Question & Answer Session
Implementing New Tax Laws Bring More Questions
More questions have popped up as county appraisal districts (CADs) and local tax offices implement law changes that affect 2004 property tax values and taxes. CADs and tax offices should consult with their attorneys to receive legal advice on these new laws. None of the answers below are legal opinions or official directives from the state, but are provided for information purposes only.
Previous issues of STATEMENT since August 2003 contain articles on the general provisions of the various new 2004 laws. Readers should review those previous issues for more details. STATEMENT issues are available on the Web at www.window.state.tx.us/taxinfo/proptax/stmt/stmthome.html.
For other questions not addressed here, please contact the PTD’s technical assistance hotline by calling 1-800-252-9121. In Austin, call 305-9999. Or, e-mail questions to firstname.lastname@example.org;.
Q: Tax Code Section 25.19 details the required items on the notice of appraised value. It requires a sentence that homeowners age 65 or older have a school tax limitation. However, the legislature did not amend this section to address the disabled homeowner with a school tax limitation or for any other taxing units that adopt the new limitation provision. May appraisal districts add, at their option, information about these new limitations? Are they constrained to show only the items listed in Section 25.19?
A: Section 25.19 requires that chief appraisers deliver "a clear and understandable written notice to a property owner." The law states what information must be included in the notice but does not say that this is the only information that can be shown. Therefore, changes in law that affect the notices might be included at the discretion of each appraisal district. In particular, the required statement regarding the tax limitation on residence homesteads of persons age 65 or older could be extended to include the fact that disabled homeowners are also eligible for the limitation. Appraisal districts, however, may wish to consult with their attorneys before adding language to these notices.
Q: How does the change to Tax Code Section 1.085 requiring certain appraisal districts to deliver 25.19 notices electronically in 2005 (and all other districts in 2006) affect the content of the notices?
A: The new law requires the Comptroller to prescribe by rule "acceptable media, formats, content, and methods for the electronic transmission of notices required by Section 25.19." The new rule is being developed at this time and may include specific requirements for notice content. At least for electronic transmissions, the notices will have required content, not subject to appraisal district changes.
Under the new Tax Code Sections 22.28 and 22.29 added by Senate Bill (S.B.) 340, 78th Texas Legislature, Regular Session, there are penalties for rendering late, not rendering or rendering fraudulently. Under Section 22.28, the chief appraiser is required to charge a penalty of 10 percent of the annual taxes on property rendered late or not rendered. Section 22.29 addresses penalties for fraud or the intent to evade taxation, with a penalty of 50 percent if a court finally determines that the person filed a false statement or report with the intent to commit fraud or to evade taxes.
Q: May the appraisal district contract with a tax office for the collection of these rendition penalties?
A: The new law does not address the collection method for these penalties. Each chief appraiser must determine the appropriate means to collect the penalty, whether by his or her own initiative or in cooperation with tax collectors. Chief appraisers should consult with their attorneys about contract requirements for others to perform any requested service.
Q: Does a rendition penalty establish a tax lien on the property?
A: The law does not provide that the rendition penalty creates a tax lien on the property. The penalty would be a personal liability of the property owner.
Q: What is the deadline for paying a rendition penalty?
A: The law does not provide a payment deadline.
Q: Do regular penalties and interest apply if the property owner does not pay the rendition penalty?
A: The rendition penalty does not accrue regular penalty and interest charges like those applied to a delinquent property tax. The penalty also does not accrue interest for nonpayment under any other Code provision.
Q: Who gets the penalty if paid by the property owner?
A: Tax Code Section 22.28 provides that the chief appraiser may retain up to 20 percent of the 10 percent penalty to cover collection costs and distributes the remainder of the penalty to the taxing units who tax the property, in proportion to each unit’s taxes to total taxes on that property. The taxing units are those that participate in that appraisal district.
For the 50 percent penalty, district or county attorneys must initiate proceedings against taxpayers for fraud or tax evasion. Section 22.29 authorizes the chief appraiser to retain 20 percent of this penalty to pay for collection costs, with the remainder of the penalty proportionally distributed to the taxing units that tax that property and who participate in that appraisal district. While Section 22.29 does not specify the collection method, the chief appraiser may enforce collection in the same manner as general court judgments.
Q: May the taxing unit include any rendition penalty on a property owner's regular tax bill?
A: Tax Code Section 31.01(c) lists the required items on a property tax bill. The last item in that list provides for any items required by Comptroller rule. The items listed in Section 31.01 and in Comptroller Rule 9.3038 for tax bills do not include this rendition penalty.
Unlike the appraisal notice required by Section 25.19 (see earlier questions), tax bills or statements accompanying tax bills may only include what is required by statute or rule. The statute lists 10 specific items and then "any other information required by the comptroller." There is no general language about the tax assessor-collector providing clear and understandable tax bills; instead, there is a specific list that includes discretion for the Comptroller to require more. The language is restrictive enough to imply that tax bills may only include the required information. Appraisal and tax offices should consult with their attorneys to determine how to collect the rendition penalties in view of the limitation on the contents of the tax bills.
Q: Amended Tax Code Section 11.26 and new Tax Code Section 11.261 provide for continuing a tax limitation established by a homeowner age 65 or older or disabled for the homeowner’s surviving spouse age 55 or older. The surviving spouse must own and reside in the qualified homestead. Does the law also provide that the surviving spouse continues to receive the exemption amounts or just the tax limitation?
A: While Sections 11.26 and 11.261 provide for continuing the tax limitations for the surviving spouse age 55 or older, Section 11.13(q) addresses continuing the exemption amounts. It states that the exemption applies to the “surviving spouse of an individual who qualifies for an exemption under Subsection (d) for the residence homestead of a person 65 or older ....” The Texas Legislature did not amend this section to provide that the surviving spouse of the disabled homeowner continues to receive the exemption amounts.
Q: In past years, when a disabled homeowner turned 65 years of age, the homeowner switched to the exemptions for homeowners 65 years of age or older so that the homeowner would receive the school tax limitation. Now that the law provides for disabled homeowners to receive the school tax limitation, what should happen when the disabled homeowner turns 65 years of age?
A: A homeowner who in a tax year is both disabled and 65 years of age must decide which exemption type to apply. Tax Code Section 11.13(h) provides that an “eligible disabled person who is 65 or older may not receive both a disabled and an elderly residence homestead exemption but may choose either.” The homeowner will need information from the appraisal district about the exemptions offered for disabled and over-65 homeowners by the taxing units that tax the home. The homeowner will need to consider the tax limitation established as a disabled homeowner and the tax limitation to be established as an over-65 homeowner.
Since Section 11.13(h) is open to interpretation, appraisal districts should consult with their attorneys about this provision. One issue is whether the homeowner’s decision may vary from taxing unit to taxing unit. For example, the homeowner may choose the disabled exemption for school taxes but the over-65 exemption for city taxes. The appraisal district should note the homeowner’s decision in the appraisal record for that home.