New Audit Rule Under Consideration
Revisions Will Grant More Time, Streamline Process
Late-filed exemptions, court decisions, and reporting errors may change a school district’s reported appraisal roll values used in the Comptroller’s annual property value study (PVS). These changes may occur after the Comptroller has certified final school values to the Texas Education Agency (TEA).
Under Government Code Section 403.302, school districts may request that the Comptroller audit the school district’s records and reflect changes in a revised certification. If the revision reduces the Comptroller’s taxable value finding, the TEA normally increases school funding to the school district. Comptroller Rule 9.5071 governs these audits, providing the audit submission deadline, setting information requirements, and limiting the kind of information to audit. The Comptroller’s Property Tax Division (PTD) is proposing to replace Rule 9.5071 with a new audit rule.
Deadline change
The most noticeable change in the proposed rule is extending the audit deadline from October 1 of the year following the study year to July 1 of the third year following the study year.
To make the process more convenient, the school district could choose to wait until the end of the three-year period and consolidate all changes in one request. Or, the school district may submit up to three separate audit requests related to a study year. For example, for the 2002 PVS in a given school district, a maximum of three separate audit requests would be due before July 1, 2005.
The proposed rule would permit deadline extensions only for substantive tax roll changes outside of the school district’s control that occur after the deadline. The deadline would only be extended to July 1 of the year following the study year in which the changes occurred.
Incomplete requests
The PTD could refuse to conduct an audit under the new rule if the audit request is incomplete, raises issues that a school district could have raised in a PVS appeal, duplicates previous audit requests, or involves a PVS year for which records no longer exist. The PTD later could accept an audit that was refused if the school district brought the request into compliance and resubmitted before the deadline.
In past years, the volume of audits has been very small. The PTD had allowed districts to submit the required documents after the deadline, as long as they submitted a letter declaring their intent to request an audit before the deadline. This required extra time and paperwork.
Because of the large increase in the volume of audit requests in recent years and the need to handle the requests efficiently, the revised rule would prevent consideration of audits unless the requests include required documentation. To standardize the process and increase its efficiency, the PTD would require that the school district submit the audit request on a form and attach the required documentation. The form would list all the audit request requirements.
The rule further provides that the PTD may request additional information from the school district, its appraisal district, or any other source as needed to complete the taxable value audit. If the school district or its appraisal district does not provide the additional information within 30 days of this request, the PTD could deny any adjustments related to the additional information.
Audit effective date
Values may change in appraisal districts, resulting in differing total values depending on the date a report is run. This causes confusion and delay while the PTD attempts to reconcile the differences. The new rule will require that the school district select an effective date for the audit and run all recaps and other reports as of that date.
Under the new rule, the school district could amend an audit request at any time prior to the date of the issuance of the preliminary finding. The school district could not amend the audit’s effective date. For a change to an effective date, the school district would be required to submit a new audit request.
Audit review
The primary goal in conducting the taxable value audit is to update the PVS for accuracy. The PTD could conduct the taxable value audit by reviewing the required documentation submitted with the audit request or could include a review of the relevant records by personal inspection at the tax office, appraisal office, or any other public office.
The school district could challenge the audit results in the same manner as PVS appeals. In cooperation with school and appraisal districts, PTD expects that the most current and accurate study values will result from the audit process.
More information
Interested parties may review the proposed rule by calling the PTD at 1-800-252-9121 and ask for James Archer, extension 5-9808, or Debbie Cartwright, extension 3-3106.
Direct questions about PVS audits and requests to Phyllis Thomas in the PTD’s Reporting Section by calling 1-800-252-9121, extension 5-0485. Or, you may e-mail her at phyllis.thomas@cpa.state.tx.us.
