IV. Resolving Disputes and Approving Appraisal Records
Appraisal review boards do most of their work in early summer. They should begin their work by May 15 and complete it by July 20. The board of directors of an appraisal district in a county with a population of at least 1 million may, by resolution, extend the deadline to Aug. 30. During these months, ARB members resolve taxpayer protests and taxing unit challenges.
The ARB does not review the appraisal records for uniformity in a general review. The ARB's review process involves these steps generally:
- chief appraiser submits the appraisal records to the ARB;
- ARB hears and determines taxing unit challenges;
- ARB hears and determines taxpayer protests;
- ARB issues "change orders" directing the chief appraiser to make changes in the appraisal records and sends these to the chief appraiser and to each protesting taxpayer or challenging taxing unit;
- ARB approves the appraisal records; and
- chief appraiser certifies an appraisal roll to each taxing unit.
Chief appraiser submits records to the ARB.
The chief appraiser begins the review process by formally transferring the appraisal records to the ARB. May 15 is the deadline for doing so. The chief appraiser may submit all records at once, or may submit them in groups.
Required notices. Before submitting a group of records to the ARB, the chief appraiser must deliver all legally required notices. A list of these notices appears in Appendix V. If the chief appraiser has not delivered a required notice to a taxpayer, that taxpayer may be able to bring a late protest before the ARB.
Certification. Tax Code Section 25.22 requires the chief appraiser to submit a sworn statement with the appraisal records:
|I, _______________________________, chief appraiser for ________________________ Appraisal District, solemnly swear that I have made or caused to be made a diligent inquiry to ascertain all property in the district subject to appraisal by me and that I have included in the records all property that I am aware of at an appraised value determined as required by law.|
ARB hears taxing unit challenges.
The ARB hears any taxing unit's formal objections to the records. The Tax Code calls a taxing unit hearing a challenge; the taxpayer's hearing is called a protest.
Taxing unit challenges are limited. Taxing units cannot dispute the appraised value placed on a particular property for review. However, taxing units may challenge:
- the level of appraisal of any category of property or geographical area in the district (but not the appraised value of a single parcel of property);
- exclusion of property from the appraisal records for the unit or the district;
- a grant in whole or in part of a partial exemption;
- a determination that land qualifies for special appraisals; and
- failure to identify a taxing unit in which a property is taxable.
Appraisal level challenges can have a significant impact on the appraisal roll. If improper appraisal methods have affected a group of similar properties or a particular area, the taxing unit may challenge the district's overall appraisal level of that group or area.
For example, a taxing unit may believe that the chief appraiser has appraised single-family residences in the district below market value. In a challenge hearing, the unit attempts to prove it by presenting relevant evidence. If a taxing unit's evidence shows a group of properties is undervalued, the ARB should direct the chief appraiser to reappraise each property within the category or within the specified territory. The ARB can also direct the chief appraiser to make corrections to the appraisal records that are necessary to conform the records to the requirements of law.
Taxing units must file challenges before June 1, or within 15 days after the chief appraiser submits the appraisal records, whichever is later. Appendix A is an example of a challenge petition. Challenges should be scheduled by the ARB for hearings as soon as possible.
The Tax Code does not address the issue of late-filed challenges. An ARB confronted with this issue should consult with its attorney. This is especially so if the taxing unit asks for the challenge before the ARB approves the records, shows a good reason for missing the deadline and agrees to explain its reasons in its challenge grounds.
The ARB must notify the taxing unit in writing of the date, time and place of its challenge hearing. The ARB sends the notice by first-class mail at least 10 days before the hearing date. The ARB's secretary also shall deliver notice of the date, time and place for the challenge hearing to each taxing unit in which the property involved in the challenge is or may be taxable. Each taxing unit may appear to offer evidence or argument, as provided by Tax Code Section 41.05.
When the challenge includes property involving a taxable leasehold or other type of interest in property owned by the state or a taxing unit, the state or unit also receives notice of the ARB hearing. The state or taxing unit may appear at the ARB hearing to offer evidence and arguments.
If an ARB correction increases a property owner's tax liability, the affected owner must be sent a correction order and given 30 days from the date of mailing to file a protest and request a hearing.
ARB hears property owner protests.
Resolving disputes between the appraisal district and property owners is the ARB's most important function. If this process breaks down, the district or its taxing units may face costly court action later. The usual last day for filing a protest is May 31. The 80th Texas Legislature amended the May 31 deadline for certain property owners. However, the net result of the legislative changes was to keep the May 31 normal deadline for all property owners. Exceptions to the normal deadline are discussed later in this section.
