 days before the hearing a copy of ARB hearing procedures, Remedies or evidence available. The owner must ask for additional time to prepare for the hearing and prove the chief appraiser’s failure to comply. The owner is entitled to only one postponement for failure to comply, although the ARB may grant more postponements. Again, evidence not available to an owner 14 days before the postponed hearing may not be used as evidence at the hearing.