Taxpayer's Rights, Remedies and Responsibilities

Taxpayer's Rights, Remedies and Responsibilities
The Basics

Appointing an Agent
Savings on Home Taxes
Savings on Agricultural Land Taxes
New Business/Going Out of Business
Valuing Property
How to Protest
Setting Tax Rates
Paying Your Taxes
For More Information

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The property tax is the largest source of funding for local services in Texas. Property taxes help to pay for public schools, city streets, county roads, police, fire protection and many other services.

Property taxes are based on monetary value. For example, the property tax due on a vacant lot valued at $10,000 would be ten times as much as the tax for one valued at $1,000.

Property taxes are local taxes. Your local officials establish a value for your property, set tax rates and collect your taxes. State law, however, governs the process.

The Texas Constitution sets out five basic rules for the property tax:

Taxation must be equal and uniform.
All property, whether residential or commercial, must be taxed equally and uniformly. No single property or type of properties should pay more than its fair share of taxes.

Generally, all tangible property must be taxed on its current market value. The Constitution provides certain exceptions, such as productivity values for agricultural and timber land.
A property’s market value is the price for which it would sell when both buyer and seller seek the best price and neither is under pressure to buy or sell. Land used for farming and ranching, by contrast, can be valued on its capacity to produce crops or livestock instead of its market value. Such appraisal is called agricultural appraisal. Similarly, special timberland appraisal is available to property owners whose land produces timber for commercial use.

All property is taxable unless a federal or state law exempts it from the tax. The Texas Legislature may provide certain exemptions.
Exemptions may exclude all or part of a property’s value from taxation.

Property owners have a right to reasonable notice of increases in appraised property value.

Each property in a county must have a single appraised value.

How does the system work?

The Texas property tax system has five main participants:

The property taxpayer, whether residential or business, is responsible for paying taxes and has a reasonable expectation that the taxing process will be fairly administered.

An appraisal district in each county, administered by a chief appraiser, sets the value of your property each year. The appraisal district’s board of directors hires the chief appraiser. Local taxing units appoint the directors and fund the appraisal district according to a formula that is based on taxes.

An appraisal review board (ARB) settles disagreements between you and the appraisal district about the taxability and value of your property. The appraisal district’s board of directors appoints citizens from the community to serve as ARB members.

Local taxing units, including the school districts, counties, cities and special districts, decide how much money they must spend to provide public services. Property tax rates are set according to taxing unit budgets. Some taxing units have access to other revenue sources, such as a local sales tax. School districts must rely on the local property tax, in addition to state and federal funds.

The Property Tax Division (PTD), a division of the State Comptroller’s office, conducts an annual Property Value Study (PVS) for each school district for state funding purposes. This study, an independent estimate mandated by the Texas Legislature, ensures that property values within a school district are at or near market value for equitable school funding. The state sends more money to those districts that are less able to raise money locally because of insufficient taxable property. The Comptroller’s values do not directly affect local values or property taxes, which are determined locally. However, when local values are more than 5 percent below state values, the school district could receive fewer state dollars because the funding formulas will use state values to calculate state funding. Through a Comptroller appeals process, a school district can contest the state values.

The annual tax levy has four phases: property valuation, a protest period, tax rate adoption and tax collection.

Each January 1 marks the beginning of property appraisal, which depends upon the use of the property as of January 1 and current market conditions.

Between January 1 and April 30, the appraisal district processes applications for tax exemptions, agricultural appraisals, other tax relief and property renditions. The appraisal district also makes value determinations for all taxable property within its boundaries. After May 15, the appraisal review board begins hearing protests from property owners contesting their proposed property values or their failure to receive exemptions or other matters for which protests are allowed. When the ARB finishes its work, the appraisal district gives each taxing unit a list of taxable property known as a certified appraisal roll.

In August or September, the elected officials of each taxing unit adopt tax rates. Several taxing units may tax your property. Every nonexempt property is taxed by the appropriate county and local school district. You also may pay taxes to a city and to special districts such as hospital, junior college or water districts. The tax roll is created when tax rates are applied to appraised values.

Tax collections begin around October 1, when tax bills generally are sent to property owners. Taxpayers have until January 31 of the following year to pay their taxes. On February 1, penalty and interest charges begin accumulating on most unpaid tax bills. Taxing units may impose an additional penalty on July 1 for legal costs on unpaid taxes.

What is the taxpayer’s role?

As a taxpayer, you should know your rights, understand the remedies available to you and fulfill your responsibilities under law.

Know your rights:

You have the right to equal and uniform tax appraisals. Your property should be appraised at market value in the same way as similar properties in the area.

Your property should be taxed on its agricultural or timber value if it qualifies for such treatment and you apply timely.

You should receive all tax exemptions or other tax relief for which you qualify, if you apply for such relief in a timely fashion.

You should receive notices of changes in your property’s value or in your exemption status.

You should be informed about a taxing unit’s proposed tax rate increase and comment on it before the taxing unit’s governing body.

Understand your remedies:

If you believe your property value is too high, or if you were denied an exemption or agricultural appraisal, you may protest to your ARB. If you do not agree with the ARB’s decision, you may take your case to binding arbitration in some instances or to district court.

You may speak before public hearings when your elected officials are deciding how to spend your taxes and setting the tax rate. You and your fellow taxpayers may limit major tax increases through elections to roll back or limit tax rates.

Fulfill your responsibilities:

You must apply timely for general, over-65, disabled or any local-option homestead exemptions with the appraisal district where your property is located. If your property is located in a taxing unit that overlaps into two or more counties, you must apply to each county appraisal district.

You must apply for other exemptions, agricultural appraisal and other forms of tax relief before the deadlines set by law.

You must report, or render, taxable business personal property to your appraisal district. In doing so, you may give your opinion of the property’s value.

You should ensure that your property is listed correctly on local tax records, with your correct name, current address and property description.

You must pay your taxes on time. You may not withhold or make conditional payment or attempt to pay taxes into a special account to protest your assigned value, tax rates or the budget of a taxing unit.