Who may file. Normally, either the person who owned the property Jan. 1 or the person's agent files a protest. A taxpayer who acquires property between Jan. 1 and the protest deadline may file a protest in the place of the Jan. 1 owner. A taxpayer who acquires property while a protest is pending may apply to the ARB to continue the protest in the place of the original owner. A person who claims an interest in the property may file a protest even if the person is not shown as the owner on the appraisal district records. Both old and new property owners can file. The ARB should hold a joint hearing for both owners.
Section 41.413 allows a lessee – a person who is contractually obligated to reimburse the lessor (property owner) for property taxes – to protest to the ARB the appraised value of the leased property. The lessee may protest only if the lessor does not protest. The lessee's right to protest exists for leased personal or real property. The lessee assumes all rights to receive notices from the ARB relating to the protest because the lessee is considered the property owner for the protest.
Filing deadlines. The usual deadline for filing a protest is midnight, May 31. The filing deadline, however, is postponed until the next business day if the last day falls on a Saturday, Sunday or holiday. Timeliness of filing by mail is addressed in Tax Code Section 1.08, and the effect of weekends or holidays is addressed in Tax Code Section 1.06.
The usual deadline may be postponed in a number of cases. First, if the district mails a late notice of appraised value (after May 2), the deadline is 30 days from the mailing date. Second, a property owner who misses the original deadline for good cause may still file a protest. The deadline in this case is the day before the ARB approves the appraisal records. In such a case, the property owner receives a two-step hearing. First, the ARB decides whether the property owner had good cause for missing the deadline. Then – and only if the ARB determines the owner had good cause – the ARB hears the protest. A good cause is usually something not within the taxpayer's control. An example of good cause is a medical emergency. Board policies should address the issue of what constitutes good cause. A special deadline applies to protests that result from changes the ARB makes to the appraisal records. The property owner must file a protest within 30 days of the date notice of the ARB change is delivered to the owner.
The deadline for filing a protest may be even later if the property owner claims the appraisal district or ARB didn't mail a required notice.
A lessor is required to send to the lessee a copy of the property's notice of appraised value. Failure to do so, however, does not affect the protest deadline for the property in question.
The law also allows property owners working offshore or on full-time active military duty out of the country on the date of the deadline to file a late protest. The owner or their agent must file the protest before taxes on the property become delinquent. A person working offshore would have to be continuously employed in the Gulf of Mexico for a period of at least 20 days during which the protest deadline passed. The owner may provide evidence of their offshore employment by furnishing the ARB a letter from their employer or supervisor or, if the owner is self-employed, a sworn affidavit. For active duty military personnel, the property owner must provide a valid military identification card and a deployment order.
Notice of protest. A property owner must file a written notice of protest. The notice may take any form, but must be in writing and show at least the following three elements: the property owner's identification, the property's identification and an indication of the owner's dissatisfaction with some determination by the appraisal district.
The Comptroller's office has adopted a model notice of protest form that ARBs and appraisal districts must make easily accessible to the public and deliver to an owner who requests the form. The Comptroller's model form (see Appendix B) permits the property owner to request a copy of the ARB's hearing procedures and to allow space for the lessee's name and address.
Notice of hearing. The ARB must provide a protesting taxpayer with written notice of the time, date and place of the protest hearing and of the taxpayer's entitlement to a postponement of the hearing. The ARB must deliver the notice by first-class mail at least 15 days before the scheduled hearing date. A property owner, however, may waive in writing his or her right to the hearing notice. Additionally, the chief appraiser is entitled to advance notice of the hearing, but the law does not specify how far in advance.
When the protest hearing is for property involving a taxable leasehold or other type of interest in property owned by the state or a taxing unit, the state or unit also receives notice of the ARB hearing. The state or taxing unit may appear at the ARB hearing to offer evidence and arguments.
Delivery of protest information. The chief appraiser must deliver certain materials and information to a property owner at least 14 days before a protest hearing. The chief appraiser must:
- deliver a copy of the Comptroller's publication Taxpayers' Rights, Remedies and Responsibilities (Remedies) to the property owner or to the owner's agent (on agent request);
- deliver a copy of the ARB's hearing procedures; and
- notify the property owner that the owner has a right to inspect and copy the data, schedules, formulas and any other material the chief appraiser plans to introduce at the hearing.
