Appendix B. Comptroller Rule Section 9.105.
Sec. 9.105. Tax Refund for Economic Development
Adopted effective January 9, 1998; amended March 16, 1999.
- Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.
- Appraised value - The chief appraiser's opinion as to the market value on a specific appraisal date.
- Compliance - Conforming to all the terms of an abatement agreement.
- Management review - Review by comptroller management staff of the denial of a refund based on the facts present.
- Taxes paid - The franchise tax and state sales and use tax paid directly to the state, and state sales and use tax that is paid to a seller or collected from customers and remitted to the state, minus any applicable tax credits.
- Entered into - same as executed. An agreement is entered into when it has been approved by the appropriate governing body and signed and dated by all parties.
- Initial base comparison year - the calendar year in which the tax abatement is entered into or executed.
- Tax refund for economic development.
- Eligible property and taxes. An eligible person is entitled to a refund of taxes paid and postmarked in a calendar year, not to exceed the amount for which the person paid ad valorem taxes to a school district in that calendar year on property that:
- is located in a reinvestment zone established under the Tax Code, Chapter 312;
- is exempt in whole or in part from the ad valorem taxes imposed by a municipality or a county under a tax abatement agreement entered into after January 1, 1996, with the municipality or county under the Tax Code, Chapter 312; and
- is not subject to a tax abatement agreement entered into by the school district.
- Limitations on refunds.
- The amount of the refund that can be paid by the comptroller in a calendar year is limited to the amount of taxes paid and postmarked, as the term is defined in subsection (a)(4) of this section, by the person after any applicable tax credit. A person who receives a tax abatement refund under this section, and who later receives a refund, credit, or other adjustment of the amount of "taxes paid and postmarked" on which the tax abatement refund was based, may be required to return a portion of that tax abatement refund.
- The refund period is limited to the lesser of:
- five years; or
- the duration of the tax abatement agreement entered into with a municipality or county.
- Eligibility for the refund.
- To be eligible for the refund, a person must have paid in full, by single or multiple payments, ad valorem taxes to the school district and:
- established a new business in the reinvestment zone;
- expanded an existing business in the reinvestment zone; or
- modernized an existing business located in the reinvestment zone to retain jobs for employees of the business.
- The business must have had:
- since the date of the tax abatement agreement with a municipality or county, an increase of $3 million in the business' payroll, specific to property located in this state according to records filed by the business with the Texas Workforce Commission; or
- an increase of at least $4 million in appraised value of the business' property subject to the tax abatement agreement from an initial base comparison year beginning on or after January 1, 1996.
- The following is an example of how the refund available under this subsection will be administered.
Figure: 34 TAC 9.105(b)(3)(C)
Corporation A plans to build a $50 million plant in a qualified reinvestment zone in Enterprise County on land Corporation A has owned for three years. The plant will be completed in 1998. Corporation A and Enterprise County enter into a three year 50% tax abatement agreement on June 30, 1996. The years abated will be ad valorem years 1997, 1998, and 1999. Corporation A and Enterprise School District do not enter into an abatement agreement. Appraisal values are issued by Enterprise County in May of the year prior to the ad valorem year. Corporation A typically pays its property taxes in December. Application for refund must be filed before August 1, 1998.
1996 1997 1998 1999 1. Total appraised value of property subject to the abatement agreement $1 million $26 million $51 million $55 million 2. Base year appraised value of property subject to the abatement agreement NA $1 million $1 million $1 million 3. Value after base year deduction NA $25 million $50 million $54 million 4. Abatement agreement value that would not have been subject to school district property tax had you been in an abatement agreement [Multiply #3 by % abatement (50%)] $12.5 million $25 million $27 million 5. School tax rate $1.00/$100 $1.02/$100 $1.04/$100 $1.06/$100 6. Potential refund amount based on 50% abatement agreement* N/A $130,000 $260,000 $286,200 7. Amount of property tax paid to the school district $10,000 $265,200 $530,400 $583,000 8. State taxes paid in a calendar year N/A $300,000 $500,000 $600,000
* Corporation A's refund is limited to 50% of the school taxes paid minus the amount of school taxes paid on base year value in calendar year.
The initial base comparison year is 1996 (the base comparison year must begin on or after January 1, 1996). Since the valuation on January 1, 1997, is greater than the valuation at the 1996 base year by more than $4 million, and Corporation A meets all other statutory requirements, Corporation A qualifies for a refund of state taxes paid.
