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Texas Property Tax Updates

Updated September 2013

 

Tax Payments Requirements & Late Tax Challenges

Taxing units throughout Texas are adopting tax rates and sending tax bills. Taxpayers should consider tax payment requirements and potential last opportunities to contest their taxes.

Taxpayers must be vigilant to avoid missing payment of a tax bill. All taxpayers receive a school and county bill and, if located within such, a city or special district bill. Tax bills are sent to the "most recent address in possession" of the appraisal district whether current or not. Failure to send or receive a bill does not affect a taxpayer's liability. It is the taxpayer's responsibility to pay all taxes with or without a bill.

Taxes must be paid by January 31, 2014 and will, if delinquent, incur 1% per month interest, and up to a 12% penalty and a 15% attorney collection fee. Payment is recommended by postmarked, certified mail, return receipt.

Some taxpayers are questioning why they did not contest their valuations last spring. There may still be an avenue of protest. A taxpayer under certain limited circumstances may still protest prior to the delinquency date their valuation if their value exceeds the correct value of the property by more than one-third.

 

Jim Popp
Popp Hutcheson PLLC
American Property Tax Counsel (APTC)


Texas Property Tax Update Archive 

 

Texas Property Tax Update

Legislative Update
Updated June 2013

The Texas Legislature recently completed its biennial session. There were 278 bills filed related to property taxes and 58 passed. It was a very positive session for taxpayers. Some highlights of new provisions are as follows:

  • Appointment of ARB members in counties over 120,000 in population by a district court judge rather than the appraisal district board of directors;
  • Creation of model hearing procedures by the Comptroller's office for use by all appraisal review boards;
  • Implementing a taxpayer complaint process in the Comptroller's office;
  • Requiring chief appraisers to be registered professional appraisers;
  • Permitting removal of an ARB member for repeated bias or misconduct;
  • Allowing the filing of a lawsuit and recovery of attorney fees to obtain a refund;
  • Changing the appraisal district's burden of proof to clear and convincing to raise a value;
  • Requiring random assignment of ARB panels;
  • Providing that jurisdiction in a property tax appeal to district court is in rem;
  • Allowing award of attorney's fees for certain exemption lawsuits;
  • Authorizing use of SOAH appeals on a statewide basis.
     

 

TEXAS Property Tax Update
Updated March 2013

Texas Legislature Considers Property Tax Legislation

The Texas Legislature is currently in session through May 31 during which it will consider approximately 300 property tax bills.
With bill filing still under way, the most significant bill filed is SB 585 by Mike Villarreal. The bill proposes numerous improvements to appraisal review boards (ARBs) and to protest and lawsuit procedures. They include:

  • Uniform model procedures for appraisal review boards;
  • Compilation of complaints concerning ARBs by the Comptroller;
  • Appointment of ARBs and removal of members for cause in large counties by the local administrative district judge;
  • Requires scheduling of ARB hearings for a time certain for taxpayers;
  • Allows a taxpayer to request up to 20 hearings be held on the same day;
  • Requires random assignment to ARB panels;
  • Clarifies that a lawsuit may contain multiple properties;
  • Provides for in rem jurisdiction in a lawsuit;
  • Provides that testimony offered at an ARB is not admissible in court.
     
 

TEXAS Property Tax Update
Updated December 2012

Constitutionality of Texas School Finance System at Issue: Again

Once again the constitutionality of the school finance system is being challenged in court by two-thirds of the state's 1026 school districts. These include both property rich and property poor districts. This is the sixth challenge of the system since 1984. School districts are funded in part by local property taxes and in part by funds from the state.

The constitution requires an "efficient system of public free schools." The meaning of this has been a constant source of litigation. In 1989, the Supreme Court ruled the system flawed stating that children must be "afforded a substantially equal opportunity to have access to educational funds."

In 2005, the court ruled that the legislature by imposing a local property tax rate cap of $1.50 per $100 of local value had created a statewide property tax which is impermissible under the constitution.
The trial has lasted over two months. It is on recess until January when it is expected to last another month.