Compliance with this provision requires the chief appraiser to know what evidence the district intends to introduce at the protest hearing. The Comptroller's office recommends that the chief appraiser have these materials readily available to a protesting property owner 14 days before the scheduled hearing.
Amendments to the Public Information Act excluding real property sales data given to appraisal districts from public disclosure do not affect the availability of evidence provided to a protesting property owner. A property owner has a right to obtain copies of sales and other data the chief appraiser used to establish the owner's appraised or market value. The owner or agent may also ask for and receive a copy of each item of information that the chief appraiser took into consideration but does not plan to introduce at the protest hearing. In addition, the protesting party may ask for and receive from the chief appraiser comparable sales data from a reasonable number of sales that is relevant to any matter to be determined by the ARB at the owner's protest. Once the property owner or agent has this information it remains confidential and cannot be disclosed or used except at the protest hearing.
Charges for the copies are limited. The chief appraiser may not charge more than $15 for copies of material related to a residential property protest. The charge for materials related to one non-residential property is limited to $25. If the charge is less than these limits, the appraisal district must only charge the amount permitted by the Public Information Act.
Members should know about a second law that requires the delivery of the ARB's protest procedures to a protesting property owner on request. The law doesn't specify the entity responsible for complying, but other provisions make it beneficial to the ARB to send or oversee sending this information. The Tax Code requires delivery of requested ARB hearing procedures at least 10 days before the scheduled hearing. This law requires that the notice of protest have a space for the property owner to "accept or decline" delivery of the procedures. The Comptroller's sample notice of protest hearing form appears in Appendix D.
The ARB and chief appraiser may consider delivering Remedies, hearing procedures and information about the availability of data at the same time the ARB delivers the notice of hearing. The ARB must deliver the notice at least 15 days before the hearing, so if the notice of hearing is delivered on time, the materials and information will be delivered ahead of schedule. One mailing thus ensures compliance with both laws.
Records with contract appraisal firm. 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.
Waiver of protest. Many appraisal districts encourage a property owner to meet with a district staff member to try to resolve the dispute before the formal hearing. Often, the property owner and appraisal district representative will reach a mutually agreeable solution to the owner's protest at these informal meetings. Both parties may sign a settlement and waiver of protest form (see Appendix F) and give it to the ARB. The property owner agrees on a settlement with the appraisal district and drops the protest on the matter. If the owner's agent signs the form, the agreement between the agent and the appraisal district is final. The ARB may not review or reject agreements between an owner/agent and the appraisal district.
Grounds for protest. The Tax Code permits a property owner to protest any determination by the appraisal district, the chief appraiser or the ARB that applies to and adversely affects the owner. Section 41.41 specifically lists several grounds for protest. Owners may base their protests on any of these grounds:
- appraisal that exceeds the appraised or market value of the property;
- unequal appraisal;
- inclusion of the property on the appraisal records;
- denial in whole or in part of a partial exemption;
- determination that the property does not qualify for special appraisal;
- identification of the taxing units in which the property is taxable;
- determination of the property's ownership;
- determination that the use of agricultural or timberland has changed; or
- any other action of the appraisal district, chief appraiser or ARB that applies to and adversely affects the property owner.
Property owner representation. A property owner may have an agent present his or her protest. The property owner must designate the agent in writing. A property manager or other person who has legal authority to act for the property owner in naming tax agents may also designate an agent. Comptroller Rule 9.3044 requires the property owner to use Comptroller Forms 50-162-1 or 50-241-1 for designating an agent (see Appendix C). Form 50-162-1 addresses designating an agent for property other than a single-family residence in which the owner resides. The second form – Form 50-241-1 – is for designating an agent for a single-family residence and states in boldface type that a taxpayer may wish to contact the appraisal office or taxing units for free information or forms. Use of the form is required unless the property owner filed a valid designation before Jan. 1, 1990. The ARB may not require a property owner to designate an agent in any other manner. An owner does not have to file a form for an attorney, mortgage lender, owner's employee or for a person who simply acts as a courier.
Granting a hearing. The ARB determines whether or not it will hear a protest. The ARB decides if the protest notice is timely filed and the notice has the necessary elements that make up a protest. Carefully determining whether the property owner is entitled to a hearing protects the owner's right to protest. In addition, the ARB may find itself defending a lawsuit if it denies a hearing to which a property owner was entitled under Tax Code Chapter 41.