Refunds for property tax years 1997-1999 would also be available if Corporation A had qualified based on a payroll increase of $3 million between the date the agreement was entered into and the date the refund application was filed.
- Application for refund.
- An application for the refund must:
- be made on a form prescribed by the comptroller and properly completed;
- include an attached copy of the tax receipt from the assessor and collector of taxes for the school district showing full payment of school district ad valorem taxes on the property for the tax year for which the refund is sought;
- include an attached copy of the tax abatement agreement entered into with the municipality or county;
- include an attached signed statement from the county appraisal district's chief appraiser verifying that an exemption from property tax was granted and showing the current appraised value, the initial base comparison year and the beginning or initial base comparison year's appraised value of the property subject to the abatement agreement;
- include an attached statement from each applicable city or county official verifying that the abatement agreement has been filed with the state entity responsible for maintaining a registry of tax abatements;
- include attached copies of Texas Workforce Commission returns for the calendar year the agreement was entered into and the calendar year subject to the claim, showing an increase in payroll since entering the abatement agreement, if the person is applying for the refund based on an increase in payroll; and
- include any other information requested by the comptroller to support the refund request.
- If a comptroller employee has requested in writing additional information, the person requesting the refund must submit the requested materials:
- within 30 calendar days after the request is issued by fax, if the application was filed on or before April 30 of the year following the tax year, or
- within 10 calendar days after the request is issued by fax, if the application was filed on or after May 1 of the year following the tax year.
- If additional information is not submitted as required by paragraph (B) of this subsection, the refund may be denied in full due to missing information.
- A refund payable under this subsection does not earn interest.
- A person applying for a refund must certify to the comptroller that the person is in compliance with each term of the tax abatement agreement entered into with the municipality or county.
- A complete application for refund must be filed before August 1 of the year following the ad valorem tax year for which the applicant has paid ad valorem taxes described by the Tax Code, sec. 111.301(a).
- If the total amount of eligible refunds claimed by all persons is less than $10 million, the amount of a tax refund is equal to the ad valorem taxes paid to a school district by the person for the applicable tax year on the property that the person would not have been required to pay if the school district had entered into a tax abatement agreement covering the property that included the same terms, including terms governing the portion of the property that is to be exempt from taxation under the agreement, as the applicable municipal or county tax abatement agreement.
- If the total amount of eligible refunds claimed by all persons is greater than $10 million, the comptroller shall proportionally reduce the amount of each refund of persons whose claims are determined to be eligible as necessary to reduce the total refund amount to the $10 million available based on the applicant's eligible refund as a percentage of all eligible refunds. The amount by which a refund is reduced under this subsection may not be included in a claim for a refund in a subsequent year.
- The decision of the comptroller regarding a claim for refund becomes final 10 working days after the date the comptroller issues by fax notice of denial unless the claimant delivers a written request stating specific grounds for reconsideration of that comptroller decision, which request must be accompanied by appropriate supporting documentation. Management of the Property Tax Division will conduct a management review and fax a response to the taxpayer within 10 calendar days after the taxpayer's request for reconsideration was received by the comptroller. The decision of the Property Tax Division's management review becomes final 10 calendar days after the date the comptroller issues by fax notice of such review unless the claimant delivers a second written request for reconsideration to the manager of Property Tax Division stating grounds and providing documentation for a Comptroller of Public Accounts review within that time. A comptroller review will be conducted with the benefit of the Property Tax Division's recommendation and a response will be faxed within 20 calendar days after the request is filed. This process is not governed by the Administrative Procedures Act; it is provided solely to ensure an appropriate administrative review of a refund claimed under this section.
- Application for refund. An application for refund must be substantially in the form of an Application for Refund of State Taxes Paid by Person Owning Certain Abated Property (Form AP-186). The comptroller adopts this amended form by reference. Copies of the form are available for inspection at the office of the Texas Register or may be obtained from the Comptroller of Public Accounts, P.O. Box 13528, and Austin, Texas 78711. Copies may also be requested by calling our toll-free number, 1-800-252-9121. In Austin, call (512) 365-9999. From a Telecommunications Device for the Deaf (TDD), call 1-800-248-4099, toll free. In Austin, the local TDD number is (512) 463-4621.