 
 

TEXAS Property Tax Update
Updated September 2012

Tax Payments Requirements & Late Tax Challenges

Taxing units throughout Texas will soon be adopting tax rates and sending tax bills. Taxpayers should consider tax payment requirements and potential last opportunities to contest their taxes.

Tax payments: Taxpayers must be vigilant to avoid missing payment of a tax bill. All taxpayers receive a school and county bill and, if located within such, a city or special district bill. Tax bills are sent to the "most recent address in possession" of the county appraisal district whether current or not. Failure to send or receive a bill does not affect a taxpayer's liability to pay the tax. It is the taxpayer's responsibility to pay all taxes with or without a bill.

Taxes must be paid by January 31, 2013 and will, if delinquent, incur 1% per month interest, and up to a 12% penalty and a 15% attorney collection fee. Payment is recommended by postmarked, certified mail, return receipt.

Final Protest Opportunity: Some taxpayers are questioning why they did not contest their valuations last spring. There may still be an avenue of protest.

A taxpayer may still protest their valuation if the taxable value exceeds the correct market value of the property by more than 33%. To do so, you must prior to February 1, 2013, (1) file a motion for correction with the Appraisal Review Board of the Appraisal District and (2) pay your 2012 taxes.

This so called one-third error approach may not be used if the value was set as a result of a protest hearing or as a result of a written agreement with the chief appraiser. If successful under this approach, there is a penalty of ten percent of the amount of tax ultimately determined.

 
 

TEXAS Property Tax Update
Updated March 2012

Appraisal Districts mail Notices of Appraised Value during April and May which set the taxable value of a property. It is important to note that these notices are sent only to the last known address in possession of the District and only if the value increases over last year.

A taxpayer may contest the taxable value by filing a Notice of Protest with the Appraisal Review Board for the Appraisal District by May 31 or within 30 days of delivery of the Notice of Appraised Value, whichever is later.

A taxpayer may protest that the taxable value of the property exceeds the market value of the property. Market value is determined on a fee simple basis, which considers market, rather than actual, rent, expenses and vacancy.

A taxpayer may also protest based on equality and uniformity that the taxable value exceeds the median taxable value of a reasonable number of comparable properties appropriately adjusted.

 
 

TEXAS Property Tax Update
Updated December 2011

Supreme Court Upholds Margins Tax Offset to Property Taxes

In 2006, the Legislature passed sweeping property tax reform legislation. They reduced the maximum school tax rate from 1.5% to 1% and created a property tax relief fund. To pay for the local property tax relief, the legislature replaced the franchise tax which applied only to corporations with a margins tax which applied to all entities that enjoyed state liability protection. The margins tax has fallen short of offsetting the lost property taxes and has faced several court challenges. In a recent challenge, the Supreme Court ruled that the margins tax was not an income tax on natural persons which requires voter approval. This ruling opens up the ability of the legislature to expand the margins tax to offset the property tax relief deficit. There are, however, several other challenges to the tax. This ruling is important to property taxpayers because one alternative to offset the margins tax deficit is to raise property tax rates.

 
 

TEXAS Property Tax Update
Updated September 2011

Legislative Update

The recently concluded legislative session proved favorable to taxpayers. There were 289 property tax related bills filed, and 57 were passed and sent to the governor.

The highlights of the session for taxpayers are as follows:

  • Made attorney fees recoverable for a taxpayer in a State Office of Administrative Hearings appeal proceeding;
  • Expanded taxpayer hearings at SOAH to Collin, Denton, Fort Bend, Montgomery and Nueces counties;
  • Prevented the dismissal of a protest or lawsuit filed in an incorrect owners name;
  • Enhanced the credibility of Appraisal Review Boards by limiting who may provide them continuing education courses, who may comment on the courses, and who may serve as ARB attorney;
  • Provided a new notice and protest process for the imposition of a rendition penalty;
  • Required attorneys hired by a third party to give notice of the engagement to the property owner.

