A bi-monthly insider guide to the confusing world of property taxation from BRUSNIAK TURNER. Providing insight and saving lawyers research time since 1981 

THE HEART-ATTACK-INDUCING PROPERTY TAX BILL THE HORRORS OF LATE PAYMENTS & THE LAST CHANCE TO FIX MISTAKES

 © John Brusniak 2023

THE DREADED PHONE CALL

Your client calls. They just opened their property tax bill and are irate. Their taxes are too high, their values are egregious, and other important details in the bill are wrong. You do great work for them, so they know that you know how to fix it. Your first question is, "Why didn't I let this call go to voicemail?"

This is the first newsletter in a series to arm you with basic knowledge about how the property tax system works. Like every area of law, there are exceptions to basic guidance. (Where would we lawyers be without exceptions?) More on exceptions in future newsletters.

BAD NEWS BUT SOME HOPE

 By waiting until the bill arrived, your client waived most of their rights to proper and accurate taxation. But the Property Tax Code provides relief in a handful of instances. You may need to get creative. Sometimes square pegs can get through round holes.

DON'T GIVE IN TO TEMPTATION

You know how this works. Angry people never want to pay anything. Nothing good can come from not paying taxes on time. Never refuse to pay a tax bill. If your client does not pay their tax bill on time, they waive the few rights they might still have left. Your client must choose from amongst three options: 

1. Pay the bill in full. (Always the best option.)
2. Pay the amount they paid in the prior tax year. 
3. Or pay an amount based on what the client admits they owe.

A few instances exist where a taxpayer can lawfully tender nothing and preserve their claims—for example, personal property that never acquired a tax situs in Texas.

BUT, if your client has the right to claim a late exemption, the rule is reversed. Making any tax tender forfeits the right to file a late exemption claim.

HOW BAD CAN IT POSSIBLY GET?

Really bad. Property taxes are due on or before January 31. If not paid by then, on February 1 your client will be assessed a 6% penalty and 1% interest. On the first day of each subsequent month, your client will accrue additional penalties until they reach a total of 12%. Interest, at the rate of 1%, will accrue on the first day of each month thereafter until the bill is paid. A collection penalty of 15-20% is added to the cumulative total (base tax, accumulated penalties, and accumulated interest) and the tax bill will have grown by 32% in five months—and it will continue to grow until the bill is paid.

DON'T ASK

The question I am most frequently asked: “Will taxing units negotiate on any portion of the delinquent amount owed?” The answer is NO. The Texas Constitution prohibits forgiveness of tax delinquencies. 

ANY GOOD NEWS?

Yes. Large valuation errors are correctable if a Motion to Correct Error is filed with an appraisal review board on or before January 31. How large does an error have to be to qualify for correction? Overvaluations of more than 25% on a homestead, and overvaluations of more than 1/3 on all other property can be corrected. 

EXAMPLE:

If the correct value of your client's homestead is $100,000, and the appraisal district appraised it at $125,001 or more, a correction can be made. Similarly, if the correct value for your client's nonhomestead property (e.g., vacation home, commercial property, vacant land, personal property) is $100,000, the appraisal district must have valued it at more than $133,334 for a correction to be made. 

THE FLY IN THE OINTMENT

If your client prevails in a late valuation challenge, they will be assessed a late correction penalty of 10% on the new, lower value. If they fail, no penalties attach. So, no harm in trying. Failing to make a timely tax tender is fatal to late overvaluation claims. 

FIVE BIG MISTAKES THAT CAN BE CORRECTED

Some mistakes are so egregious, they cannot be ignored. But only correction of errors is allowed. No revaluations. 

1) CLERICAL ERRORS

If a tax valuation is incorrect due to a non-judgmental error, then the value may be corrected. Correctible errors include mathematical errors, failure to copy numbers correctly, computer input errors, square footage errors, and others. Errors on an appraisal review board order reflecting a value other than the actual determination of the board may also be corrected. Think in terms of “judgments nunc pro tunc.” 

2) ERRORS IN PERSONAL PROPERTY TAX RENDITIONS 

Your client made mistakes in reporting their business personal property to the appraisal district, those errors can be corrected. 

3) MULTIPLE APPRAISALS

If the same item of property has been taxed more than once, the duplicative taxes can be removed. Multiple appraisals can occur when a property is appraised by more than one appraisal district or when the value of real property is fully captured within the value of a related property. 

4) NOT IN THE LOCATION SHOWN ON THE APPRAISAL ROLL

This one is tricky. To qualify, the property at issue ( think in terms of “business personal property”) must be located entirely outside the boundaries of an appraisal district. If a taxpayer has any personal property in the district (e.g., other items of inventory), a claim is not allowed. And the phrase “ shown on the appraisal roll” limits the type of error that can be corrected to one that literally appears on the face of the appraisal district's summary records. One cannot go behind the summary records to the underlying records to prove the error. 

5) DON'T OWN THE PROPERTY

This is a one-way street. It can only be used to remove your client's name from taxes associated with property they do not own. It cannot be used to claim ownership of property not listed in your client's name. Failure to timely fix an ownership error may result in personal liability for taxes owed by someone else. If all else fails, your client can wait until a delinquent tax lawsuit is filed and raise the affirmative defense that they did not own the property and avoid personal liability. 

DUE PROCESS VIOLATIONS

If an appraisal district fails to deliver a statutorily required notice to your client, the tax assessment is voidable. If an appraisal review board fails to rule on a timely filed protest, no valid assessment can arise until a determination is made. 

DEADLINES!

Valuation Errors January 31; or The date a tax is due if the tax bill was delayed in delivery. (Hint: The due date is always the last day of a month.) 

But SURPRISE! Failure to receive a tax bill is not an excuse for not paying a tax bill on time. The law assumes everyone is aware they owe taxes each year on property they own and imposes a duty to discover the amount of tax due and pay it prior to the delinquency date.

Motions to Correct Errors Four of the five aforementioned "big errors" can be corrected up to five calendar years in arrears. As a result, on January 1, one of the prior five years that could have been corrected drops off and can no longer be fixed. However, if a valuation error resulted from a mistake your client made in filing their personal property rendition, the error may only be corrected two years in arrears.

Due Process Violations: Involving Notice These may be cured if a protest is filed within 125 days of the date the taxpayer became aware of a missing notification.

Suit to Compel a Hearing: There is no deadline to sue an appraisal review board to force it to conduct a hearing. 

Late Claims REMEMBER: Failing to make a timely tax tender is fatal to late claims.

COMING UP NEXT How to read tax bills and find errors.