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Title 2. State Taxation
Subtitle B. Enforcement and Collections

Chapter 111. Collection Procedures
Subchapter F. Tax Refund for Economic Development

Sec. 111.301. Refund of State Taxes; Application for Refund.
Sec. 111.302. Issuance of Tax Refund; Amount of Refund.
Sec. 111.303. Rules and Forms.
Sec. 111.304. Evaluation; Annual Report.

Sec. 111.301. Refund of State Taxes; Application for Refund.

(a) An eligible person is entitled to a refund of state sales and use taxes imposed under Chapter 151 and state franchise taxes imposed under Chapter 171 paid in a calendar year for which the person paid ad valorem taxes to a school district on property that in that year is:

(1) located in a reinvestment zone established under Chapter 312;

(2) exempt in whole or in part from the payment of ad valorem taxes imposed by a municipality or a county under a tax abatement agreement entered into with the municipality or county under Chapter 312; and

(3) not subject to a tax abatement agreement entered into by the school district.

(b) No refund may be made under this section if the person makes a payment in lieu of taxes, or any other payment, including a gift, grant, donation, or provision of in-kind service, to a municipality or county with which the person has executed a tax abatement agreement, if the payment was made during the period of the agreement. This subsection does not apply to a payment that is a tax, fee, or charge for services provided by the municipality or county, or to payments pursuant to a contract with an industrial district under Chapter 42 or Chapter 43, Local Government Code, or to a payment that in any year of the agreement does not in the aggregate exceed $5,000 in value.

(c) The amount of a refund may not exceed the amount of net state sales and use and state franchise taxes paid by the person, after any applicable tax credit, in that year. A person is entitled to a refund under this section for the lesser of five years or the duration of the tax abatement agreement. If the tax abatement agreement is cancelled or the person relocates the person's business outside the zone, a person may not apply for a refund after the date of the cancellation or the date of the relocation, as applicable.

(d) To be eligible for the refund:

(1) a person must have:

(A) established a new business in the reinvestment zone;

(B) expanded an existing business located in the reinvestment zone; or

(C) modernized an existing business located in the reinvestment zone to retain jobs of employees of the business;

(2) that business must have had:

(A) since the date the person entered into the tax abatement agreement with the municipality or county, an increase in the business's payroll of $3 million, specific to property located in this state according to records filed by the business with the Texas Employment Commission; or

(B) since an initial comparison year beginning on or after January 1, 1996, an increase of at least $4 million in the appraised value of the business's property subject to the tax abatement agreement with the municipality or county according to the appraisal rolls; and

(3) that person must have furnished the comptroller with a copy of the tax abatement agreement entered into by the person with the municipality or county.

(e) Application for the refund is to the comptroller. The application must:

(1) be made on the form prescribed by the comptroller;

(2) have attached a 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; and

(3) include sufficient information for the comptroller to determine the portion of 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 concerning 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 specified by the municipal or county tax abatement agreement on which the refund amount is to be based.

(f) A refund amount payable under this subchapter does not earn interest.

(g) 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.

(h) If the relevant tax abatement agreement has not been filed with the comptroller and the Texas Department of Commerce, the comptroller may not act on the application until the agreement is on file.

(i) If, after a review or audit, the comptroller determines that the person applying for the refund is not in compliance with each term of the appropriate tax abatement agreement, the comptroller may not act on the refund application until the person comes into compliance and shall notify the municipality or county of the person's noncompliance.

(j) The comptroller may grant to a person who is not in compliance with a tax abatement agreement a temporary waiver if the comptroller determines that the person's noncompliance is the result of a natural disaster.

(k) The comptroller may conduct any audit that the comptroller determines necessary for the enforcement or administration of this subchapter.

Added by 1995 Tex. Laws, p. 4990, ch. 995, Sec. 1; amended by SB 1125, 77th Tex. Leg., 2001, eff. September 1, 2001.

Notes:

The tax refund applies to tax abatement agreements entered into after January 1, 1996.

The Comptroller's office may release the names, address, and county information about taxpayers who requested a refund and may inform a requestor whether a taxpayer's request for a refund is granted or denied. An additional letter ruling from the attorney general's office would be required to disclose any details about the basis for an individual taxpayer's refund. This open records letter ruling should not be relied upon in any other situation other than refunds under Tax Code Section 111.301. Since the submission of a request for a refund is considered an examination [see also OR Letter 96-2203 (1996)], the information on the refund amount paid to an individual under Chapter 111, subchapter F, is not subject to disclosure under the Open Records Act. Letter Op. Tex. Att'y Gen. OR99-0252 (1999).

Sec. 111.302. Issuance of Tax Refund; Amount of Refund.

(a) The comptroller shall issue a tax refund to a person for a tax year in which the person applying has paid the ad valorem taxes imposed by a school district on property of the person described by Section 111.301(a).

(b) Applications for refund must be filed before August 1 of the year following the tax year for which the person applying has paid ad valorem taxes described by Section 111.301(a). Within 90 days thereafter, the comptroller shall compute the total amount eligible for refund.

(c) If the total amount of eligible refunds claimed by all persons, as determined under Subsection (b), 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 specified by the municipal or county tax abatement agreement on which the refund amount is to be based. If the total amount of eligible refunds claimed by all persons, as determined under Subsection (b), is greater than $10 million, the comptroller shall reduce the amount of each refund as necessary to allow all claimants to share proportionally the $10 million available. 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.

(d) If an eligible person has entered into tax abatement agreements with the municipality and the county, and the agreements provided to the comptroller show that the agreements exempt different portions of property value, the refund amount shall be computed based on the greater of the portions exempted.

Added by 1995 Tex. Laws, p. 4991, ch. 995, Sec. 1; amended by SB 1125, 77th Tex. Leg., 2001, eff. September 1, 2001.

Sec. 111.303. Rules and Forms.

(a) The comptroller shall adopt rules and forms for the administration of this subchapter. The rules must identify the state taxes to which this subchapter applies.

(b) The comptroller shall provide without charge one copy of the rules and forms to each person applying for a refund under this subchapter.

Added by 1995 Tex. Laws, p. 4991, ch. 995, Sec. 1.

Cross References:

Refund application and procedures, see Comptroller Rule Sec. 9.105.

Sec. 111.304. Evaluation; Annual Report.

Not later than December 1 of each year, the comptroller shall submit an annual report to the legislature. The report:

(1) must document the applications for refunds filed with the comptroller under this subchapter;

(2) must document the refunds paid by the comptroller under this chapter; and

(3) may include any other relevant information that the comptroller determines is applicable to this subchapter or to Chapter 312.

Added by 1995 Tex. Laws, p. 4991, ch. 995, Sec. 1; amended by SB 1125, 77th Tex. Leg., 2001, eff. September 1, 2001.