There were no significant bills passed which were unfavorable to taxpayers.

 
 

TEXAS Property Tax Update
Updated June 2011

Legislative Session Favorable to Taxpayers

The recently concluded legislative session proved favorable to taxpayers. There were 289 property tax related bills filed, and 57 were passed and sent to the governor.

The highlights of the session for taxpayers are as follows:

  • Made attorney fees recoverable for a taxpayer in a State Office of Administrative Hearings appeal proceeding;
  • Expanded  taxpayer hearings at SOAH to Collin, Denton, Fort Bend, Montgomery and Nueces counties;
  • Prevented the dismissal of a protest or lawsuit filed in an incorrect owners name;
  • Enhanced the credibility of Appraisal Review Boards by limiting who may provide them continuing education courses, who may comment on the courses, and who may serve as ARB attorney;
  • Provided a new notice and protest process for the imposition of a rendition penalty;
  • Required attorneys hired by a third party to give notice of the engagement to the property owner.

There were no significant bills passed which were unfavorable to taxpayers.

 
 

TEXAS Property Tax Update
Updated March 2011

Legislative Update

The Texas Legislature is currently meeting in its biennial, 180 day, session. Although the large budget deficit, and redistricting, will occupy most of the legislators’ time, there have been a large number of property tax bills filed. The focus on bills filed so far includes the following:

  • Reducing the cap on increases in appraised value for homesteads (currently 10% per year);
  • Instituting a cap on appraised value of commercial property;
  • Exempting additional property, including veterans and homesteads;
  • Changing the interest paid on refunds;
  • Enhancing electronic transfer of information;
  • Selection of appraisal district board and ARB members;
  • Improving taxpayer remedies; and
  • Changing open space eligibility.

Legislative information including bills may be found at Texas Legislature Online at www.capitol.state.tx.us
Bills may be searched by author, bill number or subject.

 
 

TEXAS Property Tax Update
Updated December 2010

Legislative Update

The 82nd Texas Legislature convenes in Austin on January 11, 2011 facing two very major issues: redistricting and an estimated $20 million plus budget shortfall. However, property taxes as always will be a focal point of discussion. Last session, over three hundred property tax bills were filed. The following are some of the significant issues under discussion:

Appraisal Caps: Property taxes continue to be a very unpopular tax. This is so even though they have grown no faster than sales tax or income tax. A frequent expression of this unpopularity is bills introduced to place a cap on increases in appraised value. This occurs despite numerous studies which demonstrate that appraisal caps are not an effective method for controlling property tax growth.

State Influence on Local Property Tax Practice: The constitution was amended last session to allow greater state rather than local control over property tax practices. Currently, the state has no authority to direct local appraisal districts. It is expected that legislation will be introduced to provide more state directive on appraisal practices.

Property Tax Professional Ethics: A Houston property tax consultant was recently fined $800,000 for violation of the Texas Deceptive Trade Practices Act. It is expected that legislation will be filed in response to this which strengthens the ethics provisions of the tax consultant licensing act and addresses tax consultant alleged activities involving barratry and the unauthorized practice of law.

 
 

TEXAS Property Tax Update
Updated September 2010

Property Tax Appeals to the State Office of Administrative Hearings

In 2009, the Texas Legislature adopted a new remedy for appeals after an ARB decision. A property owner may appeal to the State Office of Administrative Hearings. (SOAH) The SOAH appeal process is a three year pilot program limited to 3000 total appeals in Bexar, Cameron, E Paso, Harris, Tarrant and Travis counties. It is available to real and personal property (but not minerals or industrial) with an ARB value in excess of $1,000,000. The SOAH appeal is an alternative to an appeal to district court and there is no appeal of a SOAH decision.