A property owner who is denied a hearing has the right to bring suit directly to district court. The aggrieved owner may sue directly by filing a petition or an application to force the ARB to provide the hearing. If the court finds that the owner was wrongfully denied a hearing, it will order the ARB to hold the hearing. In addition, the court may award the property owner court costs and attorney's fees.
A property owner with pooled or unitized mineral interests may file protests with the ARBs of more than one appraisal district. The ARB for the county where the production site is located must hear and decide on the protest before another ARB in the other district(s) may hold a hearing on a protest filed with that ARB(s). If there are two or more production sites for the pooled or unitized mineral interests, the ARB in the county where at least two-thirds of the area of the mineral interest is located hears and decides the protest before the other ARB(s).
ARB orders changes resulting from hearings.
The ARB may rule on a protest at the conclusion of the protest hearing or may postpone the decision to a later date. If the ARB divides into panels to hear separate cases, a hearings panel cannot make a final decision. A panel's decision is not final until a majority of the entire ARB approves the panel's recommendation.
The ARB's procedures should address how the ARB will handle panel recommendations. The procedures should include if and how the review board will handle requests by property owners or the chief appraiser to offer new or additional evidence, to rehear a taxpayer's protest before the full ARB or to limit issues to those presented to the panel.
If the ARB postpones a decision, it must tell the parties when it will make the final decision. Any postponed decisions must be in open sessions.
The ARB's final orders come in two forms: an order determining a protest and an order determining a challenge. These are written orders issued to the chief appraiser, signed by the ARB chair and specifying the ARB's disposition of the protest or challenge. The ARB also issues other types of orders and notices in certain cases. Appendices H-N include samples of these orders and notices.
A property owner may receive another panel hearing if the full ARB rejects the first panel's decision. The second panel must be composed of ARB members who did not hear the first protest hearing. If three members are not available to make up a new panel, the full ARB may determine the protest. The ARB must notify the taxpayer of the new hearing in the same manner provided for a regular ARB hearing.
ARB approves appraisal records.
The ARB should approve appraisal records by July 20. The board of directors of an appraisal district in a county with a population of at least 1 million may, by resolution, extend the deadline to Aug. 30.
Taxing units may sue the ARB or chief appraiser in district court for failure to meet the Property Tax Code deadlines. If the court finds the deadline was missed for a good reason, it must set a new deadline. If the court finds there was not a good reason, the deadline becomes 10 days from the date the court signs the judgment. The court may enforce its deadlines by holding parties in contempt. The court may make any other order that it finds necessary for compliance.
Even so, it may be impossible or impractical to approve the appraisal records by the July 20 deadline. Section 41.12 requires the ARB to complete substantially all protest hearings before approving the appraisal records. Specifically, if the sum of appraised values of property on which taxpayers have filed protests but have not received determinations exceeds 5 percent of the total appraised value of other properties in the district, the ARB cannot approve the appraisal records.
To help achieve 95 percent completion of the appraisal records, the ARB may wish to hear protests first on properties with larger appraised values. It may then hear protests on properties with lower appraised values, such as residential properties.
The value involved in pending protests at the time of appraisal record approval may not be greater than 5 percent of the appraised value of properties that are not under protest in the district.
The board of directors of an appraisal district in a county with a population of at least 1 million may change the threshold percentage from 95 percent to 90 percent. In other words, the value involved in pending protests at the time of appraisal record approval may not be greater than 10 percent of the appraised value of properties that are not under protest in the district.
If the ARB believes it will not complete its review by July 20, or Aug. 30 in the largest districts, it should notify the chief appraiser and the taxing units. The ARB should estimate the earliest probable date for completion and explain the reasons for the delay. However, the ARB should make every effort to meet the July 20 or Aug. 30 deadlines.
Chief appraiser certifies appraisal roll to each taxing unit.
The appraisal records, as the ARB changes and approves them, constitute the appraisal roll for the appraisal district. July 25 is the deadline for the chief appraiser to prepare and certify each taxing unit's appraisal roll to its tax assessor. An example of the certification appears below.
When protests are still pending after certification, the chief appraiser gives each taxing unit a list of pending protests with the unit's certified appraisal roll. The list shows each property and gives two values for each – the value proposed by the appraisal district and the value claimed by the property owner. The chief appraiser must estimate a probable value for the property if the owner doesn't indicate a value in the protest. The taxing unit uses the lower of the two values in calculating its effective and rollback tax rates.
A taxing unit cannot levy a tax on a property under protest until the ARB approves a final value for that property. The Tax Code contains procedures for adding approved supplemental records to appraisal and tax rolls.