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Taxing Units May Grant Alternative Option to Certain Taxpayers
In 1999, the Texas Legislature provided taxing units with an alternative payment option for certain property owners to pay their taxes. The option allows property owners to "work off" their property taxes.Section 31.035
Effective August 30, 1999, House Bill 51 added three new sections to the Tax Code. The first one -- Section 31.035 -- allows any type of taxing unit to permit homeowners 65 years of age or older to work for the taxing unit in lieu of paying their property taxes. The other two -- Sections 31.036 and 31.037 -- permit a school district to allow a homeowner or business to provide teaching services to "work off" their property taxes.
These payment options are at the discretion of the taxing unit's governing body and specific contract provisions apply.
Section 31.035 permits a taxing unit to allow a homeowner 65 years of age or older to perform services for a taxing unit in lieu of paying homestead property taxes owed by the homeowner. The taxing unit's governing body shall determine the number of homeowners permitted to perform services and the maximum number of hours of service that a homeowner may perform.Section 31.036
The homeowner and the taxing unit must execute a contract to perform services in lieu of the property tax payment before the homestead's taxes become delinquent. Taxes normally become delinquent on February 1 of the year following the tax year. The contract shall specify the nature of the service, the facility or location, the number of hours and the time of service. Credit for each hour of service will be at the federal minimum wage rate.
As long as the contract is in effect, the homestead taxes do not become delinquent. The homeowner must perform the service no later than one year after the delinquency date for that tax year. The taxing unit may terminate the contract if the homeowner fails to perform the service or the unit determines that the service is unsatisfactory. Any unpaid taxes when the contract ends become delinquent and incur penalty and interest.
The homeowner may not be an employee of the taxing unit and is not entitled to any employee benefits, including worker's compensation coverage. Homeowners performing these services may only supplement or complement the regular personnel; the taxing unit may not reduce its number of employees for these services. The taxing unit is not liable for any damages arising from an act or omission of the homeowner in performing services. The homeowner also is not entitled to indemnification from the taxing unit for injury or property damage that the owner may sustain while performing services for the unit.
Section 31.036 provides that a school district's board of trustees by resolution may permit qualified homeowners to perform teaching services for the school district at a junior or senior high school in lieu of paying their homestead taxes. The school board determines the number of qualified homeowners who will be permitted to perform teaching services, the courses that they may teach and the amount of tax credit that may be earned.Section 31.037
Each homeowner must execute a contract with the school district before the delinquency date and must specify in the contract the course or courses, the school, the semester and the amount of tax credit. The maximum credit for an entire school semester is $500, except where a student receives a full year's credit for one semester, the maximum credit is $1,000 for each such course taught. A qualified homeowner may not receive credits for teaching more than two courses in any school year.
The qualified homeowner may not be an employee of the district. The homeowner is not entitled to any employee benefits, including worker's compensation coverage. To qualify, the homeowner must hold a baccalaureate or more advanced degree in a field related to the course taught and must be certified as a classroom teacher or obtain a school district teaching permit. The district may terminate the contract if the homeowner fails to perform teaching services or provides unsatisfactory teaching services.
Section 31.037 provides that a school district may authorize a corporation or other business entity to permit its qualified employees to perform teaching services in a junior high or senior high school in lieu of paying school taxes imposed against the business. The school board determines the number of businesses that will be eligible for such a tax credit, the courses that may be taught and the amount of tax credit.Implementation
The company's employee(s) shall execute a contract with the school district before the delinquency date to specify the course to teach, the school, the semester and the amount of tax credit. The maximum credit for an entire school semester is $500, except where a student receives a full year's credit for one semester, the maximum credit is $1,000 for each such course taught.
The qualified company employee may not also be an employee of the school district or have a contract under Section 31.036. The employee is not entitled to any employee benefits, including workers' compensation coverage, from the school district. The company's employee must hold a baccalaureate or more advanced degree in a field related to the course taught and must be certified as a classroom teacher or obtain a school district teaching permit. The district may terminate the contract for failure to perform the teaching services or for unsatisfactory services.
Taxing units that consider offering Section 31.035 to its senior citizens and school districts that might offer the other two sections should consult with their legal counsel about contract provisions. Each of these three provisions requires the taxing unit to have a specific contract with the person working for the taxing unit.
Once a contract is in place, the taxing unit needs to establish a mechanism for monitoring contract performance and completion. The tax collector for the unit needs notification of when to post the property owner's account as paid, partially paid or delinquent.