SOAH will conduct the hearings in the counties in which the property is located. The hearings will be conducted by an administrative law judge and will typically be three hours in length. There is no civil procedure discovery. Discovery is limited to the exchange of documents to be used at the hearing. Expert testimony must be reduced to writing and included in the exchange. The exchange is 10 days before the hearing. The Rules of Evidence do not apply. However, a judge may consider hearsay, the qualifications of witnesses and other restrictions on admissibility in assigning weight. The loser pays the costs. The costs of an appeal include the $300 filing fee and an hourly fee for the judge's time at $100 per hour. SOAH has estimated that the typical cost will be about $2000.

Currently, there have been less than twenty filings statewide. SOAH has already scheduled these hearings for fall. There are many unanswered questions about SOAH and it will be interesting to determine how effective this process may be.

 
 

TEXAS Property Tax Update
Updated June 2010

Consider a Lawsuit for Further Property Tax Savings

Taxpayer protests are currently underway throughout Texas with a target completion date of July 26. For taxpayers dissatisfied with the result of the administrative hearing at the appraisal review board (ARB), the only recourse is to file a lawsuit in district court.

There are several prerequisites to the filing of a lawsuit. The taxpayer must file a protest and appear and offer evidence at the ARB. In addition, the taxpayer must not agree to a value either implicitly at the ARB hearing or explicitly with a written sign-off agreement.

The most common grounds for litigation are: 1) the taxable value of the property exceeds the fee simple market value of the property excluding any business value, or 2) the taxable value of the property is unequal in comparison to the taxable value of comparable properties.

The deadline to file a lawsuit is 60 days after receipt of the appraisal review board order determining the taxpayer's protest. This order will be mailed by certified mail to the owner's last address of record or to the owner's tax representative.

Most property tax lawsuits are resolved through the settlement process without a trial.

 
 

TEXAS Property Tax Update
Updated March 2010

New Notices of Appraised Value

Appraisal Districts will mail, during April and May, Notices of Appraised Value which set forth the taxable value of a property. It is important to note that these notices are sent only to the last known address in possession of the District and only if the value increases over last year or a notice is requested in writing.

A taxpayer may contest the taxable value by filing a Notice of Protest with the Appraisal Review Board for the District by May 31 or within 30 days of delivery of the Notice of Appraised Value.

A taxpayer may protest that the taxable value of the property exceeds the market value of the property. Market value is determined on a fee simple basis, which considers market, rather than actual, rent, expenses and vacancy.

In addition, a taxpayer may protest based on equality and uniformity that the taxable value exceeds the median taxable value of a reasonable number of comparable properties appropriately adjusted.

 
 

TEXAS Property Tax Update
Updated December 2009

A Last Chance to Challenge 2009 Property Taxes May Still Be Available

Property owners throughout Texas have received their 2009 tax bills, which are due on January 31, 2010. Although property tax valuations are generally protested before May 31 of the tax year and become final if not protested, relief may still be available.

Pursuant to Section 25.25(d), Tax Code, if an owner's tax value exceeds the correct value by more than one-third, the owner may file a motion with the county Appraisal Review Board prior to February 1, 2010 to request a value change.

However, this remedy is only available if the owner 1) did not file a protest on the property for the current tax year, or 2) the owner protested the property but did not present evidence at the administrative hearing. Further, the owner must pay the taxes on the property prior to the due date. There is also a late correction penalty of 10% of the taxes finally due.

In addition, if a property owner is dissatisfied with the decision on this type of protest, the property owner may file a lawsuit in district court to contest the decision.

 
 

TEXAS Property Tax Update
Updated September 2009

Property Tax Bill Payment Guidelines

Taxing units throughout Texas will soon mail 2009 property tax bills after adopting tax rates ranging generally from 2% to 3% of taxable value.

Taxpayers must be vigilant to avoid missing payment of a tax bill. All taxpayers receive a school and county bill and, if located within such, a city or special district bill. Tax bills are sent to the "most recent address in possession" of the county appraisal district whether current or not. Failure to send or receive a bill does not affect liability. Also, most tax bills are sent to agents rather than to the taxpayer. It is the taxpayer's responsibility to pay all taxes with or without a bill.

