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Title 1. Property Tax Code
Subtitle C. Taxable Property and Exemptions

Chapter 11. Taxable Property and Exemptions

Subchapter A. Taxable Property

Sec. 11.01. Real and Tangible Personal Property.
Sec. 11.02. Intangible Personal Property.

[Sections 11.03 to 11.10 reserved for expansion]

Sec. 11.01. Real and Tangible Personal Property.

(a) All real and tangible personal property that this state has jurisdiction to tax is taxable unless exempt by law.

(b) This state has jurisdiction to tax real property if located in this state.

(c) This state has jurisdiction to tax tangible personal property if the property is:

(1) located in this state for longer than a temporary period;

(2) temporarily located outside this state and the owner resides in this state; or

(3) used continually, whether regularly or irregularly, in this state.

(d) Tangible personal property that is operated or located exclusively outside this state during the year preceding the tax year and on January 1 of the tax year is not taxable in this state.

Amended by 1983 Tex. Laws, p. 1908, ch. 353, Sec. 1; amended by 1989 Tex. Laws, p. 1751, ch. 534, Sec. 2.

Cross References:

Situs of property, see Secs. 21.01, 21.02, 21.03, 21.04, 21.06, 21.07 & 21.08.
Constitutional requirement to tax property, see art. VIII, Secs. 1 & 11, Tex. Const.

Notes:

Foreign trade zones constitute foreign and, hence, interstate commerce, so they are in the purview of U. S. Congress. Imposing local property taxes on the property in foreign trade zones would affect interstate and foreign commerce, and forbidding such taxes would provide uniform treatment of foreign trade zones throughout the country. The exemption from local property taxes does not violate the Tenth Amendment nor the Guarantee Clause of the U. S. Constitution. Deer Park Independent School District et al. v. Harris County Appraisal District et al, 132 F.3d 1095 (U.S. 5th Cir. 1998, petition denied).

An exporter that detains goods in a warehouse while awaiting overseas export is entitled to a property tax exemption under the Commerce Clause and the Equal Protection Clause of the United States Constitution. Taxation would prevent the federal government from speaking with one voice in its regulation of commercial relations with foreign governments. Vinmar, Inc. v. Harris County Appraisal District, 947 S.W.2d 554 (Tex. 1997).

The import-export clause of the U. S. Constitution and its related legal test of stream of export exempts goods from taxation once exportation has commenced as a part of transportation in a continuous route or journey. Seaboard states are prohibited from taxing goods merely flowing through their ports from other states. Goods are placed into the stream of export when they were shipped from the vendors to the export shipper for a pre-determined foreign destination. The inspection of the goods, approval for import, and packing the goods were necessary for the safe and efficient movement of these goods and merely facilitated their export. Taxing the goods violated the United States import-export clause. Virginia Indonesia Company v. Harris County Appraisal District, 910 S.W.2d 905 (Tex. 1995).

Property is taxable in Texas if and to the extent the federal constitution permits Texas to tax it. Greyhound Lines v. Board of Equalization, 419 S.W.2d 345 (Tex. 1967).

The ad valorem tax did not violate the subsidiary's substantive due process rights because taxing property with no direct benefits to the property does not amount to a palpable and arbitrary abuse of power unless its initial inclusion in the district was itself a palpable and arbitrary abuse of power. The constitutional requirement of equality and uniformity is met when taxation is uniformly assessed on an ad valorem basis on all taxable property without regard to benefits received. Southwest Property Trust, Inc. v. Dallas County Flood Control District No. 1, No. 05-97-00399-CV (Tex. App.-Dallas [5th Dist.] 2002, rehearing overruled).

Computer application software consisting of imperceivable binary pulses that need not be packaged in a tangible form met the definition of intangible personal property. Such computer software is intangible personal property and not taxable for property tax purposes. The Legislature in Tax Code Section 11.01 allowed for only certain classes of intangible property to be taxed and defined intangible personal property in Tax Code Section 1.04(6). Dallas Central Appraisal District v. Tech Data Corporation, 930 S.W.2d 119 (Tex. App.-Dallas 1996, writ denied).

Taxation of leased shipping containers owned by United States-domiciled taxpayers and located within appraisal districts January 1 did not provide a commercial advantage to local business and did not violate the United States Constitution. No multiple taxation was shown and taxpayer was required to pay for governmental services. Harris County Appraisal District v. Transamerica Container Leasing, Inc., 920 S.W.2d 678 (Tex. App.-Houston [1st District] 1995, writ sought).

Property mistakenly granted an exemption from taxation under Sec. 11.01(d) could be back-assessed as omitted property under provisions of Sec. 25.25. Friedrich Air Conditioning and Refrigeration Company v. Bexar Appraisal District, 762 S.W.2d 763 (Tex. App.-San Antonio 1988, no writ).

Goods are located in the state for more than a temporary period only if, under federal law, they are in interstate transit. If the owner of the goods interrupts the continuity of transit for any business purposes or profit and not to accommodate to the means of transportation, the goods are no longer in interstate transit and are taxable in the state. Dallas County Appraisal District v. L. D. Brinkman and Company, 701 S.W.2d 20 (Tex. App.-Dallas 1985, writ ref'd n.r.e.).

Article 7150f [repealed, now see Sec. 11.01(d)], prohibits taxation of goods owned by a Texas taxpayer, that are physically present in the state for sufficient time to acquire tax situs at common law, and not exempted by federal law as being in interstate commerce. Under these circumstances, Texas courts would hold that the statute goes beyond reasonable legislative action and uses tax situs as a vehicle for granting a property tax exemption. Op. Tex. Att'y Gen. No. H-1308 (1978).

Sec. 11.02. Intangible Personal Property.

(a) Except as provided by Subsection (b) of this section, intangible personal property is not taxable.

(b) Intangible property governed by Article 4.01, Insurance Code, or by Section 89.003, Finance Code, is taxable as provided by law, unless exempt by law, if this state has jurisdiction to tax those intangibles.

(c) This state has jurisdiction to tax intangible personal property if the property is:

(1) owned by a resident of this state; or

(2) located in this state for business purposes.

(d) Repealed in 1984.

Amended by 1984 Tex. Laws (2nd C.S.), p. 212, ch. 31, art. 3, part A, Sec. 1; amended by 1999 Tex. Laws, p. 303, ch. 62, Sec. 7.88.

Cross References:

Intangible personal property defined, see Sec. 1.04.
Transportation intangibles, see ch. 24.
Situs of intangible property, see Sec. 21.06.
Situs of transportation intangibles, see Sec. 21.07.
Situs of savings and loan, insurance company intangibles, see Sec. 21.08.

Note:

Computer application software consisting of imperceivable binary pulses that need not be packaged in a tangible form met the definition of intangible personal property. Such computer software is intangible personal property and not taxable for property tax purposes. The Legislature in Tax Code Section 11.01 allowed for only certain classes of intangible property to be taxed and defined intangible personal property in Tax Code Section 1.04(6). Dallas Central Appraisal District v. Tech Data Corporation, 930 S.W.2d 119 (Tex. App.-Dallas 1996, writ denied).

[Sections 11.03 to 11.10 reserved for expansion]