Taxes must be paid by January 31, 2010 and will, if delinquent, incur up to 1% per month interest, 12% penalty and 15% attorney collection fee. Payment is recommended by postmarked, certified mail, return receipt.

 
 

TEXAS Property Tax Update
Updated June 2009

Recent Legislative Changes to Property Taxes

The Texas Legislature adjourned on June 1 after considering 355 bills related to property taxes and passing 58 of them. It was an extremely active property tax session. The following are some of the more significant changes:

A taxpayer may now file an appeal from the ARB for properties over $1,000,000 in value to the State Office of Administrative Hearings (SOAH). This is a pilot program in five counties and will be limited to the first 3000 appeals filed. It is an alternative to an appeal to district court with no allowance for appeal from SOAH to district court.

A property owner that prevails in a lawsuit filed under Section 25.25 will be entitled to attorney fees under Section 42.29

The deadline for the filing of a property tax lawsuit is changed from 45 to 60 days after receipt of the ARB order.

If the value of a property is lowered by agreement, ARB decision or lawsuit, the value may not be increased in the next year unless the chief appraiser has substantial evidence supporting the increase.

If the chief appraiser determines the appraised value of real property using the income approach, the appraised value must include the value of both the real property and the personal property in the account.

The Comptroller's property value study of school districts will be conducted every two years rather than every year and the Comptroller will conduct a performance audit of the appraisal methodology and operations every two years.

 
 

TEXAS Property Tax Update
Updated March 2009

Legislative Update on Property Taxes

The Texas Legislature is currently meeting for its biennial five month legislative session. Last session approximately 300 property tax bills were introduced and 59 were passed by the Legislature. It appears that 300 property tax bills will be introduced again this year.

The primary areas of focus are as follows:

  • Change the equal and uniform remedy based on requests of appraisal districts to limit its usefulness as a remedy for taxpayers;
  • Change the Property Value Study performed by the Comptroller to a performance audit of appraisal districts;
  • Provide for more effective monitoring of the licensing of appraisal district personnel and tax consultants;
  • Provide for simplification of the truth-in-taxation process relating to determination of the effective tax rate;
  • Value residence homesteads on their use value as a home rather than on highest and best use;
  • Provide an alternative remedy to district court through an appeal to a state hearing's examiner.
     
 

TEXAS Property Tax Update
Updated December 2008

The Texas Legislature And Property Taxes

The Texas Legislature will convene on January 13, 2009 for its biennial five month legislative session. Each year, several hundred property tax bills are introduced. During the year and one half interim between sessions, House and Senate special committees examined property tax issues. Some of the primary property tax issues for 2009 raised by the committees and by others are as follows:

Change the method of appointment of ARB members from appointment by the Appraisal District Board to another method.

Authorize the Comptroller to adopt rules and monitor use of generally accepted appraisal techniques by Appraisal Districts.

3. Change the Property Value Study performed by the Comptroller to an audit of performance of appraisal districts relating to appraisal methodology.

Provide for more effective monitoring of the licensing of appraisal district personnel and tax consultants.

Provide for simplification and clarification of the truth-in-taxation process relating particularly to determination of the effective tax rate.

Provide a statewide office of property tax counsel to hear and respond to citizen complaints about the property tax process.

Avoid changes by appraisal districts to the current effective property taxpayer remedies particularly with regard to equal and uniform.

 
 

TEXAS Property Tax Update
Updated September 2008

Tax Payments Requirements & Late Tax Challenges

Taxing units throughout Texas will soon be adopting tax rates and sending tax bills. Taxpayers should consider tax payment requirements and potential last opportunities to contest the taxes.

Tax payments: Taxpayers must be vigilant to avoid missing payment of a tax bill. All taxpayers receive a school and county bill and, if located within such, a city or special district bill. Tax bills are sent to the "most recent address in possession" of the county appraisal district whether current or not. Failure to send or receive a bill does not affect liability. Also, most tax bills are sent to agents rather than to the taxpayer. It is the taxpayer's responsibility to pay all taxes with or without a bill.

Taxes must be paid by January 31, 2009 and will, if delinquent, incur up to 1% per month interest, 12% penalty and 15% attorney collection fee. Payment is recommended by postmarked, certified mail, return receipt.

Final Protest Opportunity: Some taxpayers are questioning why they did not contest their valuations last spring. It may not be too late if: (1) you did not protest during the regular protest period or (2) you protested but withdrew the protest.

These taxpayers may still protest their valuation if the taxable value exceeds the correct market value of the property by more than 33%. To do so, you must prior to February 1, 2009, (1) file the motion for correction with the Appraisal Review Board of the Appraisal District and (2) pay your 2008 taxes.

A second less useful remedy allows taxpayers to file a motion for any of the prior five years to correct clerical errors, multiple appraisals or the inclusion of property on the appraisal records that did not exist in the form or location described in those records.

 
 

TEXAS Property Tax Update
Updated September 2008

Consider a Lawsuit for Further Property Tax Savings

Taxpayer protests are currently underway throughout Texas with a target completion date of July 26. For taxpayers dissatisfied with the result of the administrative hearing at the appraisal review board (ARB), the only recourse is to file a lawsuit in district court. Since most lawsuits result in settlement, taxpayers should consider this as another potential avenue for tax reductions.

There are several prerequisites to the filing of a lawsuit. The taxpayer must file a protest and appear and offer evidence at the ARB. In addition, the taxpayer must not agree to a value either implicitly at the ARB hearing or explicitly with a written sign-off agreement.

The most common grounds for litigation are: 1) the taxable value of the property exceeds the fee simple market value of the property excluding any business value, or 2) the taxable value of the property is unequal in comparison to the taxable value of comparable properties.

The deadline to file a lawsuit is 45 days after receipt of the appraisal review board order determining the taxpayer's protest. This order will be mailed by certified mail to the owner's last address of record or to the owner's tax representative.

Challenging property taxes through litigation has proven successful for many Texas taxpayers.

 
 

TEXAS Property Tax Update
Updated March 2008

Recent Cases Effect Rights at the Administrative Level

There have been several recent cases which effect taxpayer's rights and procedures at the administrative level. With the May 31st protest deadline approaching, taxpayers should consider the impact of these cases.

Verbal Agreements at the ARB Hearing: The Court held that a verbal agreement between a property owner and the appraisal district is binding and that a taxpayer may not subsequently appeal the ARB determination to district court. The verbal agreement consisted of the taxpayer offering an opinion of value and the district stating that they agreed with the value.

Tax Consultant May Sign Fiduciary Authorization: The Attorney General stated that if a taxpayer designates a tax consultant as authorized to act on the taxpayer's behalf, the tax consultant may sign the fiduciary authorization to appear at the ARB.

Equal & Uniform Must Address Entire Property: The Court held that a taxpayer under equal & uniform could not challenge only the land and not the improvement but must challenge the entire property.

New Owner Entitled to Protest: The Court held that a purchaser prior to the protest deadline is entitled to protest the property.

 
 

TEXAS Property Tax Update
Updated September 2007

A Last Chance To Challenge 2007 Property Taxes May Still Be Available

Property owners throughout Texas are currently receiving 2007 tax bills, which are due on January 31, 2008. Although property tax valuations are generally protested before May 31 of the tax year and become final if not protested, relief may still be available.

If an owner's tax value exceeds the correct value by more than 33%, the owner may file a motion with the county Appraisal Review Board prior to February 1, 2008 to request a value change.

However, this remedy is only available if the owner 1) did not file a protest on the property for the current tax year, or 2) the owner protested the property but did not present evidence at the administrative hearing. Further, the owner must pay the taxes on the property prior to the due date.

Further, if a property owner is dissatisfied with the appraisal review board decision, the property owner may file a lawsuit in district court to contest the decision.

 

American Property Tax Counsel

1970 East Grand Ave.
Suite 330
El Segundo, CA 90245

P 877-TAX-APTC
F 877-829-2782

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